from Buyers Lab.

April 4, 2008 – BLI recently spoke with Jim D’Emidio, newly appointed president of Muratec America. He is replacing Yutaka Moriwaki, who has been promoted to general manager of Muratec Sales Limited, the domestic sales division of Murata Machinery Limited. D’Emidio, who has been with Muratec for 21 years, was previously vice president of sales and marketing.

BLI: Effective April 1, you have been promoted to president of Muratec America, replacing Yutaka Moriwaki. How will this management restructuring position Muratec for growth?

D’Emidio: Basically, it’s not much of a restructuring. I’ve been vice president of sales and marketing for 10 years and the only real change that has happened is we won’t have a Japanese president. Although we’ve had a Japanese president for the last 10 years, the American management has been pretty much managing the company with oversight. Now our oversight will just be in Japan. We are poised to take advantage of whatever the market provides us as a secondary manufacturer.

BLI: One of Muratec’s biggest goals for 2008 is to introduce its first color MFPs, the first two of which will be positioned in the Segment 1 and 2 copier space with aggressive cost-per-copy and service. Can you provide more details on these introductions?

D’Emidio: Muratec has been behind on color. It’s one of our weaknesses that we hope to address this year. We expect to come out with four new color products in the next 18 months. Most of them will be OEM products. Some will be joint venture products as well. Similar to what we’ve done with monochrome, we hope to address certain segments of the market that our dealers are interested in selling in but that the major manufacturers are not interested in or are not addressing with a strong product.

BLI: Another one of Muratec’s goals for 2008 is to launch an open architecture software platform. Some vendors have been offering such platforms for a number of years now. Why did Muratec decide to enter into this area now?

D’Emidio: We’ve actually been part of that area. We introduced OfficeBridge about six years ago, which is an interface to the network. Our next offering was the Network Gateway Platform [NGP]. What we found through our dealers was that these products interfaced very well with some of the document management and document workflow solutions [they were offering]. And now we have gone one step further and opened up our API and given these software companies SDKs that they can write directly into our NGP. So directly on the touch screen on our machines they can place proprietary information for their software that will make our device even easier to use with their software. DocuWare, a document management company, has developed ScanTag, which allows a DocuWare user to put in metadata [indexing information that makes specific documents easier to find] directly from our touch screen. The metadata will carry along with the document that scans directly into DocuWare so that users don’t have to come back later and index those files.

BLI: Will the platform be more like Canon’s MEAP and Ricoh’s ESA or more like Xerox’s EIP and Sharp’s OSA, which are Web services?

D’Emidio: It’s a little bit of all of that. We’re not using Java as a language. We’re using a much easier language for them to program. It’s much like eCopy where it acts as a middleware to actually route documents into a specific software. And our NGP Platform is a pretty open architecture anyway and has allowed us to be able to scan to file and scan to e-mail across the network easily. And now what we have done with this open architecture in providing these SDKs is to allow the software companies to go another layer deeper into creating hooks for our products and their software.

BLI: Some vendors face a challenge in getting dealers to embrace an open platform architecture. How do you plan to deal with this?

D’Emidio: Since we’ve been doing it quite a while and we’re a small company, our development people and our Japanese engineers are able to work a lot faster and a lot closer with some of these software companies. Since our platform was fairly open to begin with, when we showed it to a number of document management companies at the ITEC show—that we’re basically just using .csv files—they looked at it and said that they could probably do it with minimal effort. So I think that the key to ours is that we didn’t make it very complicated and that it makes it easier for them to write their software hooks.

BLI: Muratec has been steadily building its product line and the new color products are the latest example. How far up in speed do you plan to go?

D’Emidio: Currently through OEM relationships we’re at 45 ppm with an A4 product [the MFX-4550]. We may look to going to 55 or maybe 65 ppm in the future. It depends on the market. We’ve been studying the A4 printer MFP market for the last 10 years and have found a niche in that area where a lot of the traditional BTA manufacturers are continuing to place A3 MFP products, whereas the printer companies—HP, Lexmark, Samsung—are coming out with this A4. We’re not sure if the A4 MFP is going to win the battle but we want to be on both sides of the fence in case it does win. So I would say short term 55 ppm is the highest we’ll go.

BLI: What more can we expect in 2008?

D’Emidio: In addition to the color products, we’re looking at refreshing our product line. Mainly that would be replacements to products that we already have, replacements for our four or five products in monochrome Segment 1 and our two products in monochrome Segment 2, in late 2008, early 2009. We also have additional A4 printer MFP products that we’re going to launch in the fall of 2008 and spring of 2009.

