This Month's Spectrum Summary:

(The following is an excerpt from the August 2007 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2007)

Shanghai Wide Format Expo Perspectives-
Progress: More UV, Upgraded Performance;
Challenges: Growing Distributor and User Backlash

This month we meet with I.T. Strategies analyst Liz Ziepniewski for a report on the APPPEXPO 2007 in Shanghai. The show unveiled many interesting products and players in the volatile wide format printer market. The session also stirs up some provocative perspectives with relevance beyond just wide format.

One interesting thing at the show was the number of new UV products.One motivation is the need to do better in overseas markets that require higher print quality and environmental standards. The print quality issue is also driving a strong shift from Xaar heads toward Spectra and KonicaMinolta. Success with UV printers may also help the vendors overcome severe hardware price erosion via that all-important ink annuity.

Machine reliability problems have been plaguing overseas users of Chinese wide format for years, with some now moving to higher cost machines from companies such as NUR and VUTEk. Besides reliability, overseas demand may also be negatively impacted by news of quality control problems with other Chinese exports such as pet food and children's toys. The wide format segment, like others, is built on the cheap labor model that tends to be still working in the domestic market. But this also faces challenges including tough competition among the vendors and a skilled labor force rebelling about pay and working conditions.

Overseas markets to date represent perhaps only 20% of their wide format sales. We discuss distribution and this, in most of their overseas markets, is through distributors. Their distributors, like many users, are unhappy with reliability and other issues. But they do gain know-how that may help them move up-market. Sun in Russia is a prime example. Sun has developed its own product, using innovative LED technology, the NEO UV-LED printer. Liz says this was one of the highlights of the China show. Another example of a dealer moving up-market is Belgium-based Augend Technologies, now offering several of their own wide format printers. In short, China may be seeding the world through its dealer partners.

Outsourcing to China by the mainstream vendors can work the other way. Although perhaps behind Russia and India, China's high-tech resources are growing rapidly in part as a by-product of supplier relationships with mainstream vendors. In time this could help China escape the challenges that impressed Liz at the Shanghai show. Success, after all, is a process of overcoming problems. Recognizing problems is an essential early step. So our tendency today to mull the problems should not be interpreted as a death sentence for China's wide format vendors.