This is an independent insider view by Chris Jordan published by the the graphic communication network GrafKom.
There have been several very exciting times to be in the printing industry and this is one of them. Whenever there is significant change there is opportunity, and we are either already in or just entering a time of change.
Many people ask what will the printing industry look like in five or ten years time. How much will it change? The answer is it will be almost unrecognizable, or will change as much as the automotive industry will change. In automotive we are all expecting autonomous self drive cars, and for them to be battery driven. In the printing industry the equivalents are inkjet, fully automated workflow (hands free and cloud based) and real Business Development. The changes in organizational structure, both at suppliers and users will also be considerable, with adaptability being key.
The last five years and particularly the last fifteen months have seen a huge number of announcements relating to inkjet presses, the products, technology, ink, substrates, features and the partnerships. In mid 2017 the number of new announcements feels like it is increasing.
This white paper aims to fill some of the gaps that the suppliers, analysts and journalists do not normally highlight.
This year several of the manufacturers that will ship their first inkjet presses have announced beta or first installations including Landa, EFI, and Heidelberg. The list and number of products, and new models increases from the market leaders (installed presses) Canon/Oce VarioPrint and HP Indigo and T Series probably taking this year’s total global shipments (depending on your market definition and products included) to 500 plus. From a suppliers perspective this number is however relatively small, and one of the challenges they face is how to get back their development costs and other investments in the face of a large number of existing competitors and increasing models, constantly updated inkjet heads technology, substrate, material and new inks. The other challenges they face are (1) their sales skill level in selling $1million plus presses with associated workflows, linked with a centralized or country based approach and (2) financing.
The cultural diversity of the suppliers and their revenue also has a significant impact on how quickly their products are developed and come to market. While for several their experience of the digital and or printing press world is relatively short, experience of and revenue reliance of many years of selling digital presses is a distinct advantage, as it is very different from selling offset devices, and or workflow and DFEs. The companies whose revenue and whole businesses “Live and Die” in the digital world will have a significant advantage. For those entering this world their centralized or decentralized corporate structure and speed of decision-making, attitude to business and selling, not to mention technology development, could be in for a wake-up call.
Japanese, German, Israeli, and US management teams and development groups are very different, as is their motivation and speed of delivery. The next five years will be very testing for all of the suppliers management teams. I expect more mergers, cooperation, and partnerships, some of them short term, and probably a number of casualties.
EFI and HP both have management teams that are good at making quick decisions even if they are sometimes wrong. Like many of the world’s top sports people, they do not dwell on the past but put all their energy into the future.
Financing these expensive and relatively short lived models may also be a challenge as many of them have a higher list price than any other products in our industry with the exception of offset presses, and these inkjet presses have a lot of in-built obsolescence, like many of today’s technologies including Smart phones. In fact I expect to see many inkjet press suppliers introducing a new or significantly enhanced press at least as often as Apple introduces a new iPhone.
The range of opportunities for these new inkjet presses is however bigger for the digital suppliers than it has ever been, and therefore considerable resources will be committed to maximizing the opportunities.
Users: Printers, PSPs, MSPs, Outsourcing and Print Managers.
What a great time to be in this industry. Digital printing, inkjet presses and finishing devices are exploding the number of opportunities. For of course those who are open to new ideas can write a simple business plan, negotiate and have a good relationship with one of the many digital press suppliers.
Traditional thinking for suppliers and users alike is unlikely to bring success.
That is not to say that all the existing technologies from offset to toner based digital presses will die, in the right hands they will prosper. But the majority have been expanded, developed, redefined and enhanced over many years, and the great majority of new opportunities passed. They no longer offer the massive number of new opportunities that inkjet offers and will continue to offer, and for the suppliers selling them it will become increasingly difficult, as the market shrinks further.
For many existing printers the number and speed of introductions and operation of these new devices maybe challenging. The dynamics are I believe for the first time in a while in favour of the user, however big or small. Because there are so many new products coming to market at the same time with such high list prices, those users who know what they want, how to negotiate and what to ask for can become an early adopter or innovator, They can work very closely with a trusted supplier, and learn how to take advantage of the new opportunities.
Suppliers Know The Traditional Market Size
Most of the suppliers in the majority of countries have identified the number of potential customers for their new inkjet presses prior to launch.
All suppliers believe they have the best product and technology, but for all of them this new inkjet press market (including the existing leaders) is a huge learning curve. Similar, if you like, to the new rules in F1 in 2017, which means existing leaders are under threat or attack, and will have to prove themselves again and again. The companies with existing extensive management, technical, marketing, and sales digital press sales knowledge have an advantage, but without exception they all have to prove their new products and are looking for cooperative users to be test, trial or beta sites in several countries. Many of the printers who had early Indigo, Xeikon, or Xerox production engines will know that if you are an innovator or early adopter there will be teething problems and challenges, but that what you learnt in those early weeks, months and years gave you an advantage over your competitors and enabled you to make very good margins. The same will be and is true of the new inkjet presses.
