Office equipment is expected to remain a buyer’s market for the next few quarters as a result of macroeconomic conditions, which are reducing the demand for devices such as printers, copiers, fax machines, and multi-functional devices (MFDs). These conditions have caused office equipment sales to deteriorate throughout 2008 and 2009, with no upturn anticipated until later in 2010.

Even when the economy rebounds, the office equipment market is not expected to return to 2008 volumes for the foreseeable future. Growth in the market when is does return, will likely be driven by MFDs which currently comprise 70 percent of total office equipment devices sold in the U.S. in 2009. As a result, suppliers are likely to stay aggressive to maintain current market share, which will serve to support the attractiveness of larger sourcing events, in particular for MFDs.

The trend towards market consolidation continues to evolve as suppliers look to expand global coverage and product breadth. Over the last few years, Ricoh acquired IKON and Konica Minolta purchased Danka, with both instances increasing the reach of these OEMs through acquisition of channel partners. Additionally, in 2009, Canon indicated its intent to purchase Océ to increase its product mix and service offerings. The market has limited organic growth opportunities for suppliers as the market continues to consolidate. As a result, global enterprise buyers typically have significant leverage as OEMs vie for a larger piece of the market.

Buyers should take this opportunity to engage in cost savings initiatives beyond pure sourcing, such as demand management exercises at both the device and print/click level. Optimization and print reduction initiatives can augment the considerable savings that a company-wide sourcing exercise already yields. Buyers of MFD’s can expect to see savings in the range of 14-22% when competitively sourcing this category.

Shawn Fronzaglia is a category manager in Ariba’s Global Services Organization.