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January 25, 2000

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Industry News
By Kevin Keane, IAPHC CEO

Derailed.

Since our last issue, your erstwhile correspondent enjoyed the IAPHC mid-year meeting in Las Vegas; acquired a lovely dose of extra long lasting Casino Crud; and learned on Valentines Day, additional horrible circumstances about my son's fatal accident last October. The confluence of these events knocked us off kilter, but we are back on track with this issue.

More Digital Signposts

1) "E-commerce is not only the wave of the future, it's the wave of the present. Those that don't ride it will be under it." Lyn Johnson, chair of the PIA's E-Commerce Council.

2) On February 17th America Online and Kinko's announced a new alliance whereby Kinko's will develop Internet Solutions Centers in its more than 1,000 retail stores (featuring AOL of course) and AOL will include on its ongoing barrage of CD's, software to allow customers to print their documents at Kinko's directly from their desktop.

3) A newspaper ad run on February 20th: "$15,000 Signing Bonus. Colorbrite is seeking very experienced Mac operators. www.colorbrite.com"

4) The DPS 65 is a new digital color press bringing digital printing technology to the home and commercial furnishings market, i.e., wallpaper.

5) E-Ink of Cambridge, Massachusetts has completed another round of equity financing, bringing in another $37 million from a consortium of global investors including McClatchy Co of Sacramento which is a newspaper conglomera te. Among other things, E-Ink hopes to develop electronic newspapers.

6) Story in February 2000 High Volume Printing magazine: "Go Digital, or Become History."

7) On Tuesday Xerox announced a software application called MobileDoc that allows people to fax and e-mail documents remotely from their cell phones, handheld computers and pagers.

8) Not to be outdone, today Adobe Systems unveiled Adobe Acrobat Messenger software which can be integrated with a standard PC and attached scanner or digital copier to create an all inclusive communications station that can convert an paper document or photograph to ADOBE PDF, which means the document creator or user can capture said documents or photos and send them via e-mail, the Web or even fax.

E-Gads, E-Books are for real

According to Forrester Research, by 2004, $426 million, or 13 percent of all book sales will be digital downloads. On February 17th, Chapters Online, Inc. Canada's largest e-commerce retailer said it will sell electronic books on its website that can be downloaded to computers and other hand held devices like NuvoMedia's Rocket eBook. "Our expansion into digital content is a result of Canadian consumer's already enthusiastic response to buying software and music online," said Chapters Online president Rick Segal. Adobe Systems will work with Chapters to digitally deliver over the Internet, 172 "Coles Notes" (like Cliff Notes in the US), student study guides. Toronto based computer columnist and author Jim Carroll protested: "The book isn't broken so why do we need to fix it?"

The justification most often given to rebut Mr. Carroll's view is that by sending book content electronically, publishers and booksellers can reduce printing, distribution and shipping costs.

Paging Dr. Freud's EGO

The whirlwind emergence of new companies like Noosh, Impresse and Collabria is understandably confusing for Joe Printer who has a gimlet eye fixed on the possibility of price hikes in paper. Printing was a relatively simple equation for more than 500 years -- try to get the darn ink on the darn paper. Now, however, the advent of web based systems designed to streamline the buying and selling of printing have opened new vistas of opportunity and thrown some tried and true expectations on the junk heap.

We ran across a very useful explanation of these new methodologies the other day, written by Warren Loomis for Logic in their Winter 2000 newsletter:

"Now, companies like Noosh, Impresse and Collabria are making the Web more "printer friendly" by acting as e-go betweens (EGOs) for print buyer and print vendors. By connecting to an EGO's Web site, a print buyer can create a Request for Estimate (RFE) that is automatically sent to a number of print vendors. The vendors each submit an estimate; the buyer picks one and sends an 'order award'; the chosen printer enters the order and sends back a confirmation - all done through the EGO's web site. Buyers can also submit change orders and receive job status updates via the Web."

We have admired the work done by the folks at Collabria, in no small part because they came from within the ranks of commercial printers. Another new entrant, not as well known as yet, is Printconnect. A visit to their website is well worth the trip: www.printconnect.net And by the end of this month one can see www.planetprint.com

Of course the latter should not be confused with printplanet.com where the good folks at Digital Art Exchange (DAX) host web communities for the graphic arts.

Yesterday, DAX announced an agreement with Noosh in which DAX will direct its customers to Noosh.com so they can benefit from the file transfer, collaboration and email work flow features that Noosh.com offers.

