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This story by Barbara Fox was published in U.S. 1 Newspaper on August 19, 1998. All rights reserved.
Postal Meters: Out with the Old
The postage meter problem is a miniature version of the Year 2K problem. If you have been an ostrich up to now -- if you have failed to replace your mechanical postage meter -- you could find yourself losing some money. But unlike the Year 2K dilemma, the meter problem is easy to fix. Just turn in your mechanical meter for an electronic one.
"I'll wait 'till I'm good and ready," you say.
Bet you didn't know that, after a certain as-yet-unannounced date, you won't even be able to get a refund for the postage on the meter you now own. "We urge you to remedy this situation and convert now," warns Wayne A. Wilkerson, manager of metering technology management for the United States Postal Service, in a remonstrative letter last month.
Why are these postage meters being decertified? More than $21.5 billion or 37 percent of all postal revenue went through postage meters last year, and the Postal Service claims losses of $1 billion to $2 billion annually in postage theft. Pitney Bowes disputes that figure. But for competitors to Pitney Bowes, which has 86 percent of the postage meter market, this decertification is an unparalleled business opportunity.
One insider estimates that Pitney Bowes had 700,000 old-style mechanical meters in use -- a lucrative profit center -- and that it has replaced 400,000 of them so far. December 31 is the deadline to replace the "systems meters" (those with automatic feeds and speedy settings) and March 31 is the deadline for the lower speed or "stand alone" meters.
"Over 70 percent of our mechanical meter customers have already made the transition to electronic meters," scolds Wilkerson. "If you wait until the last minute, you risk experiencing delays in the delivery of your new electronic meter due to high demand at the end of the year." (This sounds more and more like a Y2K threat). "The Postal Service will be setting a date in the future where we will not reset any mechanical meters, accept mail from mechanical meters, or offer refunds for postage remaining in mechanical meters."
Customers of Pitney Bowes are referred, in this USPS letter, to the 800 number for their particular Pitney Bowes machine. A previous letter, addressed to all postage meter users, included the names of all four postage meter suppliers, and this caused a tumult over just who owns the customer lists.
Pitney Bowes lodged a loud objection because it has by far the largest customer share; the French-owned Neopost, the Swiss-owned Ascom Hasler, and the German-owned Postalia together serve just 14 percent of the United States market.
Neopost is number two, says Steven Pietz, marketing manager of the firm with United States headquarters in Hayward, California (http://www.neopost.com). "Here our market share is just under seven percent, up from 1993 when it was 5 1/2 percent. But worldwide we are the leader."
If Pitney Bowes had 700,000 machines to replace, Neopost had less than 5,000 to change, and Pietz says that's because Neopost made the switch in 1979. "We were the first to bring an electronic meter to market. We also introduced the first electronic scale and first interface to an electronic meter. Our share of market has grown over the last two years as a result of the decertification process. We didn't have to take a meter out to put a meter in."
"We're now seeing the final phase of meter migration," says Tom Hazel, area sales manager and certified postal consultant at the Pitney Bowes regional office on Phillips Boulevard, which covers Mercer, Monmouth, Middlesex, Ocean, Hunterdon, Bucks, and Lehigh counties (http://www.pitneybowes.com). He has worked for the firm since graduating from Spring Garden College in 1983.
As long as you have to turn in your mechanical meter for an electronic one, you might as well get one that can be remotely reset. The Postal Service is pushing for this strongly, and Pitney Bowes has cooperated by pricing both kinds -- the remote resets and the manual resets -- the same.
The least expensive "stand alone" electronic meter at Pitney Bowes costs $46 a month. That's the kind where you feed each envelope into the meter itself. Other models can seal, weigh, and automatically account for how much postage each department or client is using. Neopost offers a similar stand alone meter for $28.95 per month, $33.95 with a built-in calculating scale.
The remote resetting works like this: Go to your touchtone phone and key in three codes -- your serial number, your account number, and your access code. You get a code to put into your meter and Voila! You have postage. "Our system is infallible," says Hazel. "It was designed in the early '80s and has never been tampered with. It won't let you dial the wrong thing in."
You can pay for the postage by drawing on an interest-bearing account held in your name by the USPS. If you don't have money in your account, Pitney Bowes will advance the money for a $15 fee or one percent of the transaction, whichever is greater, and they will wait five days for your check to arrive.
Neopost allows you to reset your meter without advance deposits. With "No Deposit Postage Oncall" you keep your money until you need more postage and then it is debited from your own account. "You don't have to make prepayments or write checks; you have complete use of your capital when your money would otherwise be in escrow," says Pietz.
Another competitor, Ascom Hassler, has a meter that you reset by plugging into your fax line or any dedicated line. This streamlines the punching in of information. This firm also touts its printer cartridges that last longer than inkjet or thermal printers.
Don't think you can buy up a lot of postage on your meter on December 30 and happily use it all next year. "That happened once," says Hazel, "and they are not going to let that happen again. They want all meters removed entirely." Hence the threats that you won't even be able to get a refund on the postage on your old meter.
"Barcoding is our hottest selling product, because it allows customers to take advantage of postal discounts," says Hazel. Barcoding discounts apply to 500-piece first class mailings and 200-piece third class (standard) mailings. A barcoding envelope printer is the size of a regular printer and does not do the metering job. Pitney Bowes barcoders use an ink jet system (laser printers would end up sealing the envelopes with heat) and start at $275 a month.
Next month Hazel will launch Docu-Match, the size of a large floor-standing copier. "At $2,000 per month it will do everything: create the document, the envelope, fold the document and insert the document in the envelope," says Hazel, and it can be used for marketing letters, invoicing, payroll checks or accounts payable checks. The launch is Wednesday, September 23, from 9 a.m. to 5 p.m. at 300 Phillips Boulevard. Call Hazel at 609-896-9601.
Though December 31 is the deadline to replace a systems meter, the users of stand alone meters can procrastinate until next year; March 31 is their deadline. How to tell the difference? A systems meter sits on a base that transports the letter so it can be printed at varying speeds. The base can feed the letter automatically, put the indicia on, seal the envelope, and stack them. You can own a base, but you can't own the actual meter. A stand alone meter is just the meter; you feed it and pull the levers by hand.
"We're in the age of technology and it is being used to the utmost," says Hazel. "The accountants are out there trying to take advantage of today's technology to recoup or generate additional revenues."
Who are the laggards? "Companies afraid of technology," says Hazel.
-- Barbara Fox
The condemned mechanical meters have wheels that show the ascending and descending registers. The electronic meters have liquid crystal displays and are controlled by microprocessors. All the mechanicals must be replaced by the electronic, but not necessarily with remote reset capabilities.
Wayne A. Wilkerson, manager of metering technology management, offers some "compelling reasons to consider a remote reset meter now."
This page is published by PrincetonInfo.com -- the web site for U.S. 1 Newspaper in Princeton, New Jersey.