The below is an expert from the Virtual Panel Series #3: Disruptive Behavior.
Our panel of experts, including LEAF’s Nick Capparelli, discusses the impact of A4 on the dealer channel.
By Scott Cullen
This month our virtual panel focuses on a single topic – A4. It fits squarely into our diversification theme if you initially sold A3 before diversifying into A4, even if “It was long ago and it was far away and it was so much better than it is today” as Meat Loaf sang in Paradise by the Dashboard Lights.
We’re not going to get into a debate if it was better in the A3-only days, but this is an A3 and A4 world, and like it or not, A4 is on the rise and there’s no stopping it now.
With that in mind, we approached some of the industry’s top thought leaders, including Nick Capparelli, Managing Director, LEAF to get their take on what is happening in the A4 space.
Do you foresee a time when A4 sales will supplant A3 sales in the independent dealer channel?
The timing around this is of course dependent on what the future holds as the world makes its way through the current crisis. But as page counts continue their decline and the perceived value of printing lessens for a lot of applications, I think it’s inevitable that A4 will take an increasing share of the market opportunity in the independent dealer channel. You’ve also got to consider who’s making the purchase decision now – increasingly, it’s millennials and even Gen Zs for whom print has always been less important. For now, A3 still leads, but the shift is definitely occurring, and at some point, we’re going to see A4 take a dominant position.
How is your company preparing for a future where there will be fewer A3 products moving through the channel? Or are we being premature asking that question?
I don’t think you’re being premature at all in asking that question, especially considering the extraordinary challenges we’re all facing right now. The shift to A4 is happening and will continue to happen at an accelerating pace as A4 devices become more advanced in a time when businesses are more eager than ever to reduce print costs. With the crisis we’re currently seeing, I think pressures on A3 will further increase. As a company, we’re here to support imaging industry dealers and customers with finance options that give them more flexibility regardless of their current needs and plans for the future, whether they’re focused more on A3 or A4.
The economics underlying finance transactions are always changing and the increase in A4 placements could mean additional challenges as dealers and finance companies navigate this uncertain time.
Will an increase in A4 placements affect leasing rates due to the loss of revenue in the recovery process because the returned A4 MFPs will have no value?
The economics underlying finance transactions are always changing and the increase in A4 placements could mean additional challenges as dealers and finance companies navigate this uncertain time. Another factor is that the sales model itself is changing as demand for as-a-service solutions increases. More and more businesses are opting for the cost savings and versatility of this model, which we’re supporting with finance plans that give businesses better control over cash flow and budgeting while helping to drive predictable ongoing revenue streams for dealers.
What factors may have a positive impact regarding the value of future A4 devices at the end of a lease?
Resale value for A4 devices on the secondary market has always been a challenge, but the fact that many of them can meet business MFP needs with lower costs and reduced space requirements make them a really appealing option in a time when cutting expenses and saving space are such priorities. The need to work remotely could increase demand for A4, especially for multifunction devices that can be ideal for home workspaces. Though businesses are working remotely by necessity, for the time being, it won’t be surprising if many of those same businesses continue doing so, to at least some degree, by preference due to lower costs, higher productivity, and increasing employee demand.
Original version published in The Cannata Report’s April 2020 issue and on thecannatareport.com.