This Month's Spectrum Summary:

(The following is an excerpt from the October 2004 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2004)

Fall Show Recap:
New Strategies Emerge as Commoditization Trickles Up

This month we sit down with our I.T. Strategies senior consultants as they gather to distill some big picture insights from recent events and travels. Over the past few weeks Patti Williams attended SGIA in Minneapolis, Marco Boer GraphExpo in Chicago, and Mark Hanley IMI Europe in Barcelona.

SGIA highlighted the hunger of specialty printers, in the face of tighter margins and competition, to broaden their offerings toward ever more diverse specialties. Examples are printing plastic credit cards and membrane switch overlays. The order volume for such specialties will be quite small, but the margin much higher.

This shows the increasingly fragmented nature of the market. Specialties can blossom because the market is distributed among thousands of access points, each of which is striving to meet a wide variety of needs in their local area. So, responding to this new reality, printer vendors need to design multi-purpose printers, printers that can handle diverse media. User education remains a barrier. Many have the infrastructure and are looking for new ways to use it.

Hardware prices continue to drop, lowering the cost of entry for users. Printers are becoming cheaper and at the same time more multi-functional. Quicker obsolescence is a trend that printer engineering needs to take into account.

At GraphExpo Kodak exhibited an integration of their digital units, Encad, Versamark, NexPress and KPG. As at SGIA, a lot of specialty applications were being demonstrated such as Xeikon with a UV-curable toner that lets them print on very thin, flexible materials such as plastic blister packs.

Market access as key to new applications was demonstrated by many exhibitors. Among those integrating inkjet into addressing systems was the mailing system vendor Prism. Their system to meet the requirements of various fields on a demo application utilized inkjet heads from three different vendors: HP, Domino, and Scitex.

Distribution is also being challenged by the flood of new, affordable printer offerings and market fragmentation. Cheaper equipment means less margin for dealers as well as manufacturers. One user, a print shop in Virginia, reports a key to its growth is buying all used equipment via eBay on the Internet. This looks like a significant trend that we plan to research. By-passing distributors with Internet order processing may also reduce warehousing overhead.

The growing importance of partners to help meet broader applications was evident, with Xerox listing over 100. An unverified report is that the U.S. Postal Service is working to educate business customers about variable data printing for direct mail as a way to boost their volume.

Larger hardware vendors are tending toward general-purpose, "open" system strategy, while others are fielding some printers that let the customers access printer software to customize it to their specific applications. This tends to lock in customers, but could be counter-productive.