This Week
with Frank Romano
Hi, this is Frank Romano from WhatTheyThink.com. Welcome back to another episode.
The other day I got a copy of the NPES News, it’s a great publication, it summarizes research, it has information on foreign marketplaces and other information about the industry. NPES, as you know is the association for suppliers to the industry. And then they’re talking about some recent research involving digital printing. And it had to do with what they call tipping points; that is that moment in time when a certain technology just takes off.
Like when I stopped using the telegraph…
Offset lithography dragged along for a hundred years and then all of a sudden it found a marketplace and within a decade letter press was gone.
Now according to the research, they say the tipping point for digital printing is decades away. Decades, as in 20 years or more.
Just try and wait me out…
And I disagree with that. The chart that they have here compares analog pages going down five percent over this projection, 2009 to 2014, and digital pages increasing 11.3 percent. Now, I don’t think it’s going to take a decade for those two worlds to come very close together. And two things happened this week that really pointed that out to me.
The folks at Kodak sent me the first two books that were printed on their Prosper Inkjet Press. Beautifully done, absolutely no difference between what they’re doing and offset lithography. If there is, it would take someone with a microscope and some analytical equipment to really tell the difference. I tried to save the first publications that were done with digital printing. I have the first thing that was done on the HP Press, but that’s not important because what is important is the latest thing they did. This is off the HP, I think it’s a T300, it’s their inkjet press. And this is full color on coded stock. Here feel that.
Print beats digital again…
Now, you look at this and you look at these and you say, wait a minute, what’s the difference? If the cost is lower with existing technology because the run lines have gone down because you want some flexibility, then this is going to grow. This is going to grow. And it’s going to grow faster than you think it’s going to grow.
So when they say that the tipping point for digital printing is decades away, no, I’m sorry, it’s going to happen very quickly when it happens. And you can already see the seeds of that being sewn by the kinds of technology that’s out there. If I put this in the hands of any user and I said, how is that printed? They would have no idea because new technology is catching up very quickly with the quality levels of old technology.
Now there’s something else about this study that disturbed me. It said it excluded any equipment under $50,000. So they were covering only high-end production equipment. All right, I understand that. Certain suppliers will sell high end equipment and want to know what the market is for certain kinds of machines. And that’s great. But if you look at the market, there are more of the smaller machines. Under $50,000 gets you a phenomenal machine nowadays. You can get something that is 40 pages a minute, very good quality, has the ability to have online finishing. You have the ability then to compete with the big guys. So smaller printers, who in the past would have had to invest a significant amount of money in the bigger equipment can now find something else.
So when you exclude the high end production equipment and then you purport a chart that deals with the number of pages that are involved, you say trillions of pages Simplex North America and you’re only looking at the production equipment, then your entire chart is suspect because then it’s only talking about those pages that are done on high-end equipment, it’s not talking about those pages that are done on moderate level equipment, which means then that the tipping point may have already come.
Repent!
And the chart doesn’t tell us that and the research doesn’t tell us that. So, it’s a brave new world for digital printing. It’s amazing how quickly it has changed. From 1993 – it took a decade, from 1993 to 2003, for that technology to really take off. And you can see the chart. If you look at the chart of the acquisition of equipment, it just grew exponentially. And continue to grow that way. And the new production equipment is coming online, roller fed, higher speed, B-2 sheet fed; these machines are going to make a significant difference. Some of them will be priced at the high end of the industry because of the production level, some will be priced in the middle of the industry and some will be priced at the lower end of the industry. But they will all do similar things and they will all absorb pages from analog technology.
What analog technology has to do is to advance to the next level. Offset lithography, Gravure, Flexo will have to figure out how to get to a more productive level. They’ve already made great strides in many cases, but you can’t beat, for short run printing, digital printing because digital printing gives you the advantage of no make ready, quick change over, and phenomenal cost advantages in some cases. Not all cases, but in some cases.
So in any case, watch all that research that’s out there. Some of it is suspect.
And that’s my opinion. Take care.
