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 user 2003-12-11 at 10:05:00 am Views: 119
  • #8166

    Digital takeover

    The writing is on the wall for traditional offset printing, while printers embracing the digital world will thrive


    I have Just read a very interesting article by Professor Frank Romano of Rochester Institute of Technology covering the future of print. Professor Romano is a very well known and respected authority in the USA and his writing has a strong influence on the ongoing thinking of executives within the North American printing industry. In this article he looks at the changes that have taken place over the past 50 years in printing companies, and identifies that in that time the revenue mix of a printing company has changed. He indicates that in the USA today only 80 per cent of a printing company’s revenue comes from putting ink on paper. The rest is from new services such as multimedia or fulfilment. He also points out that when the real change that came about with the internet happened, few printing companies were aware of the impact of this as it was in a boom time for print, when overall revenues increased. With the recession of the past few years printers have become very aware that the demand for printing has dropped, but for many it is too late to do anything about it as they have not invested early enough in these changes.

    Romano points out that much of the reduction in demand for print has come from new working practices brought about by new communications approaches. A key element in this has been the rise of e-mail as a form of communication. It is estimated today that 45 billion PDF files move over the internet annually, of which 33 billion are sent as e-mail attachments. If one adds all the other electronic files such as Microsoft Word, etc that are transmitted, Romano estimates that there could be some 300 billion electronic pages that are transmitted annually. Prior to the rise of the internet such pages would be printed. Such is the challenge faced by printing companies as they see work that has traditionally been printed disappearing into the electronic world. Romano quotes studies done in the USA that show in 1995 70 per cent of communication was in printed form. In 2010 he sees this as being 48 per cent in print and 52 per cent in electronic form. In 2020 he projects only 35 per cent in printed form.

    With these projections of changes in ways we communicate, Romano looks at projections for use of paper that show an increase of between one and two per cent per year. The suppliers of big-iron printing equipment, to show that print is a growing market, often quote such paper growth projections. If one analyses the projected growth in paper one sees it is only in a very few areas of print. The largest percentage growth is in cut sheet and blank paper. In other words this is the office market. The only other areas of real growth are in packaging and advertising. Periodicals, newspapers, books, catalogues, directories and forms all show significant drop in demand for paper. Only direct mail shows a very minor growth in these projections.

    It is little surprise therefore that in recent months we have only been hearing bad news from the traditional suppliers to the printing industry. In the areas of equipment for putting ink on paper equipment sales are well down and showing no prospect of increasing. This can be said to be the ‘old business of printing.’ A few years ago Xerox introduced the term, ‘the new business of printing’, to differentiate the market and approach they were taking in the printing industry. It is interesting that at the same time that companies like Heidelberg and MAN Roland were showing that their business was in a less healthy financial state, Xerox was showing that it was increasing its business and profits in this new business of printing.

    It is interesting therefore to look at why Xerox is doing well in selling printing equipment at the same time as the old business of printing suppliers are currently struggling to maintain previous levels. What appears to be happening is the long-predicted offset transfer situation is now happening. This is where digital printing is starting to seriously impact in taking work away from offset printing. This is because today quality in most cases is comparable, and buyers of print are appreciating those shorter runs of a print job, and more targeting of the use of such printing is now effective. This is not just in colour printing but increasingly so in monochrome printing. A significant amount of book printing is now going digital.

    One may ask why is it that the traditional print suppliers are not succeeding in selling digital printing solutions. In this I read another very interesting article a few weeks ago. This was from Andreas Weber, a German printing industry consultant. In this he discussed recent comments from both Heidelberg and MAN Roland executives concerning their major losses in the digital printing area. In this they were stating that digital was a difficult business. Weber noted the market for communication via digital print media is growing. According to DigitaldruckForum in Germany, the market will grow from around 30billion euros per year now, to about 100billion euros by 2008. He also noted that suppliers of digital printing equipment like Canon, HP, Konica, Minolta, Océ, Ricoh (and their customers) are experiencing revenue growth. His conclusion was that the traditional printing equipment suppliers don’t understand the dynamics of the market. My view on this, which I have mentioned before, is that one cannot succeed in digital printing if one only operates in supplying the traditional printing market, and by not offering a range of equipment.

    In the area of digital printing, which is now an offset transfer market, we have convergence of markets. Buyers are now seeing the benefits of digital print, and have realised that one can source it from many different types of organisation. The printing industry has no exclusivity in this area. In fact most digital printing will be done outside the printing industry. The “new business of printing” is in fact largely bypassing the “old business of printing.” In fact if the printing industry as we know it today does not recognise this fact soon, all that will be left for it in future is fighting over a market that will continue to decline.