This Month's Spectrum Summary:

(The following is an excerpt from the March 2005 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2005)

PRODUCTION PRINTING:
Vendors Breathe New Energy into a Tired Industry Workhorse

This month Marco Boer shares his views about the interesting bets the leading vendors are making on the future of production printing. Production printing has been declining for quite some time, yet it is huge and provides a revenue stream vendors are counting on to keep them going until their digital color programs begin to pay off.

Vendors are now realizing production digital cannot compete with offset, and are positioning it as a complementary technology. Kodak is in a strong position in this respect. Transaction printing has been the mainstream application, with vendors now developing applications in direct mail, book printing, and publishing.

Xerox, Océ, IBM (with Ricoh/Hitachi hardware) and Kodak are seen as the major vendors. Others include Nipson, Delphax, Xeikon, and HP/Indigo. Xerox, however, in production printing is larger than all others combined. Each vendor has unique strengths and unique weaknesses.

Océ at $3B per year is the smallest of the leaders, shipping under 1000 printers a year in this class. Their continuous feed printers offer users high speed and lower operating cost. Their strategy is to add features to broaden the market beyond declining transaction printing. Other applications now include newsletters, newspapers, manuals and direct mail. They do not plan to launch full production color for several years, partly because of the high investment needed, and partly because the market is not yet sufficiently developed. Besides hardware, for broadening applications, a lot support in the form of customer education, software, and workflow infrastructure is also needed. Océ and others are working hard on this, but they also need to invest in reworking their sales operations.

Looking at the others, IBM is unique in that they sell printers as part of a much larger package that includes servers, consulting, software, etc. Kodak is a newcomer, but through its recent acquisitions (Nexpress, Versamark, Creo, KPG) they are in a strong position to bring digital production into the graphic arts world. It will take more investment for them to develop channel access into the world of business users.

All this is a big challenge for each vendor, but Marco believes they will succeed, in part because they truly have to. The future of their companies depends on it.