There’s a Red-Hot SMB Market Opportunity in…Print?!?
If anything at all was predictable about this year’s HP Amplify Partner Conference it was that the company would be very, very excited about the imminent arrival of its first AI PCs. And sure enough:
“This is a very, very exciting year, because the journey will start this summer as we start launching the first AI PCs,” said CEO Enrique Lores early in his opening day keynote.
The next day, Alex Cho, president of the company’s personal systems group, exhibited equal enthusiasm in a keynote of his own for what he called the industry’s largest portfolio of AI PCs, which HP officially unveiled yesterday.
“This is going to be a massive transformational opportunity,” he said.
Get into the numbers and that sounds less and less like hyperbole. Gartner recently predicted that after dropping 14.8% in 2023, PC revenue will rise 3.5% in 2024 thanks largely to AI PCs, which will account for 22% of all PC shipments this year.
I, however, found myself strangely fascinated by an IDC projection this week highlighting a more unexpected growth opportunity specifically for the SMB channel.
Print.
“It’s contracting, but it’s still a viable market. There’s still a big opportunity for print,” says Robert Palmer (pictured), research vice president for imaging, printing, and document solutions at IDC.
Like really big, especially if you’re charging customers on a per-page basis for managed or subscription print services. “We’re over a trillion pages [annually] just in the U.S. alone,” Palmer says.
Skeptical? Ask your customers how they feel about printing, as IDC did not long ago.
“Sixty-three percent of them said that print is still either important or very important to their company, and the rest of them said it’s still moderately important,” Palmer reports. “The fact is we still have to print.”
And we will for a while. Sure, people have been doing a lot less of what IDC calls “ad hoc printing” of a page or two here and there to read on the bus ride home. But the print jobs built into their everyday workflows?
“It’s not as easy to take that stuff out,” Palmer says. “It’s not like something you can just come in and flip a switch and it happens. It takes time and effort.”
In the meantime, a lot of businesses are going to be ripe targets for managed print offerings, and most of them will be SMBs.
“All of the growth opportunity is in SMB right now,” Palmer says. Something like 70% of large businesses already have managed print contracts, he notes, versus maybe 25% of SMBs with more than 100 users. Companies smaller than that are probably not candidates for managed print, he continues, but that leaves a lot of businesses that are.
They’re an increasingly receptive audience. Unlike big businesses spending big dollars on big print fleets, companies with just a handful of devices don’t worry much about print spending. They do worry, however, about unpredictable spending, a concern that managed print eliminates.
“It could be the same price for us, but as long as we know what our monthly expenditure is going to be, it’s much easier for us to manage our business that way,” Palmer imagines an SMB owner thinking.
Historically, he notes, it’s been the office equipment channel that’s benefitted from openings like that. “The IT channel, the IT VAR, the IT reseller, those guys have historically shied away from print because it’s too complex,” Palmer says. Lately, however, print vendors have been rolling out cloud-based solutions much easier to configure, sell, and manage.
“You can do assessments easier. You can get to your current state and future state easier and design a fleet,” Palmer says, “and then they’re putting all these tools together so that the channel is more effective at getting out there and driving that opportunity.”
Vendors also do the actual management in many cases for partners that want the revenue but don’t want to invest in new skills and tools. “It can become a pass-through model for the IT provider,” Palmer observes.
Which is where HP comes into the picture
Pretty much everything about Palmer’s analysis dovetails nicely with strategic objectives at HP.
For starters, Dave McQuarrie, the company’s chief commercial officer, specifically called out SMBs as a sales target for 2024 during a Wednesday Amplify Partner Conference presentation, noting that they spend $1.2 trillion a year on technology worldwide, including $200 billion in the U.S., and devote less of that to HP than HP would prefer.
“Our SMB penetration versus other segments is below where we would like it to be and indeed where it needs to be,” he said.
Additionally, and no matter what anyone says to the contrary, HP shares IDC’s conviction that while the print market may be in long-term decline it has plenty of life left ahead of it.
“The world still needs printing,” said Tuan Tran, president of imaging, printing, and solutions, during a keynote this week. “It’s how we learn. It’s how work gets done. It’s how we communicate.”
Last but not least, services in print and beyond are a strategic priority for HP. According to Lores during his Tuesday presentation, the company has captured less than 10% to date of a total addressable market for everything it sells worth $725 billion. Hardware has less to do with capturing more of that spending than you’d think.
“A lot of it is in services,” notes Mary Beth Walker, head of the company’s global channel strategy.
Evidence of how determined HP is to go after that spending was all over this week’s show, where the company previewed forthcoming managed video collaboration and managed device services, as well as an also forthcoming offer situated squarely where SMBs, printers, services, and Palmer’s take on the managed print market intersect.
Due to arrive in the U.S. and a few other countries in May, with global availability to follow, the new subscription lets businesses buying HP printers add automated ink or toner replenishment, next business day repair, and outsourced analytics for a flat monthly fee. The size of that fee is spelled out in advance on a tiered rate chart that shows users exactly what they’ll pay for a pre-set number of pages in color or black and white.
