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What might Canon’s takeover of Océ mean for consumers
By Peter Lavelle, from printerinks.com UK

Recently Canon completed a 71.3% takeover of Dutch printer manufacturer Océ. This is the product of negotiations started in November between the two companies, and by 19 March Canon hopes to acquire the remaining Océ shares. Stakeholders that refuse to sell will become minority investors in a Canon-controlled company. Together, Canon and Océ aim to “create the overall No. 1 presence in the printing industry,” according to their 16 November joint press statement.

The Canon takeover of Océ has been widely reported in the business press. The consequences of the deal however have been much less well publicised. For example: How does each company benefit from their combination? How does the deal affect their competitors? And most importantly, what does the takeover mean for consumers? This article addresses these questions.

Let’s started by answering the last query first: What can consumers expect from the Océ takeover? The answer in the short term is: nothing. The two companies will take three years to consolidate their facilities and technology. During this period, Canon will transfer their Research and Development to Océ’s European HQ. The Marketing, Sales and Logistics Departments of each company will be integrated. Notably, though Canon has been taken over, no redundancies are expected. The Océ shareholders’ board will retain its independence, though reporting ultimately to Canon.

In the longer term, Océ branded office imaging products (including printers and copiers) may disappear. This is because Océ technology and branding are widely inferior to Canon in this sector. For example, in 2008 Océ took less than 1% of the North American imaging market. Moreover, Océ does not manufacture its own products, instead rebranding technology suppied by OEM manufacturers such as Konica Minolta. Anticipating the takeover, Océ altered the terms of their technology alliance with Konica Minolta last month. Océ will no longer receive office imaging equipment. Hence, given both this and Canon’s existing office imaging clout, Océ branded products are likely to be phased out.

The consequences of the takeover for the SOHO (Small Office / Home Office) market are in fact limited. Consumers may notice an extended range of Canon products, owing to improved economies of scale and greater research and development clout from the deal. The primary benefits though, come from Canon’s acquisition of Océ’s wide format production printing technology and document management software, and Océ’s greater access to the Asian market through Canon’s presence. In short, the deal has potentially great B2B (business to business) implications.

For example, Océ’s biggest customers are European banks and architecture businesses. Their wide format production printers meanwhile are industry leading, and arguably kept them afloat during the recession. Moreover, Océ’s wide format toner cartridges and RIP (Roster Image Processing) software are also first rate. Hence the deal with Canon enables Océ to introduce these excellent products into Asia, and grow their market share beyond their traditional customers. However, consumers not involved in print production are unlikely to notice this.

The changes in Canon by comparison are likely to be more visible. The Japanese manufacturer will gain greater access to European markets through Océ’s presence. The takeover has greater implications for Canon though, because it could transform their business. Presently Canon manufactures office imaging equipment. However, by acquiring Océ’s document management software, Canon can begin the transition to a managed print services provider. The company can incorporate pre-sales and after-sales services into their portfolio. Océ has especial expertise in mailroom automation. By integrating this, Canon can offer customers a service package to accompany their printing hardware. This is highly lucrative.

Moreover, it reflects Canon’s recognition of the changing printer market. Few major players today confine themselves to manufacturing. For example, Xerox recently ventured into BPO (business process outsourcing) with the $6.1 billion acquisition of ACS. Last year Hewlett Packard made similar steps into IT services by buying EDS (now called HP Enterprise Systems.) Similarly, Ricoh last year purchased IKON Office Solutions. Global players in other words concern themselves not only with selling office imaging products. They sell the supervised use of this equipment and its maintenance. Canon and Océ’s stated objective is to become the overall No. 1 presence in the printing industry. To achieve this, Canon must enter document management services – and with Canon they can.

The takeover of Océ also enables Canon to fill significant gaps in their product portfolio. This concerns production printers for the most part: the feed inkjet production printing market is expected to grow significantly, and by acquiring Océ Canon can increase their revenue here. Canon will also garner useful digital production technology from the deal.

However, the most important consequence of Canon’s takeover of Océ is their capacity to challenge Hewlett Packard, Fuji Xerox and Ricoh as global print services. This challenge will largely emerge out of sight of consumers, and will not emerge quickly. It will affect businesses, and print producers. Canon’s takeover of Océ though, reflects the changing printer manufacturing market. Perhaps because of the recession, leading corporations no longer feel comfortable confining themselves to one specialty. They are diversifying, and becoming more global. They require scale to feel secure. This is the market consumers now co-habit.

Sources

Anne Valaitis, ‘Canon To Acquire Océ,’ InfoTrends.com, 16 November 2009.
Cary Sherburne, ‘Canon’s Acquisition Of Océ: The Details,’ WhatTheyThink.com, 17 November 2009.
Chris V. Nicholson, ‘Canon To Buy Océ, The Biggest European Printer Maker,’ NYTimes.com, 16 November 2009.
Richard Berger, ‘Canon and Océ To Create Global Leader In Printer Industry,’ Oce.com, 16 November 2009.

Story written by Peter Lavelle and first published in Printerinks.com