This Month's Spectrum Summary:

(The following is an excerpt from the October 2007 issue of Spectrum, a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2007)

Adventuresome Users, Bifurcating Market Structure; Line Will Blur Between Customer and Competitor?

This month we sit down with Marco Boer to explore a significant pattern he sees emerging from changes at the user level. He approaches the topic with a series of examples stemming from some recent user visits. He starts with Circle Graphics, a Colorado-based wide format company. With over 70 superwide solvent inkjet presses under one roof, Circle Graphics offers 3-day turnaround and air ships nationwide. The company has evolved from a small print shop to large technology innovator, for example by recently supporting development of two new substrates, Eco-Flexx and EcoPoster for its own use and reportedly for marketing to other wide format print providers.

Another example of a creative user-innovator is Point Imaging in Hobart, Indiana. This company's key strength is that it is process-driven. From the time the Point Imaging takes an order until it's printed and shipped, almost everything is computer controlled. The plant environment is maintained by robotic sweepers and precisely climate-controlled. There are cameras in the press room that let customers actually see via the Internet how their job looks as it's drying on the plant floor.

Moving to the U.K., another example is a document and transaction printing supplier that competes by running digital presses custom integrated to be super-productive, running at up to 1,000 ft/min. This lets this U.K. company compete with exceptional turnaround and low pricing. Big, creative companies like this can be wonderful customers to have since they push the envelope and can be living laboratories. And they use lots of ink. But they have a lot of leverage so can be tough negotiators on things like ink pricing. Another example is a U.S. company that can't be named due to a non-disclosure agreement. The company has its own engineering group to do system integration. The document and direct mail provider claims to send out more than 1.2B pieces a year. Thanks to its volume and hardware know-how, this U.S. company is closing the analog to digital cost gap.

In Japan for IGAS, Marco visited with a company, Kyoto Densen, that started out as a normal user, then decided to build its own roll-to-roll inkjet printer. And now this Japanese are selling their custom engineered presses to other companies in Japan. This move is questioned since it can be seen as reinventing the wheel plus offering competitors the same production capacity you have. It illustrates a blurring of the line between the user world and hardware vendor world.

These user examples may represent the beginning of a user level sea change. It seems unlikely that today's major commercial analog printers can evolve decisively enough to dominate in the coming digital world. As newer technologies close the digital-to-analog pricing gap, it is expected that the new giants will be the kinds of users profiled above. The user world is likely to be a small number of giants, a fading middle level, and a large assortment of small, local print shops and in-house users. And the line between end user and OEM may also tend to blur, with significant strategic implications for the industry.

But print volume isn't the sole driver for growth in our industry. Vendors will be evolving toward complete solutions beyond just hardware. Trends evident at GraphExpo are expected to allow more people to do more things to create more value.