How Seiko Epson manages to stand out in its core market
Seiko Epson Corporation's Global President Minoru Usui, a highly regarded technologist, is credited with bringing sharper focus to the Japanese conglomerate's operations by selling off parts of the empire where it was uncompetitive - like in semiconductors - even if it meant shrinking the top line. In India recently to celebrate his company's 25th year of operations in the country, he spoke to BT's Venkatesha Babu on how Epson is differentiating itself in its core market from competitors and the road ahead. Excerpts:
Q. In printers, most players have followed a model of giving away the hardware at a low cost and charging heavily for the replacement ink. You decided to upend that model by making the initial hardware a little bit costlier, but the lifetime cost of ownership significantly lower, by cutting printer cartridge prices...
A. In the past, Epson focused on what the competition was doing. In terms of printers, we were looking at competitors like HP, Canon and others. We were trying to make (our) printers a little bit faster and a bit better (in) performance. The fundamental change I brought to the company was to change this approach. Instead of looking at the competition, I decided to focus on how we can meet the expectations of our customers.
We had a wide business portfolio but I decided to downsize the areas where we were not competitive or strong. So we sold or transferred some (of those assets) to other companies. We focused on meeting customer needs in our areas of strength, in Inkjet printers, for example. Customers, especially in markets like India, are very sensitive to the cost of printing, so we decided to change our business model. We wanted people to print as much as they like, without having to worry about the cost.
Thus we developed the Inktank printers, which today has a very strong presence here. That has been responsible for us having a 51 per cent value share in the (Inkjet printer) market. These (experiments) have been very successful, and what I would like to do is take this further. We understand that many customers want to print lots. For them, we have developed a technology called RIPS, which stands for Replaceable Ink Pack System. It is very economical and (prints) extremely fast. So that is another solution we are bringing to the Indian market.
We also want to expand into the industrial or professional printing market. We think there is a huge potential for textile printing and also for signage printing. We want to create a wholesome printing environment, and we are putting a lot of effort to grow our presence. We ensure our printing solutions have very low environmental burden and helps increase productivity of users.
Another area we are looking to grow in is the projectors market in India. We have had the number one projector market share for 14 years (globally), and we are expanding out of our traditional areas like business projectors to the very high brightness ones for auditoriums and interactive projectors for education. We are also looking to expand into robotics and another area is wrist-based wearable devices based on our original watch. We are [then] looking to expand into sports and fitness monitors. So Epson is now expanding into large number of new areas.
Q. For a long time, Epson was seen as a consumer-focused company. After taking over, have you deliberately tried to tweak the model to ensure there is greater presence of industrial, commercial segments?
Yes, we are a consumer-focused company. However, when we assessed the business, we realised that, one, we have to focus on our strengths and, two, we have to focus on market needs. In areas like printing and projection, we realised there was a lot of scope beyond our traditional consumer area. That is why we have put a lot of effort into creating innovation in the business industrial area where previously we had a wide business portfolio.
We used to make LCD screens. We had a sizeable semiconductor business as well, but we lost competitiveness in those areas, so I decided to focus the whole company on the strengths, and expand within those existing domains. That's what we have done in printing and projection.
In India, the situation was a little different. Our people here had actually created a significant presence for Epson in the business area. However, in the consumer area, we weren't as widely known as some other brands, despite having a very wide range of products that I think are actually very suitable for the consumers. I would like to increase our focus in the consumer area. I also want to create new value propositions for consumers even as we continue to focus on the business area.
Q. After you pioneered the Micro Piezo technology way back in the 1990s, what further advances have been made?
A. Inkjet technology is simple. All you do is fire ink at a paper. Laser printing is high quality, but a complex process. We put in a lot of effort to develop ink that matched laser's quality
Back in 1993, there was already the bubble jet technology in the market. However, that technology had limitations, and when I developed Micro Piezo, I wanted to create something that could fire any kind of substance on basically any kind of media. Now, we are actually achieving that and it has enabled us to expand out of our traditional market into areas such as the office and the industrial professional areas.
In areas like photo printing, Inkjet is far superior to laser. However, the one thing holding Inkjet back is the print end. It is the core component of the Inkjet printer. Because there was a certain restriction on the number of nozzles you can get on the print, that affected the speed. We have now developed PrecisionCore technology, which has allowed us to dramatically increase the number of nozzles on the print head, and in addition to that we can actually align them in what we call a line head. It means you can print in one pass which actually will allow us to surpass the speed of laser. Now, you can look at laser printer speed that's around 50 pages per minute (ppm). However, using this precision core technology in a line head configuration, we can easily achieve 100 ppm. So you can surpass laser in terms of speed and also quality.