BLI: BLI tested the Muratec MFX-2830, which has an impressive voice-guidance system. Is this capability being offered throughout your product line?

D’Emidio: Only Segment 2 on up now. We have found that in a lot of applications—we were surprised—it’s actually found a home, especially in hospital applications where they’re running three shifts and have a high turnover. We have found that the voice guidance has really helped in training and getting people through issues with the machine in the middle of the night and when they might not be able to get immediate help. We found that true in the restaurant industry and some of the financial industries as well.

BLI: In the BLI article on the year ahead, Lou Stricklin, marketing manager for Muratec, said that the fax-centric multifunction market is eroding but that this may be a blessing in disguise for Muratec because as the primary manufacturers stop making fax devices, Muratec is picking up the business. Can you expand on this?

D’Emidio: What we found is it’s like the last guy making typewriters who got 100 percent of the business. We have found that as companies like OKI and Kyocera have exited what we call the standalone plain-paper fax market, there were companies and a lot of government agencies that were still dependent on the fax machine either as a secondary or primary communications method. We are now beginning to see a little bit of erosion of that. This is the first year that we have seen our fax business not keep up with the previous year’s. While we have benefited from continuing to make plain-paper faxes and sales have increased year after year, 2007 will really be the first year in our entire career of making business faxes that we’re going to see a year-to-year decline in our placements. Not much of a decline—probably three or four percent—but it is a decline.

BLI: Who are the primary customers for these products?

D’Emidio: For us it is government, but we have found industries that are using fax like law firms. They were still using fax because they were concerned about some of the e-mail issues they had and were using fax as an on-ramp for fax-to-e-mail. Law firms and certain financial brokerages are still using fax because they had a good way of tracking documents for their Sarbanes-Oxley compliance.

BLI: What are they using faxes for?

D’Emidio: What we have found with some law firms is that they prefer faxing certain documents because faxes are not electronic and the other law firm can’t manipulate the information on it or because the documents were coming out of archives and they actually wanted to see what the original documents looked like scanned. And brokers were sending information out to end users for compliance—with our machines they can actually send a fax and also capture that fax as an e-mail to a compliance officer. That would help them with compliance with Sarbanes-Oxley.

BLI: Another challenge faced by Muratec is the increasing competition from traditional printer-based manufacturers such as HP and Lexmark. How do you plan to deal with this?

D’Emidio: We’ve chosen the strategy, ‘if you can’t beat them, join them.’ When we first saw the HP LaserJet 4345mfp four years ago, we thought that HP was on to something. It was a good-looking product and from the research that we did and the research we got from companies like you, we found that less than five percent of American businesses really needed ledger-size paper. And the business model for the BTA dealer changed a little bit. Where in the past they would walk into an office and disregard 50 printers just to get to the one copier or copiers within an organization, the market has changed so that now they have to look at every device that’s in that organization that prints or puts marks on the paper, as you will, and figure out how they can put all of those in some cost-per-copy or maintenance contract. Then with that, the A4 printer-based MFP allows them to replace additional printers within the organization and provide on-ramping capabilities or scanning capabilities at that device. So, the way we see it, HP does have it right. HP was not replacing copiers with their 45-page-per-minute A4 machine, they were actually replacing printers. And if the dealer was going to compete for every device that was in that organization, they were also going to have to provide the end user with a high-speed A4 MFP printer. So we thought that we would be a good alternative [for the dealer by allowing] them to put our product in a more traditional CPC environment and get away from just competing with HP and Lexmark and Samsung on price. We don’t think the traditional BTA dealer will survive at less than a five percent margin on their hardware.

BLI: Thus far, Muratec has focused on low-end products. Would you say that this is an advantage and a disadvantage for the company—an advantage because it’s where most of the market is and a disadvantage because there’s not much incentive for dealers in providing these products on a cost-per-copy basis? And given the latter, what incentives do you provide to dealers?

