This Month's Spectrum Summary:

(The following is an excerpt from the January 2008 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2008)

Peering into the Crystal Ball of 2008

Our topics, interwoven with the themes of demand generation and distribution, were on the table as Marco Boer and Mark Hanley met on a snowy day in early January to peer into the crystal ball at the year spread out before us. They mused about drupa, light production printing, desktop printers, and vendor expectations, seasoned with thoughts on technology, go-to-market strategies and the changing economics of an evolving printing industry. We begin with drupa, the industry's big event of 2008, which runs from May 29th to June 11th in Düesseldorf, Germany.

drupa
Drupa is the big show of 2008 and will showcase some new technologies, especially in color. However, many of the attendees won't be able to appreciate how the new printing systems can benefit their businesses because the equipment vendors tend to lack programs to educate print providers about what the technology means and how to use it to make their businesses more profitable.

In fact, the relevance of drupa may be fading. Once a trade fair for offset printing, that technology is increasingly less important, and is not completely being supplanted by digital equipment. This may reflect an important change in the printing industry. Although many big commercial printing firms have some digital equipment, they will not be replacing their offset presses with digital ones. However, new types of all-digital printers, such as DST Output, Vestcom and Bowne, that have entirely different business models and are being quite successful. Their success--and lower operating costs--poses a threat in that they could pull business from smaller firms due to their ability to drive prices lower and lower.

Light Production
While drupa focuses primarily on high volume and high production, the light production area is actually one of the strongest parts of the market. Canon, with about 10% year over year growth, and been very successful in placing light production copiers, and MFPs (Multi-Function Printers) in small and medium size companies and small print shops, where its inexpensive machines are very cost-effective for those beginning to use digital color.

An important area to watch is the introduction of light production inkjet. Hewlett-Packard is pursuing this area with its EdgeLine technology, which may soon show up as a competing option in this market.

Desktop Printing
Many companies compete in this space, especially for color printing, but it is not very profitable for most companies. Canon, HP, Ricoh and Xerox are likely to continue to dominate.

Standards are needed in the desktop space, especially with respect to print speed. ISO standards may help, and we may see some in place by the end of 2008.

Vendors
While vendors are showing good revenues and even profits, the numbers hide a problem that could impact the industry's growth. Marco says the lack solid go-to-market strategies poses serious challenges for printing equipment providers and their customers looking to the future. Not having a sound strategy ultimately impacts both demand generation and distribution.

HP is the largest of all the vendors but there's a question as to whether the company can sustain the growth rate that has made it a $104 billion (USD) company. Without continued acquisitions, it is not clear the company can maintain the growth needed to satisfy stockholders and the financial markets.