Color Conducted by Noel Ward, Managing Editor, Show Coverage October 13, 2006 -- Xerox has been so active promoting its big iGen3 and other digital color presses that it's been easy to forget the company's presence and strength in black-and-white printing. But the company that created the DocuTech and in many ways jumpstarted the digital print business we know today has not forgotten its roots and has numerous offerings and strategies around monochrome. But that's not to say that black can't be enhanced with a little extra color when the need arises. I talked with Jerry Murray, Vice President, Product Marketing and Kevin Horey, Manager, Worldwide Monochrome Solutions, to get a reading on how Xerox sees the changing market for basic black and some of what the company will be talking about next week at Graph Expo. WTT: Xerox CEO Anne Mulcahy said recently that Xerox sees a huge market for highlight color. Yet most of the hype from virtually all print engine vendors has focused on full color. Tell us where you see the opportunity in highlight color and why you see this as important to Xerox. JM: If you look at the overall printing market, 50 percent of all the pages are still done in black, 25 percent are in two color and 25 percent are in full color. Over time there'll be more migration to full color and some will stay black-only. But that 25 percent using two-colors is a huge opportunity for our customers and for Xerox, especially if you can cost-effectively add the value of spot color to black and white printing. If you look at the overall printing market, 50 percent of all the pages are still done in black, 25 percent are in two color and 25 percent are in full color. KH: The expanded product offerings we'll be announcing at Graph Expo give our customers more options for adding highlight color--to any page in a document. JM: So one question is why this hasn't happened before? It's not like the market suddenly transitioned into this. Well, previously, no one, including ourselves, had the speed, reliability and quality to help this migration. Now, with our new DocuTech 180 Highlight Color System, a whole new market opens up, not just transactional, but POD with an additional color, and this changes the landscape. WTT: The DocuTech 180 HLC you will be showing at Graph Expo is not a new device but is one that focuses on the growing market for highlight color. Do you see there being a migration path from black-and-white to highlight color to full color, or are these simply separate niches or segments of the market? How can printers take advantage of these different types of printing? KH: We think this is a great migration path for our DocuTech customers to expand the application set for their customers. It's a great advantage to be able to print at 180 ppm with black-only or black-plus-one color. One example is a product user manual. Using highlight color to call out or indicate a key step or process on a page may reduce the number of calls placed to a customer support center, which can translate into lower costs for the manufacturer and improved end user satisfaction. If it takes them to full color later on, based on their applications that's great, but it's not critical that they go to full color. JM: I look at the market as three intersecting circles, not necessarily a progression of monochrome to highlight to full color. Depending on the application and the price-value relationship to the client, exactly where color makes an important difference dictates its use. There are hybrid applications where covers and some inserts can be full color, some pages are black-only, while others use a spot color for brand identity. These are the next generation of the POD applications that have long been produced in black-only on DocuTechs. I see the market as three intersecting circles, not necessarily a progression of monochrome to highlight to full color. What is interesting is that highlight color cost levels today are about where black-only was with DocuTech when it created the POD market. And the machines we'll have at Graph Expo get their heritage from the DocuTech line with all the software and finishing--and that opens up the on-demand market. WTT: In the past, Xerox highlight color machines have had a fairly limited palette. Given the significant potential for highlight color, do you anticipate expanding that palette to offer a wider gamut that will open more applications for your machines? KH: By the end of year we'll have 8 standard colors. We'll be introducing magenta at the show, and will be adding yellow in the fourth quarter. Adding these two colors to the existing base of Red, Blue, Green, Royal Blue, Cyan, Cardinal Red, widens the gamut significantly. But even more importantly, at Graph Expo we'll announce a custom-blended color program available in the first quarter of 2007. We're able to offer these custom colors by blending the standard toner colors and the introduction of a clear and an additional black toner. The blending capability opens up a wide range of new color opportunities. This is new technology, we were not able to offer in the older highlight color system. We're able to provide custom colors by blending the standard toner colors and with the introduction of a clear and an additional black toner. The capability opens up a wide range of new color opportunities. We have research showing that half of corporate logos are black plus one, so we think there's a huge opportunity to get very close to those logo colors and offer a new application set for our customers. JM: That's right. Logo colors are very important for brand identity and we believe this ability will be very important to customers and their clients. We'll have some sample boards at the show to show the range of custom colors we'll be able to achieve moving forward even though the colors won't all be available right away. WTT: The majority of documents shifting to highlight color will formerly have been printed black-only. But printers I talk to say customers are often reluctant to pay much extra for an additional color, even though it obviously costs more to print. How does Xerox plan on charging for highlight color on all these new pages? JM: Basically we're going to be charging same as black. A black click won't change, but color does cost a little more, but when you're just looking at logos and very low coverage, the difference is only a few mils. The difference is that the print provider can open up his application base, offer this greater value for his customers and can charge more for it even though it really doesn't cost him very much to offer the added color. When you offer highlight color at effectively the same price as black and white I think this will have a big impact. Now if there's any