TMN 9 January, 2001Graphic Industry News with a Piquant Point of ViewIndustry NewsPast the Millennial Bends TrendSpotters Of the many replies we share these vignettes: A) "I walk the line between the ever diminishing craft of printing and the digital future. and I hope to provide my customers with the wisdom of both." John Zachry, new owner of Minuteman Press of Placerville, California and new member of the Sacramento Printers Association, an affiliate of the IAPHC, as printed in that organization's December bulletin. B) The January/February issue of GATF World carried a reprint from the November 2000 issue of Folio magazine, an intriguing interview with Frank Scott who has left Time, Inc., to become GATF's director of research. Mr. Scott pushed the various magazine titles of Time to adopt Computer to Plate well before the rest of the publishing industry. He was asked his views about the future: Q: What do you think is preventing widespread acceptance of these digital technologies? A: The unknown. Digital is a different way of doing things, and for some people, change is hard to manage. A lot of people simply say that if their processes work, they will continue using them and not deal with change. Q: What do you see as the next big development in digital publishing? A: Probably color-managed workflows, where the need for and use of supplied proofs goes away. So, if Mr. Scott is correct, publishers and indeed printers could move away from the need for both film (thanks to CTP) and proofing (thanks to color-managed workflows.) As it happens, Mr. Scott's new boss, George Ryan, president of the GATF told the assembled educators at the annual conference of the IGAEA last August that digital proofing is maturing with some 17,000 units in use and with 39% of printers using continuous tone digital proofing systems. C) "I can see exactly the same vista as do you. It's something we've been -- in a way -- hoping wouldn't come to pass. After all, we LIKE to put ink on paper. It has a wonderful way of becoming something more than its physical self. Somehow, sparkling electrons, beautiful in their own way, don't have the multiple dimensions of ink on paper. ... But I honestly think that we are in the beginnings of the demise of our profession as we grew up with it. We will see more toner on paper, more distributed reproduction, more individualization of what IS reproduced on a substrate. It doesn't scare me as much as it does other people; it just makes me mourn the loss of artistry as execution descends to those who have no skills and frankly no appreciation of the skill it takes to execute fine reproduction....I'm afraid I agree with those who predict that true craftsmanship will become the purview of the dedicated amateur such as we find now with woodworking." Minge Bishop, e-writing from Charleston, South Carolina. D) Meanwhile on the other side of the North American continent, a member was moved to phone in his assessment of the challenges his business will face in 2001: 1) We must restructure our sales team into a technology solutions sales group. 2) We must repurpose and reinvent our people. 3) We must reinvent our business as a technology based business. 4) We must manage all of the above re-inventions! E) Our friend Celeste Maia-Cron has done an admirable job of forecasting the future for her fellow Sacramento Printer Association members. She provided a continuing series of articles sharing the views of James Whittington from TrendWatch in the Sacramento Club bulletin. In the same December issue of her club's bulletin which featured the above quote from John Zachry, Celeste offered her summary of the 5 trends for the new millennium. Given that she was until recently, the California State Printer and thus the director of one of the world's largest print shops; plus the fact that she is one brilliant person, we like her snapshot and thank both Celeste and Jim Whittington: 1) Print is changing and there will be more volume done by fewer players. 2) People and technology will be more important than ever. 3) The successful printer must think 'outside the box' and capture e-opportunities since the new media, cross media and 'non-print' opportunities will be there. 4) Profitability will depend upon successful strategic relationships with customers. 5) The successful printer must think 'digital' and 'Internet' since our customers are certainly doing so. In this time of dotcom bombs, we need to keep our eyes and ears open to market realities. One thing we found fascinating in our December pilgrimage to Toys R Us, was the number of customers in that retail wonderland who had done comparison shopping online, and were proud to offer loud verbal testimony as to their findings. Can we be sure that print customers are not similarly e-inclined? CAP Ventures has estimated that a mere 17% of the print market was Internet-enabled as 2000 came to a close; however, they also predict that by 2005 some 80% will be so enabled. Somehow we suspect the 80:20 rule will still apply, even in the digital day and age. Are you ready? On 8 January Xerox announced that it had entered into a six year arrangement with Siemens IT Services to set