In Software Imaging 35+ years history there have been many rewarding experiences with our customers.
Today we want to share one of the most memorable. We hope that our experience can be useful for anyone who wants to run or is running their own business.
Back in 2022 there was a new distribution contract with Ricoh in Japan.
In the 1990s, we were already supplying PCL 5c printer drivers to Ricoh in San Jose, California for Windows 3.x/95/NT4.0. In 2001, we provided a particularly good update for a new fast colour printer for demonstration by Ricoh at CeBIT.
Encouraged by this modest success, Peter Lismer, Founder Director, and his technical director approached Ricoh head office in Japan to negotiate a fresh agreement. This was welcomed by Ricoh and to our surprise the Ricoh director, responsible for printer software, asked if we could quote for PCL 5c/XL/5e drivers for a wider range of monochrome and colour printers and MFPs and to supply our Driver Development Kits (DDKs) for their development sites in Tokyo, Shanghai and San Jose.
How It Happened
We had no idea at the time how long Ricoh would wish to distribute our drivers. We therefore took a chance and quoted royalties based upon a committed period of 3 years; totalling USD14m based upon Ricoh’s own shipment estimates.
The next thing we heard was that the Ricoh director in Tokyo responsible for this negotiation wished to visit Peter in our Oxford office. He told us how much he wanted to visit our beautiful university city – therefore we were naturally doubted if he was meeting us to further the negotiation.
The challenge (Kōshō)
After the first day of meetings Peter Lismer was told by the Ricoh Director that he had been authorized by his Board to offer us USD10m.
We were thrilled by this offer as there was no additional development. The DDKs were already released, well tested with other customers, and evaluated by Ricoh.
How could we negotiate the difference of USD4m between our quotation and Ricoh’s offer?
The relationship with the Ricoh director continued to develop very well in the 2nd day of meetings and just before leaving for his flight back to Japan, the Ricoh director agreed to split the difference and pay us USD12m!
This became the largest distribution contract in the history of our company. Happy end is always needed, but this was not the end of this story…
The distribution contract was based upon the annual licensing of the individual DDKs, annual maintenance contracts and royalties on the shipment of the printers. The contract also required Ricoh to prepay the royalties in large blocks of licenses prior to shipment. In the first 3 years, Ricoh could not exceed a pre-agreed quarterly shipment volume without purchasing further licenses for any excess in the quarter – despite paying USD12m.
The surprise for Software Imaging, was not only that the shipments commenced just 6 weeks after the distribution contract was signed in January 2002, but that the contract would yield over USD20m in royalties in the first 3-year period and not just USD 12m as forecast by Ricoh. The contract would go on and yield nearly USD60m for Software Imaging.
Peter Lismer, interpreted this success as not only being a testament to the quality of Software Imaging’s engineers and their printer software but also demonstrated how our software could shorten the time to market for our customers who had typically taken more than a year to release new printer models with new driver software developed elsewhere.
The Ricoh director invited Peter Lismer and his colleagues to visit him in China in 2005 when he became the CEO of the Ricoh Software Technology company in Shanghai. Ricoh showed their gratitude by providing our party with wonderful hospitality and a 3 day bus tour of beautiful regions surrounding Shanghai. The Ricoh director, now retired, and Peter remain lifelong friends to this day and meet regularly to reflect upon the success of Ricoh’s printers and MFPs based upon the close partnership with Software Imaging.
Success is not a destination, but the road that you’re on.