*NEWS*10 PREDICTIONS FOR INDUSTRY IN 2004
*NEWS*10 PREDICTIONS FOR INDUSTRY IN 2004
2003-12-17 at 10:48:00 am #4265
10 Predictions for the Printer Market: 2004
1. Digital Printing Revenues overall will begin to increase after years of flat revenues. This will be driven by color printing revenues – both ink jet and electrophotography – which will be enough to offset the declines in monochrome revenue.
2. Supplies will account for 60%+ of digital printing revenue. Historically, this has not been the case. HP & Lexmark currently generate about 50% of revenues (both monochrome and color) from supplies but every year the percentage has been increasing by 2 – 3 percentage points. This is partially because hardware prices are falling — but on the positive side, it’s because users are printing more in color using more ink and high value media.
3. Core EP engine R&D investment requirements will be high. Mega mergers among printer manufacturers will continue in order to fund these future R&D investments. I.T. Strategies estimates that in 2002 more than $6 billion was invested in EP and ink jet R&D; 75% of this was invested in EP R&D. Of the $6.2 billion, five companies – Canon, HP, Xerox, Ricoh and Fuji Xerox – combined accounted for almost 75% of R&D investment. Smaller companies may find it easier to add value through areas such as software. In color EP there will be a split in the market: a few large companies will dominate. We are seeing the beginning of consolidation already: Konica/Minolta merged in early 2003. Some EP vendors my diversify risk by developing a closer involvement with ink jet which is now viewed as a “grown-up” technology.
4. We will see the confirmation of the continued trend towards decentralized printing at the expense of production printing. Within this model, we will see the rise of a mid segment in color EP. Office printing markets will become more decentralized and printing will shift from high-volume machines onto desktop devices, driven by lower cost products and increased end user education and access to digital publishing tools. Vendors will move downstream to facilitate user needs.
5. As low end ink jet and EP markets continue to be dominated by one or two companies, number 3 or 4 could turn to companies such as Wal-Mart and offer them private-label branded products. Wal-Mart is the world’s #1 retailer with more than 4,700 stores and fiscal 2003 sales of $245 billion. Of that, more than $22 billion was from electronics. In contrast, Staples, Office Depot and Office Max combined have 3,480 stores and sales of about $28 billion.
6. All-In-One (AIO) devices will continue to increase market share. In the office it won’t be the AIO with ADF (auto document feeder) that will be successful, rather it will be standalone AIO devices. These devices will increase share at the expense of standalone ink jet printers and some laser printers.
7. Digital printer manufacturers may finally realize that digital printing is not meant to emulate analog print technology but rather digital’s value propositions are different and it can and will open up new markets. Currently the percentage of total printing done on centralized color EP devices is still <1% of what is printed on offset printers. This is not an accident – after ten years it is a lesson. A good example of a completely new model in the photo hard copy business is the proliferation in Japan of kiosks in places such as donut shops and convenience shops to allow photo cell phone users to print out photos from their phones just about anywhere they are.
8. In industrial areas, investments in mostly ink jet projects will increase but penetration curve will stay shallow. New, innovative companies are coming. The model of high value at minimal market penetration will be confirmed. Digital printing strategies will be adopted by more “product related” companies, such as those printing wallpaper & decorative laminates, to provide these companies with new high-margin products in new market areas.
9. A few industry-specific ink jet system integrators will become more important in bridging the gap between digital technology and end user needs. These integrators will address specialized markets with custom products. We have already seen the beginning of this with integrators such as Dotrix and Jetrion. The skills required are highly specialized and depend on assured investment from convinced customers. There is no general offering that can be made. Therefore, there will be few integrators.
10. Information and analysis will have an increasing value over raw data. Companies will continue to need information on new markets, applications and prospects. Understanding what’s behind the numbers is critical to make informed decisions about new product R&D, new markets and new customers. Our observation is that the needs of the market have undergone a shift over the last ten years. Numbers and data are almost a free commodity today. Now the market will likely turn to qualitative analysis based on research. This type of research will provide a much greater efficiency for future product planning.