Having It Large

As the Middle East develops at a remarkable pace, opportunities abound across the IT sector. One area benefiting more than most from the sprawling growth of the region, particularly in cities like Doha, Riyadh, Amman and Dubai, is the large format printing market. Walking down the high street of any of these cities the two largest factors driving the large format market are in abundance: construction and advertising.

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By  Stuart Wilson Published  July 1, 2006

Loving LFPs|~|ernest200.jpg|~|Ernest Azzam, business development manager, large format printing at HP’s IPG group|~|The cost of buying a large format printer has decreased and investment from major vendors across the product range shows how much attention is being paid to the market. With advancements in technology, large format printers (LFPs) are also breaking into new markets areas. Growth is so high in the Middle East region that HP has announced that it will hold its 2006 EMEA LFP Academy, an event attended by over 500 partners, in Dubai. “I’d imagine only 35% to 40% of our business is with repeat customers. The rest is all coming from new customers and we are winning market share across the Middle East. All sectors are growing,” says Chris Govier, production business manager Middle East and Africa at Xerox. The best thing about the LFP channel is that it presently has breathing room. Resellers such as Jordanian distributor NAF, which started out as a small print shop, are doing a healthy business with their LFP offerings. “I was the first person to take HP LFPs into Jordan. They asked me how many I thought I could sell in one year — I said around 50. That first year I sold 300 printers. By the time they had got me stock of 24 large formats to Jordan, I had already sold 17 of them,” explains Nedal Odeh, general manager at NAF Engineering Equipments in Jordan. While there is still a slice of the pie up for grabs in the large format market, exactly where is not so easy to define, as it covers a very broad area. An LFP is usually defined as anything larger than an A1 printer; anything above 64” in width is usually described as a super wide format, or grand format machine. The market is also split into different sectors, divided by the printer’s application: technical drawing and line printers (usually black and white) used by construction sites, and the graphic market (usually colour machines). These products are then split between indoor and outdoor offerings. Typical large format resellers will stock A1 to 64” printers, though vendors usually require partners to work on either the industrial or graphic side. “The partners have to pledge their allegiance one way or the other. In some small markets one partner can cater to both but we prefer a focus on one area of the market. LFPs require expertise and it is full solution selling — for example, with graphics, partners have to calibrate the printer, install it and train users,” comments Ernest Azzam, business development manager, large format printing at HP’s IPG group. ||**||Channel building|~|govierxerox200.jpg|~|Chris Govier, production business manager Middle East and Africa at Xerox|~|As to which side of the market is growing faster, Govier at Xerox says it’s a close call, with the graphics market having a slight edge. This area has seen more developments in recent times, with HP strengthening its position in this section of the market with the introduction of its ‘Echo’ lineup, and vendors such as Epson reviewing and releasing updated products, such as its black and white range, capable of very high print resolution of 48,000 dpi. Technology in the outdoor market has also widened the scope of these printers. “The market is moving towards solvent-based outdoor printers, even if the user is doing some indoor printing. Resolution has increased so much that outdoor printers can be used for prints in an indoor environment. The solvent printers also have a must lower cost of production overall, and are cheaper in the long run,” says M. Karthik, sales manager for Roland printers at Emirates Computers. Companies like Emirates Computers are regional master distributors — the most common channel model for vendors to use in the region. These master distributors will then work with regional partners, some will look after support themselves, others will rely on the master distributor for this. Vendors also provide a level of partner support. Xerox, for example, has a full time large format expert, based out of its Dubai office, who travels around the region assisting partners. Partner programmes run by vendors in this field tend to be intimate, and vendors have direct contact with all of their distributors, in a symbiotic win-win relationship. “For us to go down the channel route is quite new. Partners’ knowledge of the industry is very strong, but we have to do some work on the product knowledge and how the Xerox model works. The rationale is that the channel has the local knowledge that we don’t have and this helps with the synergy in the marketplace,” says Govier at Xerox. This does not mean that entry into a vendor’s fold is easy. HP runs a DesignJet channel programme and a large format supplies programme for its partners, judging their skills on an individual basis. “It depends on a partner’s experience and history. Especially for new partners, they qualify depending on what they know. We look at what they have, assets and training, and we can help them to achieve certain standards. Its not easy, and in some cases the partners cannot do it — especially at the high end,” says Azzam at HP. The emphasis from all vendors is for their partners to specialise and become as niche as possible. The LFP segment covers a number of different verticals with different applications and industries. Dubai based distributor Jacky’s electronics started off by selling large industrial size printers of 3m to 5m wide, and has since added smaller formats to its portfolio. Ashish Panjabi, chief operating officer at Jacky’s Electronics lists the company’s main verticals as print service providers, the photographic segment (mini-lab operators) and corporate accounts with a base of LFPs.||**||Sales strategy|~|raf200.jpg|~|Nedal Odeh, general manager at NAF Engineering Equipments in Jordan|~|By working its way deep into a niche, Jacky’s has successfully exploited other opportunities that the market provides. For LFPs to work effectively they have to print through special raster image processor (RIP) software. This translates large image files into packets of information to ensure a fast print time, and eliminate room for output error, as well as performing the very important job of colour translation, to make sure that the print colours match the original input colours. Jacky’s has developed this colour management business into a very profitable separate sideline and employs two full time colour management specialists. “We have come to the point where we are not only consulting for our customers, but for our competitors as well. We run colour management services and training courses too, and help recalibrate machines to print exactly the same as each other. It is a very important area and a very profitable business,” says Panjabi at Jacky’s. Service is also the main focus of NAF’s Jordanian business, and Odeh says that his sales and reputation rely on NAF’s dedication to offering services, not only for its own customers, but in terms of servicing competitor’s machines too. “We are getting more resellers coming to us and wanting to buy from NAF because of the fact that we take care of each and every one of our machines. We have potential Saudi customers that are asking NAF to supply them with LFPs,” says Odeh at NAF. Sales techniques vary, but Epson’s UAE distributor, Almoe, has done a lot of legwork to tout its large format offering since becoming the sole UAE distributor two years ago. It identifies three categories of customer: “One type of customer has already done his research and knows he wants the printer. This is easy to sell, as he’s already made up his mind. Then we have large accounts, repeat customers, which are also a good source of returning revenues from consumable sales. The third customer is one that needs persuading. Here we will leave a printer with them so they can assess it and see what they want from the printer, a ‘try before you buy’ scheme that usually breaks the deal for us,” says Shihab Zubair, sales engineer at Almoe Digital Solutions. ||**||Clear commitment|~|almoe200.jpg|~|Shihab Zubair, sales engineer at Almoe Digital Solutions|~|The path to customers is never easy, and contacts in the LFP business are a valuable commodity that takes time and work to build up. In such as niche industry, personal contacts are of prime importance. “There were problems with Epson’s service in our first year, so we solved these and in the second year we have prepared the customers and spread the name and the advantages of large format investment. So now, when people think Epson large format, they think Almoe directly. We have broken the ice with the customers and this year we never have any backlog of stock,” comments Zubair. Working in a niche industry where machines are selling for US$8,000 a time, partners expect a decent margin. LFPs certainly delivers on this front, with Emirates Computers estimating the channel can make up to 20% on a sale. Nedal at NAF says that on HP large formats the company will make 10%, but warns that market competition can lead this to be cut in half to win orders. Vendors are keen to remind resellers of the opportunities provided by providing regular service and consumable sales. The LFP market is growing faster than ever before as the technology makes huge leaps and bounds. Prices are reducing and the products are becoming more accessible and more cost-effective meaning that demand is on the up. The opportunity is real but partners need to show strong commitment to LFPs. ||**||

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