“We wanted to make that transaction very simple,” says John Gordon (pictured right), who became senior vice president and president of managed solutions in the company’s Workforce Solutions group last September.
The service is flexible too. Exceed your quota one month, and you rise to a more expensive tier. Print less the next month, and you drop to a cheaper one. Tired of the whole thing? You can cancel whenever you want.
“An enterprise contractual motion tends to be a fixed so many years at so much time with certain SLAs,” Gordon notes. “The subscription is month to month.” That means there are no renewals to negotiate either, he adds. “It kind of goes on in perpetuity.”
Partners can handle parts of the service, like the analytics reporting, themselves or offload everything to HP. “You choose,” Gordan says. Like IDC, HP suspects most SMBs are at least potentially in the market for the new service.
“We think, talking to our channel partners right now, that the penetration is very low,” says Gordon of managed print. “The upside’s really big.”
That’s as true for IT providers as it is for HP itself.
Wait, didn’t HP announce this last week?
Careful HP watchers may have read just a few days ago about a similar print subscription from HP called “the All-In Plan”. That product, however:
Includes hardware as well as services.
Is meant primarily for consumers.
Is available only from HP itself.
Sounds like that last part might be temporary, though. “With subscriptions, we tend to start small, and in some cases direct, because it’s easier to control what’s going on and how this is actually going to work,” Walker says, “but absolutely we will look to have a partner play there.”
Why partners matter more than ever in security
Here’s one version of what the world might look like right now if you’re a security vendor:
There’s plenty of security spending out there. Security will be the fastest growing segment in IT this year, climbing 9.9% worldwide to $87 billion, according to Canalys. Sales through the channel are rising briskly too. Barracuda Networks, to cite just one example, disclosed earlier this week that its ARR from MSPs is up 17% in the last year.
There are a lot of security vendors contending for that business. , chief research analyst at IT-Harvest, profiles 3,754 of them on his latest Analyst Dashboard, but there are tens of thousands of additional companies he potentially could have profiled. If you focus specifically on SMBs, moreover, you’re now competing with some of the biggest names in the industry.
The channel’s getting choosier about vendors. Eighty percent of them will reduce the number of vendor relationships they juggle to less than six this year, according to recent projections from IDC.
Raising fresh capital from VCs or private equity, if that’s your bag, won’t be easy for a while, given the downward arc of global deal values in the post-ZIRP era, from $1.185 trillion in 2021 to $645.3 billion last year, according to PitchBook’s latest Annual US PE Breakdown.
So in brief, there’s a lot of money to be made in security, lots of vendors fighting over that money, and a less than robust landscape for funding that fight. Recent moves by Barracuda Networks and Sophos illustrate a few of the ways security vendors are responding to those facts:
1. By investing in partner success. Because, as channel-first or only vendors rightly and regularly say, they grow only if their partners do. Barracuda, for example, has been working more closely with partners on co-sales and revenue acceleration roadmaps, according to Maria Martinez (pictured), the vendor’s vice president of channels, Americas.
“We’ve gotten more disciplined around supporting our partners on a regular cadence as it relates to channel planning in quarterly business reviews,” she says. “We’ll work with the partners to identify specific goals, whether they’re technical or sales oriented, to help drive mutual growth.”
Sophos, for its part, has been rolling out new and improved tools, including an automated proposal generator.
“We have a great template that our partners can go into, fill out some basic information on their customer, and it gives them a couple-of-page documented proposal to an end customer on why our MDR services are better for their customer to outsource,” says Kendra Krause, the vendor’s senior vice president of global channels and small business sales.
2. By investing in partner satisfaction. More competition for MSP loyalty means more pressure to keep MSPs happy. Barracuda, for example, unveiled four in-depth technical certification courses and other new technical enablement enhancements just this week based largely on partner feedback.
“We keep hearing, ‘I want more deep dive on the technical enablement piece,’” says Jason Beal, the company’s vice president of worldwide partner ecosystems.
Partner input also inspired recent deal registration upgrades. “We want to make sure that we protect them as a partner of record and protect their profit opportunity on renewals,” Beal says.
Sophos, meanwhile, recently introduced a new team specifically and solely dedicated to partner care. Its chief function, according to Krause, is providing faster answers to day-to-day questions about licensing issues and other administrative matters than account managers typically can supply.
“We wanted to put that into a more efficient process and team for our partners,” Krause says.
3. By targeting all of that investment more carefully.
When raising new funds is harder, using the funds you have more effectively is even more important.
Those previously referenced discounts and rebates at Barracuda, for example, are for their top-tier Premier partners specifically. “It’s an investment in those partners who are investing in us,” Beal notes.
Also worth noting
Bitdefender has shipped a new package of endpoint protection and MDR services for MSPs and a cloud security posture management solution.
Check Point has a new way to guard against SaaS-based threats.
Hornetsecurity has acquired email security giant Vade.
Roughly the same percentage of security pros who say their current stack is effective against QR phishing attacks have been compromised in the last year by a QR phishing attack, according to research from IRONSCALES.
Meanwhile, cybersecurity is a revenue driver for three-fourths of MSPs, according to Kaseya. Coincidence?
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