Today, Collabria announced an alliance with Mitsui & Co (the world's oldest general trading company, fifth largest firm on the Fortune Global 500, and through its 561 subsidiaries, is a name very familiar to the graphic arts.) Mitsui's high tech and internet focused subsidiary Mitsui Comek is making a substantial investment in Collabria, and in turn, Mitsui will market Collabria's printing workflow solution in Japan, which is the world's second largest printing market with $90 billion in sales.

ABBA was Right!

When the beguiling blonde Scandinavian super group sang about Money, Money, Money, little could they have known that the world's forestry and paper industry may yet come to be dominated by Norse super firms.

The Graphic Arts Marketing Information Service (GAMIS) released a report early this month outlining why paper remains the deciding factor in print quality. "It is the most important variable in creating an impression, with brightness and gloss providing much of the look the reader sees, and the weight and texture providing much of the tactile feel the reader perceives."

While that seems obvious, one must remember that even in this inalterably digital world, the basic printing equation is still ink on paper. Conventional still makes cents, but longer term it will be digital dollar signs.

In any event the sage advice of David Christie of Spicers Paper which has been quoted several times in the virtual pages of TMN, continues to be proven out - the future of paper making isn't in North America. The mega deals involving Helsinki based UPM-Kymmene merging with Champion International and Stora Enso merging with Consolidated Papers, creates a Scandinavian super group indeed. "We think the Nordic groups will be the two global leaders. They have higher profitability ... and they have more global ambitions," said Torbjorn Thufvessen a paper industry analyst at Carnegie.

Meanwhile, the price of pulp continues to rise with Weyerhaeuser and Georgia Pacific joining the list of firms planning to increase prices April 1. Interestingly, the Wall Street Journal reported late last week that a US Federal grand jury has subpoenaed several dozen Canadian newsprint salespersons as part of possible antitrust violations (price fixing) in newsprint dating back to 1994 and 1995.

Heidelberg's Digital Forays

The first local Digimaster 9110 from Heidelberger Drucksmachinen AG has been installed at Mediengruppe ABT in Wein-heim. Heidelberg calls the 9110 a fully digitized black and white press, and says it has also installed the 9110 in locations in France and the UK. Heidelberg points to industry analyses that predict a three-fold increase in the Print-on-Demand market by 2002. At CeBIT 2000, which opened today in Hanover, Germany, Heidelberg is showing the 9110 as well the first fruit of the cooperative alliance announced between Heidelberg and WAM!NET at the end of 1999. The latter will be a live demonstration of onsite digital photos being taken of the exhibits and attendees in Hall 8, which will be shot through WAM!NET's pipeline to the Hermstedt booth in an entirely different Hall, which firm will assemble the photo into the layout of DI News and then transmit it back to the Heidelberg booth in Hall 1 for printing on the Quickmaster DI 46-4.

Digital Dribbles Pre-Drupa

This month has seen a flurry of announcements from some of the digital color press manufacturers trying to drum up excitement prior to Drupa 2000.

First, came Indigo announcing a Black and White version of its Electro-Ink technology for digital color offset printing. The machine is called the Ebony and can run 136 pages per minute (2 up letter size). A week later Xeikon announced its first sheet fed color press, the CSP 320 D. Previously, Xeikon's machines have all been roll fed. Both Indigo, with its introduction last summer of the e-Print Pro + machine, and Xeikon with the slower speed but now sheet fed CSP 320 D, are acknowledging that they need to find a lower entry point for digital printing for the many small print shops around the globe.

Alfons Buts, CEO of Xeikon said: "The CSP 320 D is aimed squarely at what we believe is a major untapped market for digital color printing: Printers convinced of the technology's benefits but who have so far been reluctant to embrace it because of the lack of an economical sheet fed machine designed for handling production volumes of 100,000 sheets per month."

Indigo's CEO and chief digital savant, Benny Landa said: "For the second consecutive quarter since its introduction in July, the e-Print Pro + has accounted for approximately 50% of our unit shipments. This is exactly the outcome we had hoped for with the launch of this $149,000 product - rapid market penetration and growth in unit placements. Indigo's razor/razor blade business model means the company's long term profitability will be determined primarily by the size of its installed customer base."

This week Indigo reported that it lost money in 1999, while Xeikon reported that it had $21 million in operating income on sales of $200 million for 1999. Indigo's stock price however, has finally begun to move off its $3.00 a share sticking point.

