This Month's Spectrum Summary:

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

The Mystery of the Missing $Millions: A Drama in Three Parts

This month our I.T. Strategies consultants focus on the gap between the revenues realized by the primary digital printer vendors and what users pay for the print produced by the industry's products. In 2002 it is estimated this gap was 28% of primary vendor revenues.

It is not a mystery who got these $29B in lost revenues. Most have gone to the digital print providers. While our industry remains relatively flat, the digital print providers such as the Allegra Network have been enjoying healthy growth.

Commoditization, as always, is a pitfall since by at least one definition, there is no profit once this happens. Coffee is seen as a parallel. The Starbucks shops get most of the money while the growers work in poverty.

The question is how to respond. Commoditization can be avoided by building brand recognition and maintaining or establishing contact with end users. A chart is presented as a road map to a second chance to reap a bigger share of user revenues when moving into new markets.

But there are opportunities in today's markets. More volume will stay in-house with new high-end printers with speed, more finishing capability and streamlined operation. In-house POP signage is just one new possibility. More end user research will uncover unmet needs. This does not mean asking print providers and other current customers, but rather getting to end users. Digital printing needs to be taken beyond imitating the print of the past, beyond just more speed, less cost.

Digital photography is an example of a new market that has generally escaped many of the traditional vendors. But this industry is young and new solutions are needed to make life easier for digital camera users such as self-serve and attended processors with expanded capabilities, for example, user-designed digital photo albums.

Getting outside factory gates to the user is essential. This can be done by developing well-conceived partnerships. It is a trap to emulate today's analog printing world, but rather develop print solutions that are specific to the digital world. Awareness is the first step toward recovering today's missing $29B. In time, the rewards could be much greater.