Q. What are your thoughts on 3D printing? Has it moved beyond being a hobby market?
A. Yes, 3D printing has become a big subject in the market and it's also growing significantly. However, if you look at what they actually use 3D printers on, it's still plastic figures or toys. None of the printers in the market are actually suitable for (mass) manufacturing.
Just as we decided to focus entirely on Inkjet rather than laser, we would like to focus on 3D printing. Our aim is to focus on an area where our competitors simply can't easily enter. We are focusing on volume manufacturing area for 3D printing at the moment.
There are three restrictions in the current 3D printers. One, the type of materials they can fire. It is not wide enough for a manufacturer. Then they are too slow, they don't have the productivity you need for industry, and also they are not accurate enough. So we are looking to make dramatic increases and improvements in all these three areas to produce a printer that can be used in manufacturing situations.
We don't have anything on the 3D printer market at the moment. But we are doing basic developments on the R&D side and hope to have something in four to five years.
Q. You are big in the global projector market, but in India, your projectors business has hardly moved beyond companies, corporations, and has not entered the consumer, home use kind of a segment...
A. Indians love watching movies and there is a great potential in that segment. So this is an area we will really want to focus on and grow our presence in the home consumer and projector markets.
Q. With Epson, you have a strong legacy in watchmaking, but what progress have you made in the wearable segment? What is your positioning vis-a-vis an Apple or a Samsung or any other large players?
A. Yes, we have a very long heritage as a watchmaker. We have a strong watch technology and a good business infrastructure as well. Our idea is to combine this with our unique sensing technology.
If you look at companies like Apple and Samsung, they are concentrating on web connectivity with smartphones. Of course, we understand it's important, but we would like to take a different route, focus on high precision and combine them with wearability and feeling of luxury, while wearing a watch. So that's taking a slightly different approach from those companies.
Q. Epson seems to have more of a hardware-centric approach compared to an app-based or a software-centric approach which an Apple or a Samsung has. Given India's strength in the software and services industry, would the India team be able to help you in the software part?
A. Our focus has been on hardware because that's where our strength lies. Of course, software is extremely important. I have strong expectations from Indian companies because they have many excellent IT solutions. It would be good if we can work with such companies in future to strengthen that side of our business.
A. That is not something we can actually talk about right now. However, companies like that in India, with their excellent IT solutions, can play a big role for us and we certainly would be interested in working with them going forward as we expand our business.
Q. Given the emphasis of the 'Make in India' programme, do you see a significant opportunity for the robotics and industrial automation part of your global portfolio here?
A. Our robots are relatively small that we use for high precision assembly. We developed the robot business initially for use in our own company, then we expanded to outside customers. Prime Minister [Narendra] Modi is putting a lot of emphasis on manufacturing industrial goods, so we have very high expectations of growth in India, even though we are small at the moment. Also, as you know, the software side is extremely important for robots. There is a lot of potential to actually work with Indian companies on the R&D side.
Q. Any plans of a manufacturing facility here?
A.There are no immediate plans. However, as I have mentioned, there is an increasing demand for printers and projectors in the Indian market and the more this demand grows, the more it makes sense to make a manufacturing base here.
Q. You have completed 25 years of operations in India, which contributes about Rs 2,500 crore to your annual revenues. Have you been happy with the progress thus far?
A. Of course, there have been many challenges, but the people here have worked hard to overcome them. The team has actually produced some good results and we are happy with what they have achieved so far. However, there is a lot of potential in the market and I would like them to continue with their efforts. There is a lot of capability for further increasing our presence in India. We have 250 people (approximately) working in India and have high expectations from them in the future.
In four years, our revenue in India has approximately doubled. That means we are looking at 20 per cent increase in a year. However, it has actually been accelerating recently. Till date, we mainly had a sales operation here. However, as I mentioned, as our market grows, it will be more efficient to manufacture products here.
Another area we are considering is software. There are many talented software engineers here whom we can use to further develop on our software base for areas like robotics and wearables. I also have high expectations that in the future, India will be able to contribute to Epson globally on the software side as well.
Q. What innovations are you most excited about (apart from the 3D printer)?
A. What I find most stimulating is developing products that meet customer needs. I would like to develop a printer that could print at 100 ppm or more. Also, in the textile printing area, develop a printer/machine that can replace an entire factory. Another, in wearables area, would be small glasses that people can wear like sunglasses, and a robot that is capable of assembling things using its own intelligence and releases people from manual labour. These are some of the things we are working on.
