Scary Times – Ricoh the one world leader succumbs to bad economy and is vulnerable like everyone else…

Now this is just hearsay, but I was just told that Ricoh is making employees take a week furlough without pay and has started lying off employees. This is a very similar situation that I am seeing across the boat I mean board with companies in our industry. From Konica Minolta's huge layoffs right after Xerox and Kodak cut roughly 20% of their global workforce. I'm sure it is not a shock to see HP step back and act cautious in new hires and expansion. Now with Canon in complete desperation to see them partner up with HP is almost funny. These types of partnerships are not uncommon in our industry, good bedfellows they make as they both struggle to assert their once top tier status. With Oce bleeding profusely to now even Ricoh showing their humanity we see salary's decreasing, employee benefits being cut or disappearing all together to sheer headcount reductions in almost every company.

IKON has even make changes and cutbacks in our company 401K matching program. The one thing I will say is that we are still expanding headcount and retooling our demo facilities and go to market strategy. We have not given up that we can be successful in such trying economic times. "Be Bullish In Production" our RVP says religiously. IKON is very bullish in times when even the greats are cowering. In fact we seem to have put on the war paint and run into the streets to meet our enemy head on. We continue the fight regardless of the naysayers.

I am getting nervous to see our "big brother" have such 'noise' coming from their employees. I knew many that went from Konica Minolta and others to over to RBS when they were the best looking for longevity; now what were long term stable employees they too are making the great pilgrimage to look for "gainful employment."

With everyone having such a knee jerk reaction it makes me wonder what is coming next. From everything I am seeing it appears that IKON is coming out on top and in a strong position to negotiate with the Ricoh first born. It would not surprise me to find that IKON becomes the "chosen one" and the pony picked to win this next horse race. I look forward to hearing the stories from my readers as I'm sure that many will find even uttering such a thing blasphemous.

If you have a Ricoh layoff story or more "inside information" I would love to hear. As for Pirate Mike I think we will see the true colors of Ricoh's intentions by April 1^st 2010! Maybe I'm wrong but hide and watch as Ricoh retools their organization to come out fighting strong in the next fiscal.

Also be looking for the new Ricoh Pro C901 ( or whatever they will call it ) This new machine of destruction will be a great advancement of the C900 of today with no fuser oil, basing its strengths on a newly formulated polymerized toner? that will bring digital quality to new heights. If I had to guess with the speed at which they are developing products I would guess mid spring or early summer. With all of the great advancements of the Aegis product you can be sure that Ricoh is looking to show the world that "Ricoh knows production." Or at least the new horse they ride IKON>

What Ricoh knows is how to buy the best technology and engineers and then follow that up with a great distribution model which they did too buy. The IKON acquisition will show that their multibillion dollar purchase was not in vain but truly put them on the map in a way that they never could have done before the acquisition.

Ricoh is slowly learning the power of the weapon that she bought. But being able to wield this new weapon of destruction is yet another story. IKON is not an easy horse to ride, and this ride is surely to get very edgy in the short term as things build and the economy continues to falter. This is an "E" Ticket for sure!

As we get into 2010 I'm sure there are more cuts, layoffs, and changes to come. All we can ask is in the end that we are paid to the champions of the day. I for one cannot complain too bad as I have had record months and a record year! I am sitting somewhere around 120% of my budget with almost 400% of my yearly units. The Ricoh Pro 550EX, 700EX and the infamous C900 have taken me to the Promised Land!

Even in bad times the pirate of Lewisville Lake is showing that it can be done with no food or water and just on new business acquisition alone!

Happy Hunting,

The Pirate Connection…

The Pirate Connection…

You know I think I get more questions about the whole pirate thing and yet even with all that I have written I think that people truly do not make the connection. People still think pirates are folklore and are left to the stories of people walking the plank and funny characters talking strange and hobbling around on a wooden leg with a hook for a hand wearing the proverbial eye patch. What they do not understand is that piracy on the high seas is common, even in the true definition piracy occurs over 250 times a year and is one of the most common dangers faced by our merchant marines. Much more common than hurricanes or other weather related dangers it is a seaman's reality. We find it also on land, and in some of the areas that we claim are the safest like our market system.

And all the while I am living in the midst of a typical corporate merger created from the pressures from Wall Street in a very simple commodity type business and I am witnessing what I write about first hand. I mean toothpaste, toilet paper, fax machines These are all common goods that we use pretty regularly right? Well as it turns out the last year that I was working at IKON I was going to witness on a grand scale what privateering and piracy is all about at the multibillion dollar level. When I talk about sovereignty, territory and exercising power and control in the definition in the privateering of old I could as well have been talking about hostile takeovers and corporate mergers of the 21^st century. Nothing has changed our actions that we take still have lasting effects on the way we live and the security of others.

