We caught up with Francis McMahon, executive vice president at Canon Solutions America, Production Print Solutions, to talk about Canon’s growth areas, tease some new products and technologies, and explain how using the Grateful Dead as a business model has helped Canon succeed in the production inkjet market.

WhatTheyThink: Francis, thanks for catching up with us. Let’s start with Canon’s inkjet market share and the places where you’re seeing growth.

Francis McMahon: We completed 2021 with 45% market share—specifically, high-volume inkjet market share, which is really all we track here. We’ve been tracking it for about the last 10-and-a-half years. In total, that would be the sheetfed varioPRINT iX products, as well as all of our web-fed products—the ProStream and the ColorStream platforms.

We’re very pleased overall with our market share. Most importantly, in 2020, we had 32% market share, so we had a 13% increase in 2021. We’ve been successful with our traditional customers, but we’ve also had a lot of success—especially with sheetfed inkjet—getting into accounts for the first time. For many years, we’ve been successful in direct mail and transactional print, and really for the last three years or so, we had to build a brand in commercial print markets, build some confidence, and gain awareness and we’re now at the point where people want an iX, they trust Canon and they know about our service.

But that wasn't always the case. Three years ago, when you went into a photo specialty account or you went to a commercial printer, they said, “We’ve heard of Canon, but what can you guys do for us?” Today it’s, “Oh, we need to get Canon in here as a part of the process and evaluate their products.” So the growth is really coming from the commercial print and the photo specialty side. A lot of it is competitive replacement.

WTT: In what way?

FM: The iX presses in particular are good replacements for toner, and customers have been waiting forever for the quality advantage on inkjet vs. toner to come, and it just hadn’t been there. Now it’s there with the iX, and there are two big advantages.

One is the overall running cost of inkjet, but the bigger part is, with the labor market in disarray, customers can’t get labor the way that they used to, so our advantage is that our products are so simple to use. You can put one operator on two or three iXs, and if that operator calls in sick, somebody else can figure out the iX pretty quickly. You don’t need this massive skill set to operate our equipment. We’re finding that more customers are anxious to get products like the ProStream and the iX, simply because they are simpler to run, and customers have to prepare for having less people—and less technical people.

WTT: How do you see the competition on the sheetfed side?

FM: When we look at the sheetfed side, we’ve earned in our category about 50% market share. Now, to be fair, Konica Minolta has their B2 press, so you’re only going to sell so many B2s, and there’s Fujifilm, which is more of a simplex unit. And then you have Xerox doing very well in sheetfed. One of the advantages that Xerox has is a smaller footprint to sell into in-plants. So we have not seen a lot of growth in in-plants on the inkjet side, because our footprint has not been as easy for them to accommodate compared to some of the smaller devices. When you look at our presence in toner, like the varioPRINT TITANs and the imagePRESS, we do extremely well in in-plants, but the physical size of our inkjet products has not been that easy for in-plants to accommodate, although obviously some in-plants have larger locations than others.

WTT: And on the continuous-feed side?

FM: On the web-fed side, in 2021, we had 42% market share, up from 36%. Screen, Ricoh and HP have viable products and they’re doing a good job. I think there’s plenty of opportunity for everybody, but we’re very pleased to see that we’ve remained number one—and not just remained number one, but picked up significant share.

One final comment I’ll make on market share overall is that we probably could have done better. Our backlog on iXs right now is 30 machines that haven't been placed just yet.

WTT: The last time we spoke you had said that orders were coming in so fast that getting them built was a challenge.

FM: We had excellent installations in the first half of the year and now we’ve got another 30 machines ready to go. And on the web-fed side, we have about 10 ProStreams ready to go and about another 48 ColorStreams, which are new and used, ready to go. So the backlog is excellent. Assuming we can get all the products installed this year—and orders are still coming in—I would expect, from a revenue perspective, to have our best year ever. 2019 was our best year, but I think we’re going to overachieve that by as much as 10–15%.

