This Month's Spectrum Summary:

(The following is an excerpt from the January 2003 issue of Spectrum. Spectrum is a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2003)

2003: A Year to Choose the Right Target, Make Small Bets, Finesse Current Products

This month we look ahead to the New Year with I.T. Strategies staffers describing three opportunity areas for this year.

(1) Extending existing markets. HP is the first example with its photography offerings and all-in-one products. Rather than launching a whole new product line, they are "finessing" existing products, making them faster, lower cost, or more fully featured.

(2) Creating new markets. This is risky and there are big bets and little bets. The main recent big bet example was the Xerox iGen3. An example of a small bet is small printers, which Epson and Star Micronics find are enjoying healthy growth.

(3) Finding unmet needs. HP with its OEM addressing printers is a good example of serving an unmet need with variations of existing products. Some unmet needs that may be ripe now are mid-range, water-based WF printers, EP all-in-one machines, and in digital photography, easier to print at home and in-store, inkjet commercial photo-finishing systems.

Rapid change is making it tough for second-tier vendors. Konica's acquisition of Minolta is seen as a symptom, a survival tactic which hopefully will give the expanded company the resources needed to compete with Canon, Ricoh, Fuji Photo and Xerox. As a survival move, effective long-term strategy probably has yet to be developed. For such a plan, relationship with the market is understood to be more important than financial resources or technology. Success rests on trend spotting and analysis, talking with users. Helpful this year, we hope, will be a series of "Innovator of the Month" articles in this newsletter.

The digital press and iGen3 experience triggers a lot of discussion. The conclusion is that these high-end systems aimed at offset have been directed toward the wrong market. Offset printing is seen as in decline. Printing is decentralizing, and most offset printers have not been able to make the transition to digital. Offset is the wrong target. The challenge will be for Xerox and HP-Indigo and other vendors of high-end digital production printers to downscale toward the growing light production market. Print volume will continue to migrate to digital print shops and in-house.

In short, the frontiers now facing the industry lie not in big technology bets, but rather on marketing, discovering new applications, extending current product families. Rather than spectacular technology breakthroughs, the appropriate strategy for the next few years may be a multitude of small bets, a different kind of challenge, a different kind of excitement.