Commentary by Steve Aranoff & Robert FitzPatrick, The EAGLE November 7, 2006 -- Many of you know that THE EAGLE has been has been published continually every quarter since 1981. First it was delivered as the house organ of NGADA and then NAGASA, and then as an independent Journal. Three years ago, we joined whattheythink.com (WTT) because it was no longer timely to comment on the distribution of digital imaging systems and equipment in a quarterly format. Additionally, much of what The Eagle reported and analyzed was as relevant to print providers as vendors. Due to its daily nature and its wide coverage, whattheythink.com and its sister publication/portal ondemandjournal.com (ODJ) provide a running commentary and source of up to date information for all of us in the greater print community. At THE EAGLE, we are proud to participate in this groundbreaking effort. Much of what we have seen in the analog and digital offset printing are repeating themselves in digital and short run printing. Over the past few months, THE EAGLE's Musings have begun to appear in ODJ in an effort to bridge the "gap" between the two daily offerings. Much of what we have written about the last 25 years has followed the maturation of the offset marketplace from a supplies oriented analog technology to one dominated by the proliferation of digital products. Over this 25 year period, we have seen significant change, and a constant birth, maturation, consolidation and decline of many different product cycles. Today, much of what we have seen in the analog print world, and then the digital offset world, have begun to repeat themselves in the digital and short run print world. The recent GraphExpo was a good place to see some of what we are talking about. We do not want to rehash the product offerings, the positive attitude, or the PR talk from the show. And yet, we saw much of interest through reading between the lines (or is that aisles?). Cash Cow First, with all the hype about the big iron press manufacturers taking orders and not needing to have presses on the floor, there were a very large number of the digital press counterparts. We have to wonder whether "not having to show" is really a code for that segment of the market where investment becomes limited and companies try to take in as much revenue as possible. This phase is generally referred to as "Cash Cow." There were certainly Indigo and Xeikon presses in Chicago, as well as many of the wide format printers/presses, but those manufacturers did not believe it was no longer necessary to show. The wide format inkjet market is characterized by continued growth, an increasing number of vendors, many new end-users and expanded applications of the technology. It was also quite interesting to see what was shown in and talked about in the Pitman Company Booth. Pitman is one of the three largest Graphic Arts Dealers in the U.S. market. It is now the 800-pound gorilla in the digital print market as well. Not only was it showing both DuPont and Mimaki printers in full scale operation, but it had an MGE/Esko i-cut digital finishing system in the booth too. And, the major announcement, we thought, from the show, was that Pitman will now be carrying the full line of EFI/VUTEk printers as well. They have also been a Colorspan dealer, and of course, their purchase of Charrette now makes them one of the largest HP and Epson dealers in the country. Supermarket Dealers In the offset-supplies field, Pitman's traditional role was that of the supermarket dealer. Consolidation of suppliers and the buyout by Fuji of most of its dealer channel effectively ended the era of the graphic arts supermarket dealer. Pitman was confined to representing just two main vendors, AGFA and Kodak. Even this very limited offering is under pressure from the vendors who have an ever-increasing need for brand advocacy. We also have to wonder why a very crowded wide format pavilion was placed in the very back corner of the GraphExpo floor. So, while consolidation caused some focus in the offset side of the market, with product advocacy by many of the dealers, it now looks like Pitman has gone back to the Supermarket Dealer approach of 10 years ago in the inkjet field, providing every kind of product that the customer might want to buy. This may be a reflection of the "pre-consolidation" stage of the inkjet life cycle but it is also supported by Pitman's traditional channel philosophy. As the Pitman Company noted during its press conference, the wide format inkjet market is characterized by continued growth, an increasing number of vendors, many new end-users and expanded applications of the technology. Successful product sales require knowledge of complex product customization with media and consumables and in-depth familiarity with a large base of small size and widely varied end-users. In short, this is an ideal environment for an independent distributor, and a difficult one for direct selling. However, the signs of change are already present. The acquisition of Charrette by Pitman is an indicator that larger commercial printers are moving in on the turf of the small end-users of inkjet printing. Charrette itself had rolled up a number of smaller inkjet dealers and now has been acquired by a large graphic arts distributor. These are signs of focus and consolidation that will inevitably result in more brand advocacy in the channels. They are also indicators of the involvement of larger, consolidated end-users in the inkjet field. All of which add up to pressure on what may be a brief era for supermarket selling in the inkjet field. Even Pitman's alliance with EFI may be a sign of "partnership," the mantra of limited channels and more band advocacy. The vendors and the printers are far more in tune than are those who ultimately provide the work that uses the resources of the printing plant. Right across from Pitman was the FUJIFILM Graphic Systems booth. Reflecting its historical policy of limited channels and brand advocacy, Fuji was focused upon their partnership with Mutoh. The two companies shared the booth space and worked the crowd together. Fuji, we have always written, has been a partner with its dealers (before it purchased its dealer channel). Now, it looks like it is continuing that role, slightly differently, as a partner with manufacturers (for products that it does not manufacture itself.) This was a smaller and less busy booth than Pitman's, but it stood in stark contrast in its sales approach and may be a harbinger of future channel developments and marketing strategies. We also have to wonder why a very crowded wide format pavilion was placed in the very back corner of the GraphExpo floor. Since its inception, this pavilion has continued to grow to the point that it was a trade show within a show this year. We'd like to think that putting it in the back was a good business strategy much like making milk the furthest case in the supermarket. This way, people coming in to buy milk have to pass through many other tempting products to get what they came for. Here, though, we suspect that the reason was similar, but with a different implication. Far too many attendees wouldn't see the rest of the expo at all if the wide format pavilion was in the front. But, still, we wonder, if it is fair to the companies in that space to allow the big iron companies to have access to the front of the hall, while all of the digital wide format companies are relegated to the far back? Lastly, what there weren't much of were print buyers. It seems to us that the vendors and the printers are far more in tune than are those who ultimately provide the work that uses the resources of the printing plant. It is the print buyers who develop the needs for all this new technology of ours. Without them, we just sit and wait, not a good idea in a market place filled with lots of other electronic methods of disseminating the message. When will the printing industry finally understand its role is to promote the benefits of print to those not already in the choir?