Wrote this on different thread decided to post on it's own.
Here it is as I see it. Been here thru the IKON/Ricoh route a very long time. That being said Ricoh is much better at keeping their strategy plans from leaking than IKON ever was. Anyway here are my observations and opinion why they are splitting into different companies.
I did some reading on the internet and found this is a strategy corporations use to structure units for sell off or to shutter them while insulating the parent company as much as possible.
Martin Brodigan was a very nice man but he adopted a strategy sold to him by consultants. That strategy didn't result in the growth promised. Implementing it Destroyed the companies most profitable income stream TS service revenue.
Ricoh is a manufacture so to stay profitable they need to sell machines constantly. They can't have them piling up in warehouse and loading docks. Honestly they don't care if it sold by Ricoh direct or a dealer. Although if dealer sells they lower their costs of getting it to end customer.
The "Services Led" strategy was intended to lock in the customer to Ricoh by selling them services other than hardware. The thinking was if a single customer had MS, PS, MPS contracts with Ricoh it would be too difficult for the customer to take on a different partner for hardware. As part of this strategy they allowed sales to discount service price without any consent from service. The promise was that hardware sales would grow and cover the service revenue loss. About 40% of deals sold below or near service costs. The equipment sales increases never materialized, so overall revenues / profits were greatly reduced.
Now with COVID shut downs it is predicted that a large percentage of print volume will never come back the traditional office environment.
By splitting off service it would create a situation where Sales is a customer of service. It could create a possibility for them to set up a reimbursement similar to how dealer are paid to service Ricoh accounts.
Super dealers are on the rise again. If Ricoh has a current dealer being bought up by these large dealers they risk their base being converted to other manufacture brands favored by the large dealer. Moving base to dealers they can set conditions and head off some of this from happening.
While other companies were starting to realize there was no margin in MS business Ricoh stepped on the gas as part of the "Services Led" strategy. These services have very low margins except for back file conversion which was what kept them afloat. A typical MS deal is well below 10% margin before management cost are added.
Splitting MS off it will create a sell off position or it could be shuttered like other companies have done.
Although I we haven't seen the pattern where I work. Production and commercial printing is expected to keep increasing. During COVID shut down and the furloughs in our area most of the production techs don't even have a single call to do each day. It's been that way since April. Surely someone higher up has to see this pattern as well. The question is since these are the highest paid service employees will they be spared by the next round of layoffs.
PS is very profitable business but Ricoh is a small player compared to others. I would expect to see some acquisitions to increase the presence in this segment. Solution sales and license fees are very profitable.
Didn't mean to right a book, but to summarize I expect Ricoh to go back to more traditional manufacture / dealer structure. Create a Commercial Print business like infoprint, cast off the less profitable unit by selling or closing them and grow the PS / Solutions unit by acquisition.
I'm along for ride as long as they have a spot for me