up networked publishing centers for the printing industry. Managed by Siemens in Germany, and supported by Xerox's high volumne digital print and publishing technology, the centers will allow customers to place print orders over the Internet. Wagnerian WebringsLast week, American Printer magazine interviewed this writer on the general theme of what's next for e-commerce in the printing industry. Obviously there has been a lot of change in the nine months since drupa 2000 when there were some 47 dotcom firms exhibiting in Dusseldorf who saw the graphic arts as their market. The British trade magazine Printing World quoted Roy Hill chairman of PrintMountain.com in its 15 December issue: "The dotcom shakeout is set to hit printing, with the industry only able to support a maximum of four major companies." The magazine continued: "While many printers may run their own Internet sites, it is the intermediate players who set up dedicated trading sites that are said to be at most risk." Who can say if Mr. Hill's assessment of four players will prove out? What we can assert is that each segment of the printing industry will likely see a player emerge with the look of a contender. For example, in the quick print segment (a market that was, until recently, somewhat embarrassed by the appellation 'quick print' only to realize that the Internet has made every printer a quick printer!) the folks at PagePath Technologies certainly seem to have the legs for the long haul. PagePath has just upgraded their website (www.Pagepath.com) and it's worth a look if that is your market. Another interesting firm in the small commercial end of the industry is webprint.com and again we would encourage you to look at their site. We know several of the principals, and they have signed up an impressive roster of "name" chain printers. In the middle segment of the printing industry the firm that seems to have gained some real credibility is Collabria. In mid-December, the firm announced that it had doubled its client base in 2000 and had surpassed the 1,000 mark of companies it has signed on to its PrintCommerce application service. Meanwhile, the largest printers seem to have gravitated to printCafe (assuming those printers haven't created their own proprietary solutions). PrintCafe says 19 of the 25 largest printers in North America now use its applications. In a news release from London dated 3 January, printCafe said it had been named the Gold Medal winner of the Prepress and Publishing 2000 E-Business of the year award. Lindsey Reynolds, editorial director of Prepress News, PUBLISHING and PRINT magazines said: "The judging panel thought printCafe to be the clear winner, largely because the printCafe solution offers publishers and printers the ability to take full advantage of the power of the Internet through online process management, as opposed to services that just provide a basic auction environment to match buyers and sellers." Careful readers of TMN might note that two different graphic arts publications in the United Kingdom have weighed in with a thumbs down view of auction services -- in fact, there seems to also be a growing sense in North America that the auction model is not a long term player. Survival of the Fittest? Shaving a point off Printing?Long time TMN contributor and IAPHC member Martie Hughes sent along an article from Darwin magazine (2 January 2001) about a company called Servador.com which is convinced there is still a market for the middleman. "Doug Evans, founder and CEO of New York based Servador (www.servador.com) says that altho companies spend thousands, even hundreds of thousands of dollars on commercial print each year, executives tend to overlook the expense because they do not know who, or what is involved in the process. Evans claims his 18 month old company can trim anywhere from 20% to 40% off a company's commercial print spending by utilizing his company's print experts and its network of more than 400 resources across the US and Canada." The article says that Servador targets firms who spend in excess of a half million dollars a year on print, and charges such clients a 15% fee for the Servador buying service. With the anecdotal evidence piling up that some sort of an economic slowdown is underway, we suspect a new marketing refrain will be heard from outfits like Servador-- "XYZ company, you don't understand printing and you are getting ripped off. Let us help you save money." Smartly, Collabria is using that marketing spin to help printers hang on to clients. Collabria
quotes various industry data suggesting that printing costs including the total costs of developing
new printed materials, distribution and inventory management can consume as much as 15% of a