chance you won't be 100 percent black you have to look long and hard at this. WTT: Suppose a page is printed with say, 25 percent of a highlight color? What if it's 50 percent? How would that be charged? And how will you be charging for the custom colors--not the clicks--but to make a custom color for a customer? JM: The cost for different area coverages is only affected by the fact that more highlight color toner is used. We have tools to evaluate unique applications to assess toner usage. KH: We will not charge a customer to develop a custom color WTT: So what a print provider has do is look at the market potential, such as customers who could take advantage of highlight color if it was available. It's all about the applications. This opens up their capability as a printer--it broadens their horizons. KH: Absolutely. It's all about the applications. This opens up their capability as a printer--it broadens their horizons. A lot of printers think the only application for highlight color is in the transaction space and we know that's not the case. As I mentioned earlier with the product manual example, traditional black-only applications now have the option to add highlight color. Another opportunity might be the opportunity to reduce the number and volume of preprinted offset shells, because these often become obsolete sitting on a shelf. Our highlight color solutions offer great quality and high speed which may eliminate some or all preprinting based on the customers requirements. WTT: Full color and highlight color aside, black-and-white printing is not going away. The Nuvera 144 was rolled out here last year. How has this machine been fairing in the market and where are you finding the greatest success? What features are most important to customers? JM: The Nuvera family has really picked up over the last 6 months, primarily driven by print quality, the applications it can handle, and the range of stocks it can run. At Graph Expo we'll show the 144 with a stacker-stitcher that runs at full-rated speed. Some people have been waiting for the stacker-stitcher on the 144 so we expect that to drive more sales. We'll also have a technology demo of a new machine based on the 144. WTT: When the 144 was introduced last year Xerox said it expected to take jobs from offset presses because of the image quality. How is that playing out? JM: Customers are telling us the image quality is equal to offset which opens up more applications. We don't have a specific number on it, but we know customers are seeing success in moving applications to Nuvera, and are also putting jobs on the Nuvera that might previously have been run offset. WTT: The performance of the Nuvera line in general is pretty impressive. But there is a lot of competition out there, especially from some of the leading Japanese vendors, and these are reaching into traditional Xerox markets like CRDs and service bureaus, often competing largely on price. What unique advantages does Xerox have to combat these lower-cost entrants? KH: The way we look at it is being a total solutions provider versus a price-only solution, or as a strategic solution versus a tactical one. There are four key points inside the Xerox offerings. * First is having a variety of workflow solutions--how you get jobs to the printer, how you manage and produce the job. * Second, especially with respect to the Nuvera, is image quality, which we believe is the best in the industry. * Third is the media latitude. Being able to print on coated and uncoated substrates is a huge advantage and opens up more applications and more volume for our customers. * Fourth is our third-party partnerships and being able to provide end-to-end solution with variety of choices for finishing. We've been doing this a long time and these relationships give customers a comfort level with our solutions because the third-party equipment is proven to work with our print engines. JM: I'd like to build on that. Xerox recognizes there are clients and segments that can be in the mode of buying on price. They may want to turn the machine over in 36 months. We are in that market with our 4110. Our strategy is to meet the needs of lower cost entrants--not walk away from them. And because our workflow works with all of the machines we can still provide them with a comprehensive solution for all kinds of customers and requirements. WTT: At Graph Expo Xerox will also have a technology demo of a Nuvera model designed for duplexing. What are some of the market trends and customer demands driving this machine? KH: This is a technology demo, so we're not announcing it for order taking. The machine is a digital duplexing Nuvera. The trends behind it are demands for speed and image quality in a high-volume cut-sheet print engine. One of the largest opportunities is in the publishing markets where customers are seeking the image quality and volume the machine can deliver. DocuTech created the market for POD books and our book publishing customers say this is what they need to go to next level. The application focus and variable information focus taking place in color is spilling over into monochrome. That's driving requests for more media choices and high quality. JM: As we come out of this show we have a huge customer base to protect and take into the future. With the addition of this new machine and the new highlight color product we can offer our high-speed customer base a mix of devices that serve a broad array of needs. Opening up customers' opportunities and new applications. At the show we will feature books and book publishing. The technology demo will be configured with a roll feed on the machine as well as the standard input trays and a full book factory back end. Be sure to come by and see this demo. WTT: Finally, what are some trends you see in the monochrome space and what should print providers be doing to adapt to the changes they will bring? Are there some things they should really be paying attention to that may not be really obvious or might be easy to ignore? KH: Workflow is driving business decisions: It's how jobs get processed, how they get down to the CRD/print shop or printer, and the integrity of the solution. JM: I'm actually seeing that the application focus and variable information focus taking place in color is spilling over into monochrome. That's driving requests for more media choices and high quality. This is especially true for mixed jobs where the color is run on one device and the black pages are run on another. You need to have an integrated workflow as well as print engines that deliver the right level of quality. WTT: Thanks Jerry and Kevin. We really appreciate your help. I'll see you next week in Chicago. Have a great show. Please offer your feedback to Noel. H