As we discussed in the first installment, NAGASA Forum '04 was a big success. Open conversations, networking and a reasonable and businesslike program contributed to drawing more participants than in 2003. But, a revitalized Forum does not mean a revitalized channel. In this second and final installment, we continue to look at the past, the present and the future of the channel as we know it.

End of the Political Wars

Another telling characteristic of NAGASA in '04 was the absence of the "political wars" and those who waged the wars. For many years channel conflict and the cold wars among the large supplies manufacturers for dealer mind share carried over into Forums. This energizing struggle added many attendees but also negatively affected the conference programs. Channel consolidation and rationalization have largely precluded that old warfare from spilling over into this year's meeting. Consequently, while attendance was reduced, the quality and participation in the agenda program dramatically improved.

Yet, as in so many post-war eras, there is the danger of drawing the wrong lessons from the previous conflict. And certainly those who wage wars seldom recognize the harm that the wars caused, regardless of who won or lost.

Regarding NAGASA Forum, the end of the channel wars may have been taken by some companies as the end of any need to meet or talk with dealers or competitors. In Forum '04, the largest manufacturers did not attend.

AGFA was absent though the two top officials of its largest dealer, Pitman, and other significant AGFA dealers were in attendance. Fuji/Enovation, which acquired most of its dealers, was also absent, though four of its remaining dealers were all there and everybody at the conference talked about Enovation. Kodak, now called KPG, sent its dealer relations managers but no decision-makers.

The difference of this year from the past when these large manufacturers sent top executives, many sales managers and their spouses to NAGASA Forums may be the effect of consolidation. The reduced number of competing manufacturers has greatly lessened the opportunity for a competitor to take the dealers's mind share. There is simply no other place for the dealer to go. Or is there?

Some of the dealers are now looking more at private label, or entirely new market segments, such as flexo, wide format digital printers or mid level digital color printers. Their minds may not be up for grabs between the traditional large competitive manufacturers, but their marketing focus, their allocation of resources and strategic direction can change significantly as they determine how to survive. These changes, moving away from the traditional and into the future of print as a as part of the communications mix, may affect the manufacturers more than a "switched" account here or there.

An inescapable conclusion is that some of the largest manufacturers attended past NAGASA Forums and waged their disruptive wars during those meetings, only to prevent their competitors from having access to "their" dealers. The old meetings were noted for jockeying for tee times, golfing partners, dinner reservations and seating arrangements. Conference programs were disrupted by some large manufacturers who were actively pulling people away from the conference programs by holding court at the swimming pool or in private suites.

All that has ended. Yet, it has been followed, not by peace, but largely by the strategic withdrawal of the largest suppliers. What message does this absence say about the suppliers' commitments to sales through the existing dealers? Does the channel really no longer hold relevance for the major manufacturers that are still left standing?

The Shadow of Direct Selling

The conclusion that dealer sales - previously fought for during NAGASA Forums - are now downgraded in priority is verified by the larger industry trends of direct selling. Though millions of Fuji's sales dollars are gained through its five independent dealers, much more is now "in house" through its wholly owned subsidiary, Enovation. Both AGFA and KPG are increasingly selling direct. And the newest competitor, Creo, is largely a direct sales operation as is Heidelberg, neither of which attended.

So what did Forum say about the future of the channel? The make-up of the attendees showed a much-reduced channel whose middle ranks have disappeared. Forum's main speakers painted a bleak picture of the future for offset printing sales and an even more desperate future for their current portfolio of products. Even in the areas where growth was projected to occur, such as with short run digital print, the message was bleak for this group as it was suggested that their customers had neither the infrastructure, nor the sales talent, to make money selling small jobs.

The main offset suppliers chose not to even attend and are increasingly opting to sell direct, and the age-old option of the dealers  to switch to selling another brand  has been taken away by brand consolidation. And the new suppliers, those in the growth world, such as for packaging and digital products weren't there either.

Still, the success of the meeting was real, even though the channel is no longer vibrant, and is splintered into only the surviving sectors. The economic forecast numbers indicate that print in the broadest sense is still growing, while traditional supplies use continues declining. So to become vibrant the channel needs to change focus. This was one of the key messages presented by the speakers. However, this was only one of the key issues that seemed on the table.

Compared to the past, the key issues the most important questions - that the conference probed had little to do with brands any more. Instead, they were strategic issues for survival 

• Whether to sell to a consolidator if the opportunity arises,
• Whether there was a way to add value to existing product lines,
• Whether to make a drastic marketing change toward other imaging products or market sectors, or
• Whether to plan an eventual cessation of business, the classic "milking" strategy.

And while the focus of the NAGASA Forum was on the future of dealers, the unspoken reality was that these questions are equally applicable to the manufacturers and national distributors in attendance and those that were absent.