firm's overall revenue. Collabria's president and CEO Donald Armagnac says: "Because of all the hidden costs involved in printing, most corporations are not aware of the size of their enterprise-wide print spend." Whatever e-commerce purveyor a printer hooks up with, it seems clear that the smart marketing strategy will be to use the application to try to save the client money. Other people will be trying to convince the client that printing is a bloated cost center on the P & L. Printers must respond with targeted efforts to maximize the investment for the customer (this is a clear opportunity for variable printing); perhaps suggest shorter run lengths rather than longer (the lost volume will need to be made up by becoming a one stop source for ALL media); and by allowing the client inside the process -- i.e., access to the job at every step of the production cycle. Madness you say? Mayhaps, but perhaps a measured response to the mandate of the Trendspotters. xoreX; the Other Face of PainThe continuing, and really kind of unbelievable saga of Xerox -- will they or won't they? -- has brought all kinds of speculation to the fore. And why not? The Japanese markets are all atwitter over the rumours that Sony will buy Apple Computer. (If the latter occurs, no doubt the personal computer/game station will be called Placintosh and will run a new game featuring Homer Simpson called 'Play D'oh'... sorry, we couldn't resist.) Today's news reports were simply chock-a-block with rumours that Xerox would file the big BK, or not. That it had enough liquididty for the rest of 2001; or it didn't. That is would sell the engineering copier arm of the business to Oce or maybe it won't. What Xerox did do, was to hire Blackstone Group LP for advice on how best to manage its cash flow during these challenging times. Lost in all the hullaballoo over Xerox? What actually IS happening on the front lines. Xerox is having some luck in selling some units, but most of that action is taking place overseas. In Europe, Xerox is doing quite well versus Heidelberg in the digital printing arena, and in Asia is holding its own vis a vis Canon. But closer to Rochester, the pain is real and acute. Companies caught in the mighty downdraft of a wounded Xerox include Electronics for Imaging which sells more than a few Fiery interfaces connected to Xerox machines. EFI has been diversifying broadly (its new eBeam Internet Office Appliance is very cool) but its fortunes are clearly impacted by the travails of Xerox. Presstek has been similarly affected. The company took the unusual step on 22 December of reassuring its investors that a downturn in the company's stock price was not indicative of the firms future outlook. Robert Hallman, Presstek's president and CEO said: ".... the Xerox project is underway with the preparation of presses for shipment, and the building of an installation and service organization." The latter of course, is a reference to the Presstek manufactured digital presses which will carry Xerox name badges. For the year 2000, Xerox saw its stock price swoon some 79.6%. EFI was down a whopping 76% and Presstek drooped 24%. The new year did not get off to a wonderful start for Xerox. Despite the aforementioned new contract with Siemens in Germany and new deals in Austria and Russia, Xerox has been taking some lumps in its own backyard. On 3 January came the news from Tokyo that Ricoh had won a ten year contract worth potentially $200 million to supply digital copiers and maintenance to the US Postal Service. On 5 January Danka Business Systems PLC said from London that it had inked a deal worth up to $38 million to supply Canon copiers to the more than 1,100 Kinko's stores worldwide. Not surprisingly, the Internet message boards have been savage. Xenophobic even. On 3 January we found a post from a poseur who claimed that the troubles of the big red X could be traced to its copier service pricing which (the poster maintained) was $340 an hour versus $175 for Lanier and $135 for IKON and $90 for an Independent. Of course, the piqued poster didn't mention if parts were extra for the low price leader! Stay tuned gentle reader. This story isn't over yet. Take Two Greenspans and call back in the morningPerhaps lost amidst the gnashing of teeth over the swandive of the NASDAQ and other major market indices over the less than hospitable year 2000, was the fact that many printing related stocks got hammered even worse. Here's a small sampling: Consolidated Graphics - down 20% All together now: Ouch! To add to the insult, we in the graphic arts can now proudly point to four penny stocks (literally) as Asia Pulp and Paper, Danka, iPrint and Lason had all fallen below the ignominious $1.00 a share price as the year began. Which is not to say that some firms aren't doing just fine thank you. Banta Corporation was up 12.7% for the year; bellwether R. R. Donnelley & Sons was up nearly 9%; and Adobe Systems was on fire, posting a 73% gain for the year. Tom Morris, chief investment officer at Bessemer Trust in New York City manages money for a wealthy clientele. He recommends Adobe Systems because it is one of those firms that has "a real business plan, a product, and cash flow and earnings." Adobe's InDesign software package is obtaining lots of high marks from folks in the graphic arts. Chuck Draffkorn, technology manager at Graphic Art Service, a prepress house in Georgia was quoted on 8 January: "InDesign is rock solid -- we can always be confident that files will print flawlessly when they arrive at the printer."
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