Next Time…
You’re eating a sandwich at lunch and you say I’ll use Helvetica upper and lower case in a blue box, thank you very much…
Discussion
By Joe Webb on Nov 10, 2010
The digital printing revolution has been on the desktop ... and in all of the things that we no longer print. In the early 1990s, the average month for commercial printing was $12.5B -- today it is a little above $7B -- all in 2010$. The biggest thing has been the growth of digital neverprinted.
Ink jet has the benefit of not really having to develop a unique front-end "pre-press" process, unlike offset, which required lots of craft transition to support it once it had improved. Ink jet builds on what is already there starting with the near device-independence that began with desktop publishing and PostScript.
The adoption of ink jet may be faster than expected, for sure, and the economic pressure on nonadopters might be very swift and very harsh.
By Mike Serra on Nov 10, 2010
clever...well done
By Fran Settell on Nov 10, 2010
For Steve Brown:
Frank is absolutely correct. The cost, quality and technology to process data at press-rated speeds has arrived. The benefit for Publishers - millions/billions of dollars in eliminated Excess and Obsolescence will drive dramatic change to Production requirements.
Offset isn't dead, and I love the fact that Frank is challenging "analog manufacturers" to get more innovative...but the message is loud and clear, you don't have to be gifted with prophecy - digital will begin taking chunks (not bits) of market share from traditional offset providers.
By Marco Boer on Nov 10, 2010
Frank, I am the lead author of the NPES/PRIMIR Megatrends in Digital Printing Study. This study investigated the page volume tipping point from analog to digital printing and was based upon 900 North American interviews and 8 months of study and analysis sponsored and vetted by the leading digital and analog equipment and supplies manufacturers in the world.
The objective of the study was to answer when we can expect a transition of production printed pages from analog to digital print. The study investigated by 12 key print applications the opinions of print service providers, specifiers of print (buyers of print and design ad/agencies), and equipment and supplies manufacturers on the rate of transition from analog to digital print.
Frankly (no pun intended), the answers surprised all of us. As expected, there was wide variation depending on the application. For example, among print service providers 26% of respondents expected book page volumes to tip from analog to digital print by 2014. The expectation for pages tipping in marketing collateral was even higher, topping 40%. However, because most of the high-volume production applications such as newspapers, magazines, catalogs, and packaging are not expected to tip in the foreseeable future, in aggregate there is no clear tipping point foreseeable for page volumes across production printing in its entirety.
One must also not confuse page volume tipping points with print jobs, or presence of digital production printing technology at print service providers and in-plants. The awareness of digital production printing technology is ubiquitous, and the growth rates of page volumes for certain applications like digital book printing exceeds 20% CAGR.
However, because offset page volumes remain so large, growth rates for all digitally printed pages would have to cumulative exceed 200% annually for the next decade even during a projected 5% decline of analog pages for the tipping point to occur. Mathematically it is just not possible for enough new digital print volume capacity to come on-line to replace analog print.
The single largest obstacle cited to page volumes tipping was cost of digital consumables. Even among the most cost effective high-speed ink jet print systems, the cost of digital consumables is still 10-20 higher per equivalent liter than analog inks. Depending on the size of the run length, one would have to save an enormous amount of money on set-up and plates to recover that difference. Yes, there is a clear trend towards smaller run lengths, and yes digital production print will thrive economically at those smaller run lengths, but analog is not sitting still either. Look at $700M VistaPrint , growing at 20%+ annually on the basis of nesting jobs highly efficiently on analog presses.
The bottom line of the study is that analog printed page volumes are shrinking almost completely independently from digital production printing page growth. Digital production pages are effectively a parallel market, one that users are willing to pay a 10-20x premium for on a per page basis. Digital production offer high value and profit, a benefit that would disappear if digital print cost was equal to analog.
All of us including the equipment and supplies manufacturers who vetted this seminal study are extremely proud of the work that went into this research. It has framed the structure for further discussion about how we should view digital production printing, whether this perspective is in print jobs, run lengths or value.
Ultimately as an industry what we care about is revenue and profit. Assuming one can equate digital page volume growth equally with value, 11% growth compounded annually from now to 2014 is a pretty impressive number given the state of the world economy and pressures from electronic substitution of print.
