Why the fax machine refuses to dieMay 15, 2013: 7:12 AM ET
Haven't used one in years? Seems like few people have, but that hasn't stopped the Stone Age technology from hanging on. Here's why.
By Kurt Wagner, reporter
FORTUNE -- Candy manufacturer NECCO is well-known for the messages printed on its heart-shaped Sweethearts candies. Although the product is old -- the candies started back in 1902 -- the messages have stayed remarkably relevant. (Hearts this year featured sayings like "UR HOT" or "TEXT ME.") So when NECCO eliminated "Fax Me" from the lineup of sayings this year, it marked the end of the phrase's social relevance. But is the actual thing close behind?
A general shift toward e-everything business transactions and well-known fax machine flubs, particularly in the sports world, have drawn the technology's use into question. Cloud services like Box and Google Docs (GOOG) have made it easier for consumers to share files without ever needing a hard copy, and companies are reporting less fax traffic than years past, says Gartner analyst Ken Weilerstein. But while single-function fax machines fall under the category of "tech dinosaur" (Gartner stopped tracking sales more than five years ago), it's this long history that may be keeping the fax machine alive. "It would take a monumental effort by a large group of different people to all agree on a new standard," says Kyle Flowers, Director of Marketing at j2 Global which owns eFax, a cloud product that allows people to send and receive faxes as PDF documents.
Industries like finance, law, and health care have long used the fax machine and continue to do so today, says Weilerstein. Multi-function devices that couple fax capabilities with printing, scanning, and copying remain in demand, and manufacturers shipped 37 million multi-function devices worldwide in 2011 and 2012, a number Weilerstein expects to stay steady. "There are still plenty of fax machines out there," he says. "Something declining in this particular space doesn't mean disappearing by a long shot." Simply owning a multi-function device doesn't mean that users utilize the fax feature, but other services are using more creative ways to keep fax machines up to speed. Cloud-based fax products like j2 Global's eFax mix traditional fax technology with new mobile-powered business services. With eFax as the company's flagship Internet service, j2 Global's subscriber revenues are up nearly 40% since 2010 to more than $350 million.
The fax machine also receives an influx of media attention each February on college football's National Signing Day when many high school recruits send in their scholarship commitments using the fax machine. The University of Alabama, which won the National Championship the last two years, even featured a live stream of its fax machine on the school's athletic website so that fans could (literally) watch the commitments pour in. (In 2011, the school received complaints when a scantily clad coed was responsible for collecting all the incoming faxes for the live feed.) The National Letter of Intent program that governs the process allows recruits to submit letters by email, but many schools elect to use the fax machine instead. "I would love for them to get away from the fax machine," says Susan Peal, who manages the National Letter of Intent program. "[But] you do have the old-school coaches who still want to use the fax machine." In the National Football League, Pro Bowl defensive end Elvis Dumervil fired his agent after failing to fax his contract in to the Denver Broncos before the league's deadline, automatically making Dumervil a free agent. He instead signed with the Baltimore Ravens, bringing his pass rushing skills (and his new agent's faxing skills) with him to the defending Super Bowl champions.
Despite his belief in the technology's short-term relevance, Weilerstein won't take a stand on the fax machine's long-term future. Austin Allison, a former realtor and current CEO of Dotloop, a company that automates the real estate transaction process by moving interactions and contracts to the cloud, is more outspoken about the future of the fax machine, predicting its death in the next five to 10 years. "The last 30 to 40 years or so have been about us going from physical to digital," says Allison. "The fax machine really doesn't fit into that equation." Of Dotloop's more than 600,000 real estate customers, only 1.5% use the system to send faxes, he says. Long-term future aside, the fax machine has entrenched itself into the fabric of current business operations. "As long as businesses have some customers who require [faxes]," says Weilerstein, "it doesn't really disappear. The demand clearly decreases, but that doesn't mean you can pull the plug on it."