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THE CUTTING EDGE: FOCUS ON TECHNOLOGY

Internet Age Fails to Make Faxes Obsolete

Technology: Businesses still need to send documents across phone lines; and the machines are becoming cheaper and smarter.

October 23, 2000|MIKE MUSGROVE | WASHINGTON POST

Once upon a time, the shrill tones of the fax machine were supposed to be the death knell for the courier industry. The document-sending technology seemed such a threat that FedEx tried to come up with a competing system, called ZapMail, to thwart its success.

ZapMail never caught on, but FedEx is very much alive and kicking. And so is the fax industry, despite predictions that the advent of the digital age would do away with the need for people to send paper copies of their documents across telephone lines.

Fax machines remain such a fixture in most offices that several online companies are trying to make a business out of enabling people to fax their documents to a Web site--creating a kind of bridge to the technological divide.

"A lot of people predicted e-mail and the Internet would have a negative impact on the fax market, but we've found it really hasn't," said David Haueter, an analyst with the market research firm Gartner Dataquest.

The fax has survived by getting cheaper--much cheaper. In their heyday, in the 1980s, fax machines averaged $2,000--with a few bare-bones models selling for under $1,000. These days, many models are down to $100 or $200. Three major manufacturers who specialize in fax machines in this range--Sharp, Brother and Panasonic-- each sell more than a million units a year.

To be sure, the percentage growth of fax sales has cooled off since the late 1980s, when the machines first caught on. Back then, the number of fax sales exploded from year to year: from 187,500 units in 1986 to 417,200 in 1987, to 785,000 in 1988. The fax industry will probably never see growth rates like that again. Still, Dataquest forecasts that the market for fax machines will be about 5.75 million units this year and about 6.4 million next year, due in part to growth in the number of home offices and telecommuters.

Even some cutting-edge Internet companies find it difficult to do without the "old economy" technology.

"It's used as an extra communication tool," said a spokesman for MicroStrategy Inc., a Vienna, Va.-based software company that helps companies extract information from large corporate databases. "Just about everybody has e-mail now, but sometimes you only have a hard copy of a document."

Finding new market niches and luring customers with low prices isn't the only way the fax industry is fighting to stay relevant; many new models now double as scanners and copiers. Some companies are updating their fax machines to include e-mail services.

New models from Hewlett-Packard, Konica, Xerox and Panasonic, and a forthcoming unit from Sharp, will let users punch in an e-mail address. Send a fax from one of these machines to an e-mail address, and your document will end up in a recipient's inbox as an attached image file.

A number of Web companies are counting on the fax industry to survive. Krishnamurty Kambhampati, co-founder of UReach.com Inc., said his company provides transition technology between people with faxes and people without faxes. Using a calling-card pricing plan, customers can give out a UReach number for their faxes and check their incoming documents at the UReach fax Web site. Customers can choose to be alerted by an automated e-mail or phone call when a fax arrives.

"A big part of our business is moving faxing off of fax machines," Bill Fallon, vice president of business messaging services at Mail.com, which provides a similar range of services.

Fallon sees a lot of his company's worldwide business coming from industries that are just becoming tech-savvy. "Fax is very much a technology that's still in its heyday in certain industries, such as manufacturing and transportation," he said. "Every time a truck enters or leaves a loading dock, there's a whole blizzard of paper that follows it around."

Even with the popularity of the Web and its promise of high-tech, paperless solutions, many analysts believe the fax machine has staying power.

"Despite the notion that Web business exchanges will put fax out of business, anybody that thinks it's happening today is probably 20 to 30 years early," said Peter Davison, fax research manager at International Data Corp., a market research firm.

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