What is amazing is that we call ourselves a civilized society, well in some areas we may be, but in reality we are pretty savage and hypocritical. We are a greedy and bloodthirsty lot. The rest of the world talks about us in disdain and we the great capitalists of the west have exercised our sovereignty to line the pockets of the high and mighty. We like to talk about helping the needy and being a good big brother to the nations so that we can sit at home and sleep well at night. When the reality is that we have sent teams out into the nations to spy and steal with commission. "For the good of all" right? Well just to provide National security to protect the innocent right? "To preserve our freedom" right? Ya that is what is it all about; sure…

I am not a conspiracist nor am I a conspirator, but what I am is a realist. I am also a consumer, I live a decent life and earn a decent (6 figure) income in which 40% of it is disposable. In which I have the luxury to take time being a buyer, and not always a seller of goods and services. I have on many occasions after great study, research and consideration still been screwed by a savvy and well thought out salesperson. I myself have worked for manufacturers where I had several products all good for a purpose but when questioned by a prospect had to give them what the "best" solution that I had none of which was the best for their purpose. I have made purchases that luckily came out ok, due to the fact that a poor purchase could have been catastrophic. Like in the case of a bad purchase of insurance, or of a home or lemon vehicle which could ruin your finances or worse.

Since I am in the midst of some ruthless privateering and an employee of said sovereign body whom grants me commission to plunder I will hold my comments for a time. But there will be a day come to pass when I will talk of what many already know. Corporate America is savage and full of privateers and pirates. None of which can be trusted or believed, it is intrinsically interesting though how often they deceive even themselves. And what is even more funny is that they believe each other; listening intently to each other's stories of conquest with anticipation and belief. If you wake up and think you are innocent you are but just part of the great deception. If you wake up and think you are a great deceiver you have bought into the lies of those that are in ultimate control. If you wake up and are just not sure of what is happening you may very well still have a chance to save your soul.

What is of concern is that I have on occasion thought that I was outside of the boarders of those that would influence control over me, but in reality I live in the heartland of the controlled. I am but a mere pawn in this chess game of marauders. Corporate America, land of the free, home of the brave. What do you think it took to be brave in a new frontier? How do you think those brave men stayed free from the chains that would have liked to have bound them? Laissez-faire capitalists would have you believe that "hands off" government is the way to go, just let the fair market system prevail. What people forget is that the markets are driven by people and that people are in many cases driven by greed. If you leave markets and corporations to be "ruled" by themselves what you end up with are warlords and chieftains. They will fight over their territory and sphere of influence till they choke out the others. This is called a monopoly and in many rights a dictatorship.

Power corrupts and complete power corrupts completely. Without checks and balances what we see is that corporations like people become an enemy of the state. What we find is that groups are corporations; they are embodied to further a cause sometimes economic sometimes it is purely ideological like in the case of a political or spiritual group or organization. These groups can if left to themselves and being unchecked can rise up to power and cause great destruction. Look at the debacle going on with our financial institutions which have been highly regulated and monitored by the state and federal government. Look at the men that have plundered great fortunes just to leave the companies that they ruled ravaged by their greed and great incompetence. Look at the cost of their failures to our lifestyle and the real debt that we will have to pay for their debauchery.

So "hands off" doesn't work and neither does "hands on" so what does work? Market competition? Look at my industry? Well I would love to tell you about it, but this is a public blog and I am still under commission and still privateering.

Maybe when I retire J Or maybe if you come close I can whisper these great secrets into your ear, just before I cut that necklace off of your body! Don't forget I am a pirate… One that has made it through many campaigns and survived many sieges, and I will survive this one too. This old pirate is looking for calmer seas, maybe an inland cove to rest. Watching the sirens call to the passing ships has become a pastime and steering clear of the reefs has become old hat. I would much rather sit around the helm and tell stories while drinking rum then actually boarding a ship and taking no prisoners.

Taking the crew to land and plundering a city has lost its charm. I would much rather watch a sunset or the clothes fall off a beautiful silhouette. There is more to come, keep watch I am sure to tell more stories as the time passes.

RiKON… The Next Generation…

It sounds a bit like an old Star Trek episode but really this is my life. With all of the instability in the world what could happen that would bring all the stars into alignment, fix the global economy and solve world hunger? How about Ricoh making a play for the largest independent distributor of office products and solutions maybe? Ok maybe not… So you think that you had it all figured out huh, Konica Minolta buys Danka, Xerox buys Global. And maybe since IKON was almost a billion dollars of Canon's yearly equipment revenue that they would forsake the path that they followed with Global Imaging and Danka; well you were wrong! I can remember it like it was yesterday, "No Canon will never cut IKON off, that is ludicrous." Much to IKON's and Ricoh's dismay, Canon did pull the plug and sent Ricoh (the father of a brand new baby) reeling looking for a new horse to ride for the high end color and black and white portion of IKON's production portfolio (a 25% share of IKON's revenue). Watching this unravel (from the inside) was enough to send you to the doctor looking for a well deserved prescription of Xanex. Well thank goodness for Ricoh's Kodak relationship now we can all rest easy right?