Marco Boer
Vice-President
IT Strategies, Inc.
By Pete Rivard on Nov 12, 2010
The banner headline on this very page says, and I quote, "Offset is still very much a viable part of a fully integrated print offering." Wow, is that the best that offset can say about itself? That is the exact sound of the towel being thrown in.
By Noel Ward on Nov 17, 2010
I've been pretty much all digital all the time since I got started in this industry, but I'm not so sure I'd call the present volume of digital print the tipping point. There's no doubt that digital is claiming a larger and larger share of the printing landscape, but the tipping point just isn't here yet. I don't like this, but it's reality.
In my opinion, a tipping point is when a trend, movement, process, whatever literally takes precedence over existing or established processes. While digital is beginning to doing this in some areas of print, the vast majority of pages are still being produced using some type of analog process. And probably will be for a while to come.
I think of it like the big garden cart in my sideyard that got filled with water during some recent rains. I can lift the handle and begin to tip the water out. I can do this slowly and control it, but if I lift it a bit too much gravity takes over and it all goes out very fast. That's the tipping point. Much as I love it, digital print is still at the point where it's a steady but growing stream, not the runaway flood that washes away analog printing options.
I think it's important to look at the volume levels across applications, as the PRIMIR study has done. There are many applications where digital is still too slow and/or expensive for the volume levels required. And while there are numerous apps where digital has great potential, such as targeted direct mail, the costs are still sufficiently higher, sharply limiting adoption.
Frank points to books, especially short-run trade paperbacks like the two from Kodak he shows us. These work well for digital, as do some types of text books, according to people I've talked with at leading publishers. But the travel guide Frank shows (done on the HP T-300) was a customized compilation of couple of existing books produced for a narrow audience--a few hundred people. Sure, that can be done only on a digital press, but the generic version of those titles can be much more affordably and profitably produced on an offset press. Still, publishing (books, magazine, newspapers) is a place where digital print can carve out a big territory, but it will be part of a mix of offset, digital and totally electronic (iPad, Kindle, etc), rather than being the prevailing way of putting words and pictures on a page. I somehow don't expect to see 100 to 200 page magazines with sizable circulations being produced on inkjet presses--perhaps ever.
Digital print will continue carving out a bigger share of the market, and become more and more viable as an alternative, but except in a few areas, it's not likely to overwhelm analog technologies anytime soon. Both technologies will coexist for the foreseeable future.
That's my story and I'm sticking to it.
By Joe Webb on Nov 17, 2010
The tipping point is the Kindle. I was lunching with a consultant friend yesterday at a shopping mall. I mentioned a book. He said "I should get that." He downloaded the Kindle version on his iPad. There was a Barnes & Noble a couple of hundred feet away. As best as I can tell, I think the analog situation will decline faster than anyone typically anticipates, not because it is shifting to digital but the demand for the analog goods will decline at a rapid rate, and those users who prefer the analog goods will be better served from a production perspective by digital technologies that have better cost and turnaround profiles. So digital's growth will be a secondary effect, not a primary cause. The tipping point of "notprinted" occurred quite some time ago.
By Marco Boer on Nov 17, 2010
Dear Dr. Joe,
You are correct in your observation in terms of perception, but be careful as e-book volumes are statistically speaking apparently still well below 2% of all books published. Amazon and others play games by citing hardcover instead of softcover book to e-book comparisons when citing e-book volume growth, but I believe I am correct in understanding that softcover books make up more than 75% of all book volume in the US.
Also note that books are but one of many production printing applications. Books are likely most susceptible of all production printing to move from hardcopy to e-versions, but this may ironically drive growth of digital printed books as fewer hardcopy books are needed and publishers finally have to remove the 20-30% inventory returns (plus carrying costs).
Marco Boer
By Joe Webb on Nov 17, 2010
That's what I meant with the books -- enough e-books get published so that needed volume levels for print editions fall back enough that they fall into the economic range of digital. So e-books indirectly increase digital volume.
