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Commentary & Analysis

Rumors Come to Life


By WhatTheyThink Staff
Published: January 26, 2007

--- Rumors Come to Life A Semi-New Player Takes the Field By Noel Ward, Executive Editor, On Demand Journal January 26, 2007 -- It will be called the InfoPrint Solutions Company (IPS), this new joint venture of IBM Printing Systems and Ricoh. Scheduled to be consummated in the second quarter of this year, the deal will result in Ricoh owning 51 percent of the new entity now and by 2010, IPS will be a wholly owned subsidiary of Ricoh. Following regulatory approval, IPS will immediately take some 1,200 former IBM Printing Systems employees, with another 1,000 service people moving over as the ownership shifts entirely to Ricoh. At a press conference in New York City on January 25, Mr. Tony Romero, President and CEO of the new InfoPrint Solutions Company, said IPS will ultimately take responsibility for the complete portfolio of IBM's high-speed continuous feed printers and print output management software. Also included are all the end-to-end workflow management solutions, professional services, light production cut-sheet print engines, the Ricoh family of general office products, and a line up of industrial print solutions. "These capabilities give IPS the capabilities to improve customers' operations and maximize efficiency in an increasingly digitized and print on demand world," said Mr. Romero, "This combination of resources gives IPS access to expanded R & D capabilities and the financial strength to bring to significantly expand sales and support around the world and to provide customers with some of the best print and output solutions." "This is why 'Solutions' is the centerpiece of our name," said Mr. Romero. Mr. Masamitsu Sakurai, president and CEO of Ricoh, picked up that theme, noting that the desire to expand into the production space was behind Ricoh's acquistion of Hitachi in 2004, a move he said helped strengthen the company's developmental abilities. "By combining our competence in hardware and software development with IBM's expertise in services, software and IT solutions, we can reduce TCO and increase efficiency in production printing while offering seamless printing solutes and innovative document workflows," said Mr. Sakurai, who put competitors on notice, saying IPS is poised to take a sizable share of the production printing market, including production color. Mr. Sakurai put competitors on notice, saying IPS is poised to take a sizable share of the production printing market, including production color. The allusion to color is hardly a surprise, given that Ricoh is already comfortable with digital color, and since IBM Printing Systems is known to have been working with Ricoh/Hitachi on the development of a high-speed color print engine for some time. And there is after all, IBM's AFP Color Consortium, founded to develop specifications for high-speed color printing. No comment was made however, regarding the deal IBM Printing Systems struck last year with Screen to sell its inkjet printer. Stay tuned for developments on that front. Mr. Sakurai closed by calling the venture the logical outcome of the long relationship and the strong bond of mutual trust between the two companies. Thanking IBM for its faith in Ricoh, he said, "I can assure you we will use all our considerable resources to make sure this is a resounding success. Picking up on that theme, Mr. Nick Donofrio, IBM Executive Vice President, also praised the high level of mutual trust, respect, honesty, and forthrightness that has developed between the two companies, calling it a critical part of this agreement. Still, the it is the market that dictates what companies do and the capabilities they develop, and speaking with unusual candor for an executive of a large company, Mr. Donofrio described how IBM came to the decision to sell off the Printing Systems division. "There comes a point in time--and trust me, IBM has been there before--when you realize you no longer have capabilities to move a certain technology in a direction of sustainable, profitable growth." He said IBM constantly looks at how fast technology and the market is changing, and the rate at which the company is changing. "When that rate slows down, it is time to stop and reevaluate. It doesn't mean we are not changing or improving, but it does mean we are not moving fast enough anymore. That is what happened with IBM's Printing Systems business. The rate of change slowed to a point where we realized we would have great difficulty in successfully growing it, nurturing it, and helping it thrive on our own." "It meant it needed a new direction. We've learned that when we are faced with decisions about markets and our ability to serve them from a growth perspective, sometimes we must learn to let go." Mr. Donofrio said the integration of Ricoh's capabilities in the small and medium marketplace with IBM's in large enterprise space equates to a very exciting opportunity for its people and the company. But if the steady stream of calls and emails over the past two days are any indication, the question on lots of minds is how this will really play out. Which, of course, is open to debate and discussion, and there'll be plenty of that over the next few months. It was hard to reach people today for comments, but I did connect with Kemal Carr, president of Madison Advisors who told me in a quick phone call late in the day that he saw it as a win-win for both companies. Carr saw it as a natural fit for Ricoh, given that they bought Hitachi in 2004 and that it gives them a broad offering with which to move to a new level in the market. And it gives this new iteration of IBM Printing Systems a new story to take to market. I agree that it is certainly a good move for IBM and Ricoh alike, giving new life to IBM's printing division while putting Ricoh squarely in competition with the likes of Océ and Xerox. I'm looking forward to learning more of the details and the strategy as more information becomes available. Right now there's a lot of supposition and guessing going on, and sources are telling me that numerous details of the venture are yet to be worked out. Hardly a surprise. To keep you up to speed, we'll have more interviews on WTT and ODJ with IBM and Ricoh execs in the coming days and weeks as this semi-new player takes its place in the market. There are opportunities and threats for all involved, and this move, more than almost any other in recent years, clearly changes the playing field in production print and also how it may relate to office and workgroup printing. While American and European companies in the production print space anxiously look at performance on a quarterly basis, Japanese firms think long-term, and measure time in years. And make no mistake, InfoPrint Solutions will become a Japanese company and will come to market with new ideas and strategies to compete. An old saying comes to mind. "May you live in interesting times."



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