In a playing field that is less than well defined it is funny where new bed partners come from. Just picking up Kodak sounds good but is not that easy to implement especially over night. Kodak is a very high end and expensive digital press not just in up front acquisition costs but also in day to day operating costs not to mention that it requires a much more skilled operator to run and make repairs. IKON with all of its production experience isn't going to jump in and start doing service on the NexPRESS and service is where it is at in the business model of the office equipment world. So now what? Hmm, well maybe the new Hitachi technology that they have buried into their new flagship product the Ricoh Pro C900 (Digital Press, Production Copier – What do I call it?) will be enough to stave off the bitter reveling of Canon. Either way just putting the Kodak label on portfolio brochures is not going to stop the bleeding. Especially when you have cut a main artery like in the case of IKON and Canon. IKON sold about 60% Canon products in a very well defined market place where over the last years IKON went around buying up successful dealerships that were primarily Canon in nature.


So now the acquisition is over and we approach the first milestone. What is that you say? Well since you asked it is the beginning of Ricoh's new fiscal year of course. Here comes 2009 fast and furious. So what is in store for IKON in this broad new world of opportunity? Will they remain ran as an independent subsidiary? Will they get quickly absorbed into the belly of the beast? With the changing of the guard from a political standpoint and the evolution of our economy it is anyone's guess. As companies draw lines in the sand and build alliances with other competitors either by acquisition or by contract we start to see the battle grounds becoming more defined. Now that the great expansion is over and we see the number of competitors collapse into a 3 or 4 player race; we now are starting to see the mystery unfold.


The new mission of RiKON is to explore strange new worlds, seek out new life and new civilizations. In my humble opinion this new world of RiKON is very well positioned for the midterm play. Why midterm you ask? Because RiKON is a large organization and they really cannot move and adapt that quick. I watched the launch of the Canon imagePRESS both from the outside (small Canon dealer that was first to market with the imagePRESS in the country's 7^th largest print market and from the inside as a newly head hunted acquisition of IKON to their newly formed commercial print initiative (which was 6 months late to market) and watched IKON take quite a bit of time ramping the program up to the monster that it became. Between defining the goals of the organization and the tools to hand out along with push back from local operations and management it was amazing that the program lifted off at all. IKON has a way of taking strong salespeople and administrating them to death. I wonder daily how I ever find time for sales activities in the midst of my spreadsheets and conference calls. But they do have the momentum of figuring out how they want to position their "go to market strategy" though which still makes them very dangerous; much like a wounded water buffalo one must be ready to pull the trigger or get out of the way.


The imagePRESS's successor the Pro C900 is a Hitachi engine (obtained from the Ricoh purchase of Hitachi Printing Systems) with a Ricoh wrapper (fast plastic B2C look and feel). It has obvious Ricoh influences though, odd finishing configurations and odd substrate limitations that are very familiar with typical B2C products. Without time to finish the development Ricoh opted not to use a polymer toner but to use the old fashioned fuser oil process and the slow down the engines speed capability to build it to a price point. This fusing process is the one that we have over the years come to know and love. For the old timers this should bring back fond memories, as many have come to love the glossy, greasy get out your shammy cloth and buff the proof look. Outside of that, the engine has a very good color gamut (very similar to the imagePRESS) and has 8 bit color depth at the 600X600 dpi setting. (Unlike Canon's "multi bit" technology) The engine has remarkable front to back registration and clearly shows that Ricoh is "on to something." A very strong competitor to the Xerox Docucolor series it will challenge and even beat the imagePRESS where its few obvious weaknesses are not the main consideration. Upon a more detailed look the Hitachi influence is pretty obvious. The registration system is something that closer resembles something off of an offset press not a copier, and the systems that monitor quality are obvious improvements "not Ricoh." From beefed up rollers and mechanisims inside the outer wrapper is purely cosmetic. With expanded controller options in the near future and the ability to incorporate all of Ricoh's finishing options this will be a horse to ride in an economy where people want more for less and sellable is good enough.