WTT: There are obviously different technologies out there, and some of them are better suited for different environments, which is likely driving market share. Can you talk about the ROI of investing in Canon inkjet vs. some of the others—everything from training and servicing machines, all the support and so on?

FM: In terms of the ROI conversation, when you look at hard dollars, I would say all of us are pretty much similar in terms of the total ROI, meaning some of us may charge differently for ink vs. service and parts than others, but in the end, it all comes out in the wash. The reason we come out ahead isn’t so much on pricing or the actual hard-dollar ROI, but on all the intangibles. And that is our service organization offering anything from 5 x 8 to 24/7 and the reputation of our service organization just to show up very quickly and being very competent in servicing our products.

The other thing is the uptime of our products. While we have a wonderful service organization when the products do go down, the overall reliability of the machines means we’re maybe getting more hours of uptime and overall reliability than some of the other competitors. Then you’ve got things like the onsite training that we do. I think that’s a big part of how the customer views who to do business with.

WTT: And your Project 360 team.

FM: When we put a machine in, we have a team camp out there for a few weeks, and their whole job is to make sure that the operators are really competent with the machine, so they know how to do basic maintenance with the machine, but most importantly, they know how to transition a job over. It’s not like they’re running a particular job for the first time ever; they’ve been running it on some other type of product, and now they need to know the best, most efficient and cost-effective way to run it on this new machine that they just purchased from us. So we have a team that stays there and helps them through this transition period.

All this handholding that we do is a big component of it, and the other component is everything that we do afterward—everything we do through the thINK Inkjet User Community as well as throughout the year, and all the other resources that we offer. We’re constantly there to help the customer. And I think they feel it.

WTT: I was just at one of your customer sites and they had an early generation ColorStream. It still had the Océ kit, and it was a workhorse and it still is. It's still pumping out volume. When you invest in that, it seems like there’s a lot of support to keep those machines running.

FM: One of the things that I learned through being a big Grateful Dead fan was that the band wasn’t there to make money or to get rich. That was never the purpose. The purpose was to provide an experience for all these people that appreciated what they were doing and to always focus on them. The big thing for them was they wanted every single person in the audience to feel as if they were playing to them. So there could be 40,000 people there, but they wanted each person to have that level of experience.

I’ve taken that philosophy and tried to get that through our organization, so that every customer we visit should feel like Canon is in business just for them, so all the support that we give to them, the way we treat them, the products that we provide, and the training and the service and the marketing—they feel like it’s just for them. And if we do that, then you can take care of the rest.

The Grateful Dead had this huge obligation because they had hundreds of people supporting the effort in the back office and they had to feed those families. But they knew that if they just provided that experience to the customer—to the fan—then the rest would take care of itself. That model is really working for us—that is, just take care of the customer, period.

WTT: That’s a great way to put it. Switching gears a little, I understand that you just returned from one of Canon’s R&D centers. Is there anything that we can get an update on?

FM: I just got back from Venlo and what I can share with you now is I actually saw what’s coming—meaning it’s not just something on a piece of paper. I saw it, I witnessed it, and I saw how far along they are.

On the sheetfed side, we very much understand that—as I mentioned earlier—it’s been hard for us to get into in-plants with inkjet due to the physical size of our machines. That’s something really important to us because we believe the in-plant market is an important one, and they’re calling on Canon for the toner products to coexist with inkjet.

The B2 format is also something we think is an opportunity. Those are on the sheetfed side. On the continuous-feed side, we’ve also had comments from customers about the physical size of the ProStream. With inkjet, whether it’s ours or anyone else’s, the reason these machines are so big is the drying, and nobody’s quite figured all of that out just yet. That is a major goal of Canon, and from both the continuous-feed side and the sheetfed side, size matters for some of our accounts. So I think we’re going to figure that out pretty quickly.

The last thing I’ll point out is that commercial print and labels are important growth areas for us. I talked about commercial earlier, but for label and packaging, without giving too much detail, I was at the factories and I see progress and output on materials that we’ve never printed on before. It’s still early stages, but I expect Canon to continually move in this direction.

