This Month's Spectrum Summary:

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

INDUSTRIAL INKJET HEADS-
The Seeds are Set;
Gateway To a New Industry?

Consultants Mark Hanley and Marco Boer meet with us this month to explore how over the coming decades inkjet print head vendors can access a market base that extends far beyond inkjet printing.

Today, as a component business, growth prospects are limited. There are only a few large customers plus lots of small, scattered users that are tough to access through current distribution channels. The small customers may be large companies looking to develop in-house packaging systems, but to access them the inkjet modules have to be easier to integrate. China as an inkjet head market for wide format is strong, but now well established so future growth there appears limited.

They see three general strategies to respond to the reality of ever more competition and downward pricing pressures:

A number of head vendors have begun to engineer or at least talk about modules including Spectra and Xaar. Also, there are several large Japanese vendors including Ricoh, Konica, Olympus/TTEC and Canon/FineTech. Engineering and marketing looks appropriate for large companies and some have already invested in head technology for internal purposes. This gives them the potential to launch their own systems.

What Hanley terms "liquid engineering" shows great promise as an incredibly interesting frontier for our technology. This means making functional components using fluids as the raw material and inkjet as the means of depositing the fluid. A major application is expected to be printed electronics, such as antennae or transistors as discussed in our December 2004 issue.

A number of head companies and at least one ink company are exploring this direction. Spectra has established a new "Materials Deposition Division." In the biomedical area microdeposition technologies are being used to jet living cells.

This technology vector is expected to grow into an important industry in its own right, or a cluster of industries. But no matter how huge the industry becomes, it would seem direct revenues for print heads will not be spectacular. But that doesn't matter. The vendors will have triggered something much larger than themselves and will become part of it. Adobe Systems with its Acrobat/PDF technology is seen as an analogous model. Adobe's direct revenues from Acrobat are not large, but through this product it has acquired a huge base of customers for other products. Looking at business history, a historical trend has been a technology defining an industry and in time merging into the industry it serves.

The office printer market seems more or less plateaued at around $100B, and future growth is likely to be ever more difficult. But this doesn't matter if we reframe our business models to support this new path. Future profit generated by value creation will far exceed what we can expect as our industry is currently structured.