With Ricoh moving into the production arena full steam, backing this movement not just with the acquisition but in a total refresh of IKON demo floors, infrastructure, finances and personnel. With strong incentives to stay and see the changes through RiKON is positioned themselves to make strong moves on Canon and Xerox as the new product takes hold in the market place. Also for those elite customers that need NexPRESS or Digimaster they will have that to choose from as well as the IBM infoprint roll to roll systems that at the moment is a joint venture soon to be another wholly owned subsidiary of Ricoh are also on the menu. Now with their PPBG (Ricoh production print business group) and IKON (a real production print equipment and solutions distribution system) Ricoh for the first time has some products to sell and a way to market and support them on a global basis.


How long will this take? My guess after watching the launch of the imagePRESS and seeing the state of the C900 today I am thinking that things will be in place to move forward for a strong play by Q3 or Q4 of Ricoh's 2009 fiscal. Also watch for a faster and a slower C900 along with firmware coming shortly to integrate all options on their mid volume line to fit the C900. This will give the C900 a dominant opportunity in the in plant and crd space given its specs and price point.


Where will it all fit in commercial print? We will have to see how everyone perceives the C900. With open houses going on around the country, and very critical trials being pursued as we speak; some of the country's largest buyers of digital printing equipment are trying this new Hitachi technology out. Once they make their decision we will have a clear idea of how well we are going to fare this round. Ricoh with enough stamina and finances to get through several boxing rounds gives me the impression that they will get to see the fulfillment of their new objective. "Become a player in the print for pay and high volume market." With Konica Minolta running tight on Ricoh's heels and niche players poised to be gobbled up by someone for example like Oce it is still anyone's race. And what if Xerox decides to drop this AP platform that is just an extension of worn out technology the race could renew yet again. Although pay close attention though as IKON restructures it may take the focus off of those that understand the production world (those that sold and serviced the Canon's) and replace them with new inexperienced followers of the Ricoh line (mfp, fax and b2c color devices) as part of a realignment that might make sense to someone that has been staring at spreadsheets too long.


It is hard to say how long Ricoh will allow the rogue IKON to continue selling multi brands and non focus products but it clear that nothing drastic is going to change in the short term. Everyone is still trying to convince themselves that it is "business as usual." And in an economic and political time like this makes this whole discussion even more interesting. Canon is still dizzy from trying to figure out how they are going to replace 400 locations and how much they are willing to drain out of their large cash reserves to "buy back" customers that chose Canon products and specifically picked IKON as their service provider; they have a tough row to hoe. If one looks at other mergers to glimmer a bit of history one remembers that Global did not lose the farm but instead grew their market share and did quite well after the Xerox acquisition. RiKON could very well come out stronger than ever. Unlike the Danka purchase by Konica Minolta. (I would guess that the danka.konicaminolta.us will quickly change to kmbs.konicaminolta.us as they have no need for the extra dead weight and reputation that Danka has earned over the years.)


I was there for the Minolta and Konica merger and survived it (2 President's Club Trips and 1 Circle of Excellence Trip) so I know how step children are treated. They are managed to success or simply managed out. With mostly the "Minolta Management Style" left they are a very shrewd and focused group led by a Konica visionary (Jun H.) they will drive hard till they reach their business objective which is to become a "Tier 1 Player." Konica Minolta will press on till they move over one of the Gartner's "4 leaders" or knock one out of the game completely. That was their new mantra as I left to chase the Canon imagePRESS product which now has done a vanishing act from my portfolio.


Gartner has Konica Minolta as a challenger and that they truly are. With a very different "to market approach" they are not part of the "leaders" group of thinking (Canon/Xerox/Ricoh/HP). They are very much out of the box and are non traditionalists that could become a wild card in this program; they are not to be taken lightly. With their 90 ppm engine to be out soon the playing ground will level once again and they will be competing from a position of strength stepping up from their current production platform which has done very well in office, in plant and print for pay markets (both commercial print and franchise print).


As I look at my options which are still considerable (enough to keep me with a headache all the time) I am not sure that I see a clear leader to "jump" to. I suspect that as I look at the different organizations that no one has a truly superior program to the one that IKON has put together and the one that RiKON has adopted. What I have seen is a clear indication from Japan that they intend to move into this brave new world that their direct group was unable to accomplish. Now with IKON in hand they can boldly go where they have never gone before.


So what does the future look like?


Muddy and troubled for everyone in this industry. But for those that are brave enough to stick out this new world of RiKON they will be quick to learn the new vision; we are on a 5 year mission to travel out to distant zip codes, and to seek out new customers, and to boldly sell what no one has sold before. We tip our hats to you Mr. C900 may your silicone oil flow through our veins and your "green" pulverized toner sustain us, and your plethora of finishing options take us to the promised land.


Amen


Just another personal opinion from Pirate "Big Iron" Mike…

(May the rate factor be with you and your credit analyst be "on vacation")