I know there are good deals to be done because the suppliers have to, after the initial trials, maximize their sales and establish their credibility.
The dynamics of the market including upfront cost, and cost of ownership and the number of new products coming to the market will strengthen the hand of the user / printer and will allow some small companies the opportunity to “trial” a new inkjet press that they would have thought was beyond their reach, and wildest dreams.
Deciding on which supplier to work with?
The question that many people have asked when they understand there is opportunity, how do you decide which supplier to talk to and which product should I go for?
Trust, support, an existing relationship, financial clout, flexibility of payment options, ongoing upgrades, automated workflow, and actively working with you and your sales team to take advantage and tease out the new opportunities with your existing and new customers. Your existing user experience, either as a screen printer, superwide printer, and marketing service provider should help you decide which market segment and product to go for.
Inkjet rather than toner, another new technology to learn. Do your staff have the right attitude and approach to change and learning? Have they already helped you change to new products and maximize the new opportunities? For many employees this is difficult to take and adjust to.
All manufacturers, suppliers and major resellers have their own or external finance companies that they work with.
The access to new ways of financing these new presses is vital to both the seller and user. Particularly so that the suppliers can write off their technology investment and continue to invest in developing their products be it inkjet heads, new inks, substrate certification, and paper path enhancements.
Cost of loans
Money, the cost of loans and their availability has never been cheaper. This means that new innovative “cost of ownership” structures can and will be available otherwise several of the major inkjet press suppliers are going to be very disappointed with their sales.
The UK automotive industry and how the financing of most cars has changed during the last decade should be an example to all the users, suppliers and their finance departments and companies. Over the last ten years the financing of cars has changed and significantly grown in the UK for private motorists. 90% of owners now use inexpensive private finance, which means most people can now afford a far more prestigious and expensive car than 10 years ago, and this has considerably and consistently grown the market during a tough economic decade. The UK market is now approximately 6,600 cars being financed this way every day.
Although finance companies and suppliers will not want to make their financing more flexible with different ways of paying, if they do then the total sales of inkjet presses could outstrip all forecasts, and mirror the growth and success of the UK automotive market which was also against all expectations.
Get the finance right and the shipments of inkjet presses could quickly climb into the thousands rather then being in the hundreds as expected. Obviously several things need to happen, but cost of ownership is one major logjam for many printers who would like an inkjet press.
Financing the NEW digital niches
Most suppliers have identified the areas of new industrial opportunities including packaging, carton packaging, ceramics, textile etc and know or have decided which of their technologies and products will deliver the necessary benefits in specific niches. As more and more products come to market, and the technologies begin to mature many of the niches will obviously grow. There is an opportunity for all of the suppliers to grow specific niches, by offering advantageous and new types of finance, and business development tools. Very few suppliers are likely to take the finance cost onto their books, or offer special finance terms for all areas or niches, but there are obvious company and niche combinations, particularly for companies entering new segments or markets. An example of this is EFI offering special financing, and or workflow options, or business development for their new carton-packaging product the Nozomi C18000, or Heidelberg for the PrimeFire 106, Landa for their new engines, or Konica Minolta for the AccurioJet KM-1.
Suppliers: their strengths and weaknesses.
For users, who they purchase from is often determined by product price, cost of ownership, product specification, and the market it is designed for. The inkjet press market is however more competitive, developing faster with more suppliers than is normal in this industry and a look at the different suppliers, their main strengths and weaknesses, may help users with their decision making process. This is not a complete list of all the inkjet press suppliers, but includes all the movers and shakers.
Canon’s acquisition of Oce several years ago primarily for their inkjet development is bearing fruit and with the VarioPrint range, they are one of the established leaders, with 600+ installs.
Only a small part of Canon/Oce’s overall revenue comes from Graphic Communications and the Production Printing team depends on Canon continuing success in other markets to be able to continue to invest. When Canon re-entered the Graphic Communication industry in 2007 with the imagePRESS range, as an organization they struggled to penetrate the market due to a lack of in-depth expertise. The Canon acquisition of Toshiba Medical will impact where their main focus is, as the potential in that market is greater than in Graphic Communications. As is the recent acquisition of the Swedish Camera company, Allwas for $2.5 billion.
EFI’s $1 billion revenue is one of the lowest of any of the suppliers aiming to compete in the inkjet press market, where development costs are very high. They are however 100% focused on digital print, but will be competing with a number of their Fiery/Vutek OEMs, including Canon, KM, Ricoh and Xerox. On the plus side, EFI have continued to grow and be profitable during the tough post Credit Crunch years, and have by far the best acquisition team in the industry. Their workflow particularly, including the Fiery, MIS, and w2p makes them the No1 supplier. The start-up mentality that they have had for many years gives them an edge when it comes to decision-making. Their announcement and delivery of the Corrugated Packaging Press Nozomi C18000 is a major move for them, and at a rumoured cost of between $2.5 – $3million, their most expensive.
