For today’s segment of our Creo conversation, Judi Hess, recently named acting president of the Creo Inc. subsidiary, Creo Americas, talked with WhatTheyThink Senior Editor, Gail Nickel-Kailing about Creo’s Research and Development efforts. These efforts range from equipment and software development to “subforensic taggants” and flat panel display imaging systems.

This is the second in a three part series. The first installment can be seen at Part I: Creo’s Markets and Market Share, where Ms. Hess provided insight into Creo’s market share, discussed gross margins, clarified the company’s plate strategy, and talked a bit about Creo’s efforts in China.

In the upcoming final segment, Playing Well With Others, Judi will respond directly to Andy Tribute’s August 4th column, “Creo: A Critical Assessment.” Don’t miss it!

WTT: From 1999 to 2003, Creo invested nearly $290 million in R&D. I know that five years isn’t a terribly long time to generate revenue from new products, however, it would be helpful to know which investments are producing results.

JH: It’s a long list, actually. Fundamentally, our R&D is targeted to keep us 2 years ahead of any competitor on any product that we’re working on. If you look back – in 1999 we brought out the Prinergy PDF-based workflow system. And Prinergy hasn’t stayed static since then; we’re now up to version 2.3, and we added Prinergy Powerpack for the packaging market, Prinergy Newsrun for the newspaper market, and more recently, Prinergy Evo, which is targeted at smaller commercial printers. We have a complete range of products that deliver one of the best workflows available today. It takes R&D to successfully evolve a product like this.

At drupa 2000, we introduced Synapse InSite (job submission, proofing and job tracking system) and Synapse Prepare (PDF-file creation tool). We also continue to develop

the Brisque workflow system, bringing out Brisque 5.0 earlier this year. Following our acquisition of ScenicSoft in 2003; we continued to invest in UpFront (now Synapse UpFront, a production-planning tool) and Preps (an imposition tool). We’ve also introduced the Synapse Link product, which automates the exchange of data between print-production systems and management information systems (MIS).

We are committed to offering workflow solutions that completely integrate our customers’ business and production systems. Of critical importance was the introduction in 2001 of Staccato advanced screening, which is now instrumental to the implementation of our Spotless printing technology.

On the hardware side, we’ve introduced the Lotem and Lotem Quantum lines – 400 and 800 models – and we’ve increased the imaging speed on all our devices at least threefold. Other developments include the Trendsetter continuous-load machine; the Trendsetter News CTP for newspaper printers; our VLF line, including the new Magnus VLF CTP, introduced earlier this year and the fastest fully-automated VLF platesetter on the market; sleeve-imaging for our ThermoFlex flexographic platesetter; as well as the Exactus thermal gravure system in partnership with Acigraf (Italy).

Additional developments in that same five-year period include the digital offset press systems developed with Komori, MAN Roland, and, of course, Heidelberg.

In proofing we have the Integris (digital contone proofing), and, of course, the Veris (high-quality digital contone proofing with Creo Certified Process) proofing systems. The Veris has been a huge investment, in both a complex machine and the brand-new Multi-Drop Array inkjet imaging technology. To ensure that the Veris and our other inkjet proofers are successful, we commit R&D resources to ink and media, too.

The Spire color server is a key product that has been extremely successful. During the 1999-2004 time period, the Spire went from being unknown to the preferred front end in the Xerox product line for production-printing systems.

We also have launched the new Clarus line of processless plates, in addition to the other lines of Creo plates introduced in the past fiscal year as part of our new plate manufacturing capabilities. And on the creative side, we introduced the entire series of iQsmart scanners and the Leaf Valeo 17 and 22 camera backs. These are just a few of the products we’ve launched in the last five years.

WTT: A lot of what you have talked about here could be called evolutionary, could we talk a little about those “revolutionary” solutions? Revolutionary products cost more, take longer, and have higher risk.

JH: Here is a short list: Prinergy, Synapse InSite, Synapse Prepare, Preps, the Veris proofer, the Leaf Valeo camera backs, the Exactus gravure CtP system, and the flat-panel display system we’re working on with DuPont Imaging Technologies – these are all completely new.

WTT: Those things that we don’t often hear about – your flat-panel display technology, your taggants, the things outside the graphic arts industry – are pretty spectacular efforts.

JH: With anything revolutionary there is speculative nature to it. Any revolution can either go well or poorly…and because you gamble a fair bit of money and resources on new products, you can’t start a new revolution every day.

Clearly there is a large amount of R&D that goes towards keeping our existing products in good shape because that’s what our customers want. They don’t want a revolution every day.

We have to strike a balance between trying out something completely new every once in a while to break open a new market or to shake up a market completely, and keeping our existing products competitive so our customers enjoy a cost-effective evolution over time without having to question their investment.

WTT: I’ve just got to ask, what about those spectacular failures? You know, one of projects you bet on and the horse just didn’t finish?

JH: We’ve definitely had a few failures. We made an attempt at building an imaging system for the printed circuit board industry. It actually allowed us to develop a fair number of unique technologies that we used elsewhere (including the base chemistry used for some of our consumables developments), but the original product for which they were intended never made it. It was a speculative thing; we thought it was a good opportunity, but it turned out the opportunity wasn’t big enough and the product wasn’t particularly well designed for the target market.

Actually, Creo itself was born out of a spectacular failure. Creo was started by Dan Gelbart and Ken Spencer working together to develop an optical tape recorder (OTR). It was a brilliant product and by the time it came out (it was several years late), Ken and Dan had solved some fundamental physics problems but there was no real market for the product. It was a spectacular failure but it generated a lot of the technology that drives our devices today. It proves the importance of creativity: you can learn a lot and develop base technologies that can then be repurposed to deliver significant value.

WTT: Please tell us about some of your efforts to penetrate markets outside the printing industry. The new sub-forensic taggant, for instance, can be included in the manufacture of a cast, extruded, or painted products.

JH: We believe we have developed some very interesting technology around sub-forensic taggants. The security and authentication market right now is hot and getting hotter. It’s amazing the number of things that are being counterfeited. Our new Traceless technology detects fraud and counterfeiting with tamperproof marking and sensing technology. The Traceless solution uses miniscule amounts of a highly controlled powder taggant and proprietary electronic readers. The taggant, which can be added to any number of products and packaging materials, is visually and chemically undetectable, even by forensic trace methods, and can only be detected by the Creo reader. In addition we have developed a “Unique ID code,” where each individual item can have a unique tag. There are a lot of applications for such a unique code, particularly for high-security applications like passports that need to remain unique and tamper-proof.

There’s a lot of excitement about this technology, but we have to take it one step at a time. If everything goes according to plan, we will have an extremely low cost-per-unit, enabling users to tag individual items, such as boxes, documents, garments, parts etc., at a very low cost.

It definitely seems to us a market that has very good potential. In fact, we are hoping to sign our first contract in the next few months.

WTT: The reader technology for applying and reading a unique ID seems to build on your imaging core competency. Could you tell us a little more?

JH: Yes, it does leverage our strengths in optical systems for reading, but it will also allow us to apply our knowledge of databases, workflow management, and high-speed hardware. We can read an ID and match the item that is being checked with a database of identifiers in a fraction of a second.



Tomorrow: Part three of the interview with Judi Hess, President of Creo Inc., and Acting President of Creo Americas:Creo - Playing Well With Others.


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