Book volume has been declining for quite some time, not even keeping up with population. I posted this before, but here are the inflation-adjusted data http://spreadsheets.google.com/pub?key=0Avo4Flr7kg8ndEdzemtKQ2hVZHdIUjVrUTBXWVJQcUE&hl=en&single=true&gid=1&output=html
By Noel Ward on Nov 18, 2010
Joe and Marco are right that e-books will indirectly increase volumes for digital book printing, at least for a wide range of titles below some to-be-determined print volume. Best sellers are different. Even if half the volume of the top-selling books shifted to e-readers, there's still enough volume to justify offset print runs. It's the lower volume titles that may do much better on an e-reader.
But something no one seems to consider is that all the Nooks, Kindles, and iPads are primarily in the hands of about 4 million early adopters who tend to be (a) techno-geeks, (b) can afford to buy another electronic gadget, and (c) enjoy being one of the cognoscenti who have the latest technology. These devices have yet to tap the larger market of readers. This is still a wild card for e-books, as cool and trendy as they are.
I'm not sure a massive shift to e-readers is going to happen just yet, and I think digital printed books will do just fine. As will offset.
For what it's worth, my traveling observations of e-reader use has been fairly consistent all year. 4-6 e-readers in use per flight or in an airline club lounge on any given day.
By Buck Crowley on Nov 19, 2010
Having been involved in most of the key printing disrupting technolodgy in the last 40 years, these discussions about "what and when" are repetitive.
What Joe Webb explains with economics, I explain with technology; that is, look at the fundmentals from the bottom up.
The landscape has changed as the huge amount of fundamental developments are revealed to the market. All the many inkjet printer manufactures and paper companies are investing significant resources to replacing litho as the dominate printing method.
Here is the bottom-up view and some inkjet fundamentals …
WIDTH: any print width, just add modules and the price scales proportionally.
RESOLUTION: Any dot resolution, just add modules down-stream for any resolution and the price scales proportionally.
SPEED: Any speed, just add modules down-stream for any resolution and the price scales proportionally. At a 1000fpm the inkjet droplets are still 10x faster than the medium.
RELIABILITY: No moving parts, simple & low-cost disposable heads. Nothing touches the paper but ink from the inkjet, no paper steering or tension concerns.
INK: same pigments as litho, but uses less pigment and uses water instead of expensive petroleum.
Micro-Brewery ink: Making inkjet ink is easy and all large bulk users will mix their own inks in-house, the same as the hundreds of inkjet cartridge refillers do now. (90% of the bulk comes from your tap water) The inkjet cartridge refill market has produced lots of available formulations, and many of the important patents are expiring. This brings inkjet cost inline with all other ink cost.
PAPER/medium: The office printer, packaging and wide-format solved this problem and inkjet can print on anything. All the paper manufactures have major projects underway, announcing new papers at an unprecedented rate.
The additives that make the media be "ink receptive" are inexpensive, and plentiful.
HARDWARE: We are a system’s integrator with significant successes in pioneering technology breakthroughs in commercial printing. We have available inkjet technology rooted from the low cost office printers. This is easily scaled to fast, high production commercial applications.
Back to the high-level view: the reason inkjet printing is being adopted at such an incredible rate is it is a better way for printers to achieve profits. No pressman required, no make-ready and no skilled maintenance people. This is the winning formula.
Buck at BuckAutomation.com
By Erik Nikkanen on Nov 21, 2010
Buck, your post is excellent. It shows how the inkjet technology has a clear path to obtain predictable performance improvement.
I admire the development of inkjet, because it uses high level science and engineering to push the boundaries to obtain practical technology for what is required. At the core, all printing processes are analog, which require the controlled placement of the right amount of ink, in the right location. Inkjet development has done a wonderful job of understanding the physics to do this.
I am process oriented and like the potential of the offset process to develop a predictable path forward but I am not too happy with the offset community. The skilled press operators and highly experienced experts stand in the way of developing a predictable process. Their insistence on skill and experience as being the primary way forward does not allow for ideas that have not been investigated.
Inkjet technology bypasses those groups of people. Business owners, with the use of the developing inkjet technologies, can build businesses that provide predictable cost structures and are not held back by the opinions of experience.
In the end, printing has always been a business and must survive on that basis.
Discussion
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