Although they missed their $1 Billion 2016 target, I would think their aim is $2 billion by 2021.
One of the early inkjet developers and able to deliver a well-regarded product in the JetPress 720S. As the competition increases it will be good to watch how their products develop. They are well able to compete in the digital market as well as in the more traditional areas of the business.
Their product combination of print heads, aqueous, UV inks, and image optimization technologies are at the heart of several of the industry’s leading inkjet production systems, including the Jet Press 720S and Heidelberg Primefire 106 in the commercial and packaging markets, and the Onset X in the wide format market.
Indigo were one of the three companies that started the digital production business more than twenty years ago, and of the three, Xerox and Xeikon being the other two, they are definitely one of the leaders in the inkjet revolution. They are the largest of all the companies by revenue who compete in the printing industry with a $44 billion revenue, and even if only ten percent of this revenue is from printing, it still makes them the biggest and a very successful supplier.
Their expertise and knowledge is valued by many including HP, Landa, and Xerox who are using their transport technology in inkjet presses. KBA will also sell a combination KBA/Xerox Impika press aimed at the growing folding carton market.
Recent financial challenges are still causing them problems, and their change of direction re the sale of their Prosper Inkjet business does not help their credibility.
Having visited their inkjet facility to see Prosper in 2008, the question always was, can they move from hand building test units to production inkjet engines at the right price? This should be a lesson to all moving from lab machines to betas, to building production presses with the right level of reliability, consistency at an affordable price.
They have however shown great persistence with Nexpress over fifteen years.
Konica Minolta was the fourth company to introduce products and compete in the digital printing market in 2004, and they are also part of a much larger group with a $13 billion revenue.
A 40% acquisition of MGI digital finishing specialist, and launch of the AccurioJet KM-1 B2 digital inkjet press now with 10 installs will no doubt help them to achieve their aim to increase their production printing business to $3.2 billion by 2020.
From Indigo to Landa. First show was at Drupa 2012, followed by a new show at Drupa 2016. Well-financed and connected with great engineering attitude and application, but still not delivered their Nano technology in a product. It is already proving more difficult than it was with the Indigo in 1994, and the competition will be tough. Great installs needed for ongoing credibility.
Heidelberg’s re-entry into the digital market after selling Nexpress control to Kodak more than 15 years ago is welcomed by many. Although many of their more recent financial issues are behind them, and their digital strategy looks good. Apart from selling Ricoh engines they have limited digital experience and as a company they do not depend on their digital sales for significant revenue, so are they really committed? The digital press market has never been as competitive as it is now, and Heidelberg will find the competition very tough, and need to be able to make quick decisions like EFI and HP, be very adaptable and quick on their feet. Three Primefire 106 installs due to take place this year.
Ricoh’s entry into the Graphic Communications Production Printing market in 2008 was a great addition to the existing supplier list. As with several of the suppliers this is a small part of their overall $22 billion business, and they depend on success in other areas for continued investment. Like many of the suppliers (HP, Kodak, Xerox,) they are going through a tough time right now, which may put the necessary investment at risk. In 2014 they introduced the Pro VC60000 inkjet press range and have installed more than 60 units since.
Which is part of a $2.3 billion revenue group has a range of inkjet products for wide format, labels and presses. Although not one of the most obvious companies to work with on inkjet presses they first showed their TruePress product at Drupa 2008, and have been shipping for many years with good ongoing development.
The new Xerox is split into three parts, Graphic Communications being the smallest. As one of the first three digital production press suppliers, many saying they were the first, they are steeped in knowledge of the production printing and press market. Have their own workflow (FreeFlow) and owned XMPie (leading Cross Media/Multi Channel Marketing provider) since 2006. Their existing range of production inkjet products Rialto, Brenva, Impika, and Trivor has been shipping for several years. They are playing catch-up in the inkjet market when compared to their major competitor HP, but as they are now no longer focusing so much on other markets they should start to be the major digital inkjet production press supplier they once were.
Xerox recently sold a base part of their FreeFlow workflow, the FreeFlow Print Server to EFI for a rumored sum of $20m. Although in the short term this looks like a good move, in the medium to long term it may have significant consequences as they may have to choose between an EFI based workflow, and an XMPie workflow, and the two are highly competitive.
One of the original production press toner based suppliers with a great deal of knowledge of the printing and packaging market, going back to 1993. In 2015 they were acquired by The Flint Group that has revenue of $2.9 billion.
It is a very exciting time to be in the printing industry.
The opportunities for printers of all types and sizes to take advantage of the new inkjet niches is considerable. With more than twelve suppliers operating with new packaging and industrial inkjet products, printers should grasp this moment to go and talk to suppliers about how they can help them.
What everyone has to answer, is how to “Create Customers In Competitive Selling Markets?
About the author
Chris Jordan is an independent analyst who spent 30 years working for suppliers and developers, prior to becoming a consultant. He has carried out consultancy for half of the companies who are competing in the inkjet press battle. You can reach him at email@example.com.
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