D’Emidio: You are absolutely right, it’s an advantage and a disadvantage. Our dealers are focused on higher segments, generally Segment 3 on up and color. We provide a lot of support and we’re an easy company to do business with, so what we do is we tell the dealer, ‘Yes, we know that this isn’t an important part of your product line, but it is a part of your product line. So if you sell Muratec, at least you’ll be partnered with a company that will make it easy for you. Our support is second to none and we’ll make selling at least this part very simple and very profitable.’ With solutions and the way we’re focusing our products in on-ramping documents, it’s about more than selling one machine. What we look at is ways to sell multiple machines to an organization. If you go back to that company that has two Segment 4 copiers and multiple printers, our idea is for [the dealer] to sell the Segment 4 with their traditional manufacturer and maybe replace some of those printers—10 or 15 of them—with one of our A4 MFP solutions and using scanning—scan and route documents to a document management package, or document workflow, or scan to file or scan to e-mail—as a differentiator.

BLI: Ever since you entered the MFP market, you’ve been focused on being perceived as a copier company. Has that changed now that more volume is shifting to the printer function and more copier vendors are offering multifunction printers?

D’Emidio: Muratec is still perceived by many dealers as a fax company. We’ve just now gotten to be perceived as an MFP company. We consider ourselves a solutions company, that we are hardware solutions specialists looking at all of the products as on-ramps—digital document devices not only to print, fax and copy but also scan to the network. For their low-end products, a lot of the bigger manufacturers are either OEMing a product or putting very little resources in putting out that product. That’s a key part of our product. Our Segment 1 products are very strong, with the NGP allowing the end user from their office to on-ramp documents to the network. Our philosophy is to decentralize scanning, get it out of the mailroom to allow people in their offices, whether it’s the CFO or HR director, to take all their sensitive documents and on-ramp them from their credenza with our product without having to take them down to the mailroom and scan them through a dedicated scanner. That’s our philosophy and we’re finding the same with printing. Years ago companies thought about centralizing printing and getting rid of the printers. Well, that never happened. So if you can’t get rid of those printers, you might as well make those printers more interactive to the network by allowing them to scan, so that’s what we’re trying to do. [Editor’s note: See the BLI Special Report Copier vs. Printer: Which Type of 45-ppm MFP Makes More Sense]

BLI: What is you’re letter-/legal-size multifunction strategy?

D’Emidio: We believe that the data shows—and HP has been pushing it, along with some of the other printer manufacturers—that the end user doesn’t necessarily need an A3 [ledger-size] engine, which is now changing the paradigm in the industry to one that says ‘I may not need a copier in every department; in some departments I may be able to have a less expensive A4 MFP that gives me everything I need, which is that my copying ability will be on a letter/legal platform.’ And we just want to be a part of the equation when they go through that. We still think that there is a big need for A3 devices in the mailroom but as they move out of the mailroom to other areas they are giving end users the ability to copy, print and scan in more parts of their businesses. What HP has been doing is to convince the end user that where they had bigger printers, they can replace those printers with a similar type of printer but with a scanner on it to allow them to do simple copying, with simple finishing and also to on-ramp for scanning.

BLI: You are offering the MFX-4550 under the Samsung name. Why are you offering it under the Samsung name rather than the Muratec name?

D’Emidio: We are OEMing three products from Samsung. With the MFX-4550, we didn’t know how big that market is so we didn’t want to make a large commitment to make all the changes to it. So Samsung has allowed us to work with them to test the market.  

BLI: Is this product replacing single-function printers or multifunction copiers?

D’Emidio: Right now we’re replacing single-function printers.

BLI: How long has this product been in your line?

D’Emidio: Three months.

BLI: Where do you see the market for copier MFPs going?

D’Emidio: We definitely think that HP is educating the end user about the need for A3 in certain areas [and A4 in others] and that there is a battle that we’re beginning to see between the traditional printer VAR and the BTA manufacturer. I believe that the winner will be the company that can provide the most solutions that put every device within the organization on a CPC or total cost of ownership contract. What I think you’re going to be seeing is the printer VAR or the BTA dealer coming into the organization, doing some studies on how every device is being used, coming up with some recommendations and placing every device on a one- or three-year CPC contract. It’s like what they used to do with the copier. I think this is going to open up for every device and what the end user will get out of it is one-stop shopping for their printer devices—the company that’s going to install, service and repair and provide the supplies all at a fixed cost. I think that that’s beginning to happen now. I think when the dealer, whether it’s the VAR or the BTA dealer, comes to look at how an organization is using printers, there’s going to be need for a color A3 MFP, a mono A4 MFP and just regular printers in color and black and white, and the company that can convince the end user that they’re the best company to do that are the ones that are going to be surviving in the future.

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This article was originally posted at Buyers Lab. BLI retains the copyright for this article.