One of the intriguing pre-Drupa announcements from Indigo was that it plans to demonstrate live camera to press printing using Hewlett Packard PhotoSmart digital cameras and Indigo presses. Long time readers of TMN know that we think the landscape of technology suppliers to the printing industry now includes some world famous names like HP, and IBM. When Presstek teams with Xerox or Imation teams with HP, or Xerox teams with Imation, we need to pay attention.

Presstek said last week that it expects its products to be exhibited in some 20 booths at Drupa, and Presstek further predicted that Drupa should see the first fruits resulting from its new, albeit still tentative alliance with Xerox. Frank Steenburgh, senior VP of the Xerox Graphic Arts Industry Business Unit said on February 10: "We believe that in the long term, our toner based digital presses will be complementary to digital offset presses for a variety of applications. Our alliance with Presstek will help us to fulfill this vision."

Yesterday, PrimeSource Corporation announced that Xeikon digital presses have been installed in Kinko's Corporate Printing and Finishing Centers in Dallas and New York and Boston. The PrimeSource Digital group plans to install an additional 12 Xeikon systems this year in Kinko's facilities. "The Xeikon presses are a key component of our strategy to secure a significantly larger share of the corporate on-demand printing market. Our 700 member sales force will actively market the new applications made possible by these systems to corporate customers," said Scott Seay, Kinko's chief of field operations.

Finally, the British trade press is reporting that the 74KARAT digital color press joint venture between Scitex and KBA Planeta is ready to go commercial despite some problems involving ink drying.

Industry Tid-Bits

One of the interesting announcements at Seybold Boston earlier this month, was that Adobe, Agfa, Heidelberg and MAN Roland are partnering to jointly create JDF (Job Definition Format) which is a new electronic job ticket standard that is scalable, and web compatible. This kind of cooperation is nice to see, because when William Davis became CEO of R.R. Donnelley & Sons, several years back, he commented rather acidly on the critical need for more and better standards in the graphic arts.

PrimeSource Corporation had a really excellent year in 1999, the firm announced on February 22 that it had enjoyed record sales of $545 million and record operating income of more than $14 million. The IAPHC is pleased to salute PrimeSource which has agreed to sponsor the Best of Show for the third consecutive year in the IAPHC's premier program, The International Gallery of Superb Printing.

Another of our repeat International Gallery sponsors, GretagMacbeth announced last week it had a new agreement with Imation to integrate GretagMacbeth's color profiling tools with Imation's color management and proofing solutions. GretagMacbeth's ProfileMaker will carry the Imation endorsement for targeting and integrating the Matchprint color proofing standard.

Check Technology bagged a $40 million dollar three year contract to supply digital printing systems (called Imaggia) to John H. Harland Co. of Atlanta, the second largest check printer in the US behind Deluxe. Meanwhile, Deluxe said it had closed on the acquistion of Designer Checks of Aniston, Alabama. Worth noting in the flat growth environment of check printing, is the deal announced on February 22 between Pitney Bowes and CheckFree Corp which is part of Pitney's plan to introduce technology for the presentment and payment of bills online.

Consolidation seems to be a part of every aspect of the graphic arts from paper behemoths to check printers. The ink industry too marked its biggest deal earlier this year when Sun Chemical Corporation finalized its acquisition of Coates Lorilleux for nearly $550 million. Coates operates in 44 countries. Sun Chemical is the parent of Kohl & Madden, one of the IAPHC's repeat sponsors for the year 2000 International Gallery of Superb Printing.

New member-at-large, Steve Ciesmier, VP at PagePath Technologies sends along news that as of February 22, 1700 graphic arts service providers are now registered to use MyOrderDesk, PagePath's free e-commerce solution which now supports both Macintosh and Windows users.

Bowne & Co began its 225th year by celebrating its first billion dollar net sales year, which the venerable firm rang up in 1999. It its fourth quarter, Bowne printed the largest job in financial printing history -- the small bibles sent out to MetLife policy holders as part of that firm's demutualization. Bowne is setting off on the right foot for 2000, having already secured the jobs to print the documents for such deals as the recently announced Vodafone/Mannesmann and Rhone-Poulenc/Hoechst mergers.

PrintNation.com said on February 9, that it would begin selling Printware's computer-to-plate PlateStream platesetter. One printer we know in Southern California says it is impossible to resist doing business with PrintNation, the pricing and other incentives are so good.
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