WTT: You’ve mentioned—both in this interview and other times we have spoken—about industrial print markets, specifically labels, folding cartons, and packaging, and we’d like to get your perspective on the idea that you can have great technology, but if you don’t have sales and support organizations built up, you can’t really do anything with it. Now that you see this great technology emerging, what are the opportunities for Canon in these areas?

FM: I was involved with this at a previous employer. We got firsthand experience in how you can’t just take your current structure and talent pool and transition them over to these new markets, because they’re really different and unique. We just can’t do it with the same type of people and the same processes. So almost a year ago, we started a project here in the U.S. where our goal is to make sure that we build out the proper infrastructure to support the customer moving forward, because it’s going to take a different type of organization as it relates to marketing, service, sales and just overall operations. For example, going after the brand owners with labels and packaging is important. It’s something we do a bit on the commercial side, but that’s a much bigger part of label and packaging. And the software and technology you use on the front end can be very different, so we’ve got to get those people and expertise. And it requires a different sales approach. So we’ve started building out what we need and getting people in place and getting our organization really well-educated.

WTT: With all the pressure that’s happened to the industry since COVID, and now it seems there are never-ending challenges like paper shortages, logistics issues, postage increases, etc. What makes you optimistic? As the song says, “Once in a while you get shown the light/In the strangest of places If you look at it right.” Where do you see the light?

FM: There’s a lot of frustration out there, but let me tell you where I get shown the light. There is so much work out there and people still very much believe in the value of print communications. Customers tell me they’re reaping the highest profits they’ve ever had. And, yes, they’re seeing increases from their vendors, they’re seeing increases in postage, increases on paper, but they’re able to pass on those costs because the value of the services they’re providing is still very good.

It will probably be at least a full year, maybe a year-and-a-half, before we start seeing things get to some level of predictability. I don't know if we’re ever going to get back to where we were. The paper industry is scary—you’ve got paper vendors talking about not even investing anymore in paper and going straight to brown and to packaging. There’s a shortage of envelopes, and that creates difficulties for direct mailers. But they’re all getting very creative in how they communicate. I think the big thing is that the volumes are there. Our customers are running more volume than they did in 2019. Our customers are telling us that, from a profitability perspective, last year was one of their most profitable years, and this year may be their most profitable.

WTT: Commercial printers are busy. We run into delays when we need to get our print magazine on press. Everyone is busy; it’s challenging, but there is no shortage of work.

FM: And think about the backlog of orders we have in the system. Commercial printers and direct mailers and transactional printers are buying equipment, and they’re buying equipment because they need the capacity. We look at inflationary conditions and yet our sales people are bringing in almost double the amount of orders that they did back in 2019 on a monthly basis. Literally the phone rings out of nowhere and it’s a current customer and they say, “We just got another big job. We need another iX. How quickly can you get it here?” Or “I need a ColorStream right away. Can you get it here?” You know, they’re big. It’s not like I can put something in an envelope and ship it to them, but that’s kind of what’s happening. You can’t forecast that these guys are getting these giant jobs, and they need the capacity.

WTT: For a long time, especially in the commercial segment, there was a lot of, “I’m not gonna talk to this other printer. I don't wanna be in an event with another printer cause they're gonna steal my strategy or my customers." And I think these latest challenges have forced more cooperation, which has made the industry better.

FM: Very true. The challenges are real and we are struggling through them, but the optimism from the industry and the creative ways in which they’re working around these challenges have been encouraging. We see this firsthand through thiNK and at the annual in-peron thINK Ahead events. Our inkjet customers – many of whom compete against each other – come together. They learn together, they network, sometimes they even share solutions and help each other out. We’ve seen customers help each other by taking on overload work or sharing paper when someone was short. We are seeing so much more community evolve amongst our customers, and we’re proud that thINK can play a part in that.