Having spent over 20 years in that industry, I can state the end is near.
It is being reported that Xerox is looking into buying HP, a company three times its size. Keep in mind this is the HP that is the printer/copier company and not the one that deals in software and other IT related products.
This is a common move when an industry is mature. Companies are looking for growth and, since they cannot get it organically, the only way is to buy it. The bottom line is enhanced since the two companies can shed a great deal of payroll due to overlapping divisions, mostly from support lines.
Since 2009, in the United States, paper sales for office devices has consistently fallen. In the past few years, the pace accelerated. This has led to a decline in the number of "clicks" on maintenance contracts and lower parts/supplies sales.
We are seeing a shift in how business is done. The world is a lot more digital than it once was. Information is shared and stored electronically. This is something that is only going to increase as baby boomers (the paper people) exit the workforce. Millennials are moving into positions of authority meaning they are apt to eliminate the old methods completely.
I took a look at all the manufacturers numbers for the last quarter and they are abysmal. Across the board, they were down. The YoY numbers are all in the red. To me, this comes as no surprise.
As one who was in the business, I can assure you there are many who refuse to see what is going on. They are completely blind to the situation they find themselves in. I do not know if it is a psychological situation where one just blocks all reality out so as not to have to deal with it or what it is. Regardless, there are many who are going to be caught off guard.
It is interesting to see Xerox go on the offensive. Last year, they laid of thousands of workers in a couple different phases. This is not exactly a company on solid footing.
Again, this is not a surprise since it is an industry in decline. Technology along with a shift in demographics, two situations I repeatedly warn about, are making these companies obsolete.
I pegged the major impact (on the downside) within this industry to occur within 3 years. By the middle of the 2020s, we will see this as a shell of itself. Perhaps Xerox is trying to become the "Best Buy" of the office equipment industry. There is value in being the last one standing.
That said, consolidation is certainly going to take place. When the pie keeps getting smaller, there is not enough room for everyone. Xerox swallowing up HP means that there will be one less player to slice up the pie.
The only question remains as to whether the consolidation can outpace the industry decline.
There is no doubt in my mind this is the beginning of the end. When the major players start to buy each other out, the writing is there for everyone to see.
In the end, being the last standing could be of benefit. Of course, that did little for Blockbuster when the video rental business ate it.
This is what technology does. As we develop more powerful innovations, the disruption will only continue on a greater scale. Those who are into investing need to be very aware of this fact.
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