by Cary Sherburne September 17, 2003 -- On March 11, 2003, Presstek and KPG (www.kpgraphics.com) announced a relationship in which KPG would market, sell and service a direct digital imaging press and related consumables in the United States and Canada. On July 16th, the company announced the full commercialization of its Presstek-enabled DI press, the KPG DirectPress 5034 DI, in the U.S. and Canada. The KPG DirectPress becomes the third addition to KPG's digital production portfolio, added to its CTP offerings and the Xerox digital color line the company markets. KPG prides itself on its broad portfolio of digital, conventional and business solutions for the graphic arts industry. The company's products and services include a wide range of computer-to-plate and conventional lithographic plate products; digital halftone, inkjet, and analog proofing products; digital printing applications; color workflow tools; consulting services and Kodak-branded graphic arts films. WhatTheyThink spent time with John Schloff, Staff Vice President – Digital Printing for KPG to learn more about KPG's go-to-market strategy with its newly enhanced product portfolio. Topics: * New DI Press, sales process * Xerox Relationship * Overall distribution strategy WTT: John, thank you very much for taking the time to speak with us today, and congratulations on your progress on the commercialization of the KPG DirectPress. What were the deciding factors relative to adding the KPG DirectPress to your product portfolio? JS: Cary, it's great to have the opportunity to speak with you…..thanks! Our customers continue to ask us to become more of a solution provider to the industry. All of them are in some stage of transition from analog workflows to digital workflows. The addition of the KPG DirectPress to our portfolio enables KPG to meet our customers' needs in terms of all three of their primary digital options: CTP, Digital Press, and Direct Imaging Press. Many vendors only have one or two of these options in their portfolio, limiting their ability to provide alternatives that meet customer needs as they want to grow their businesses. With all three in the portfolio, our people can spend time listening to and learning about the true customer needs and issues, and offer a full breadth of solutions. WTT: Is the press actually available for ordering and installation? Have you sold/placed any units yet? JS: The press is available for ordering and installation, with our first order having come within weeks of the full commercialization. WTT: What will the sales infrastructure for this product look like? Will it be sold by your general sales force, supported by specialists, or will there be a dedicated sales force? JS: KPG has a very powerful infrastructure of field resources, and we are leveraging virtually all of them. The general sales force, those focused on a base of named customers, and those focused on gaining new customers, will all be involved in selling the press. They will be supported by a team of digital specialists. WTT: How will you differentiate the KPG DirectPress from other DI products in the market? JS: First, I want to mention what a great press the Ryobi 3404DI is. This is the platform that the KPG DirectPress is based upon and it is truly a state of the art, next generation Direct Imaging press. Small spot size and added ink and form rollers ensure top offset quality, with the ability to produce 200 line screen print. Advanced automation in the press delivers increased usability and much faster turnaround of jobs than current DI presses, better meeting the industry demands for quick turnaround, short-run, high quality press runs. This press, supported by KPG's nationwide service and support organization, recognized experts in color, is a great start for differentiation. KPG will further strengthen this offering by leveraging its history and expertise in color technology. Every KPG DirectPress will be installed with KPG press calibration and custom color curves designed to ensure consistent and accurate color on all press runs. WTT: I always think of the DI press as a bridge product between offset and digital; as such it can be an extension of existing business processes, yet it often requires a different selling process and is suitable for different applications. Do you have any specific actions in place to help customers grow volume once they have purchased a KPG DirectPress? JS: In many ways, the KPG DirectPress is very similar to the other digital presses we currently market. They all support the industry move towards shorter run lengths and quicker turnaround times. They are also very complementary to the industry trend moving a printer from simply acting as just a print supplier to more of a full service provider. All of the KPG DirectPress customers will enjoy immediate participation in Presstek's Club DI (www.DIdirectory.com/ClubDI), which focuses specifically on helping the printer build short-run quick turnaround volume through a wide range of marketing support mechanisms. Near term, KPG will take this a step further, and offer an integrated volume-building program for our customers using either the KPG DirectPress, the digital presses we sell, or a combination of the two. WTT: What is KPG's vision for DI technology beyond the KPG DirectPress ? JS: KPG believes there is a great future in DI technology. It's a natural response to the key industry trends we have just discussed. It is a great fit for high quality print jobs that require from 350 to 15,000 impressions and it's a superb complement to the CTP and digital press products that we can offer to customers. I see DI technology as an important element in KPG's role as a full solution provider for a long time to come. WTT: Tell us about the scope of KPG's relationship with Xerox. Which products and territories are included? JS: Xerox is a great partner, with an ever expanding portfolio of digital output options for the graphic arts industry. KPG is currently selling Xerox mid-range and entry-level production presses in many of the top printing cities in the country, and we see near term opportunity to grow this participation. WTT: What about the iGen3? It is currently being sold in a controlled market release process, but once that is completed, do you anticipate picking up that product as well? JS: The iGen3 press is really an exciting product. It has revolutionary capabilities in terms of print quality, productivity and flexibility. We see this product as an opportunity for customers to further grow the solutions they can offer to their client base. The iGen3 is a logical extension to the KPG portfolio. WTT: What are some of the reasons you believe customers would purchase the KPG DirectPress, versus digital color, versus CTP? In what cases do you see these products co-existing and complementing each other? JS: Customers purchase equipment to expand the services they can offer to their clients. So, demand for a certain product is an important factor in decision making. Another factor in decision making is how the new capabilities fit into the existing business structure and workflow. Isn't it great to have a vendor that can offer all three of these solutions? Equipment and technology bias is eliminated, and a focus on customer needs comes right to the forefront. The specific solution really depends on many unique customer factors. What does their business look like today? Where do they want their business to be in the future? What customers are they currently serving? With what products? What portion of their current customers' business are they not getting? Why not? What customers are they not serving today? Why? These are the important questions to focus on with a customer, and this is the type of focus you can have when you don't have to force fit a solution. WTT: Digital color presses and DI technology make an interesting combination for many applications. Do you have any bundling strategies relative to the Xerox products and the KPG DirectPress, perhaps with an integrated workflow solution such as Xerox FreeFlow or EFI's Velocity OneFlow? JS: It is important that all of our sales force can sell all of our solutions. This enables them to listen to customer needs and offer the most effective solution set available. As the number one proofing provider to the industry, we have a broad array of proofing solutions we can bundle. As the leading plate supplier to the industry, there is a broad array of plate products we can bundle. Combine our consumable bundling options with our equipment solution options, and KPG can meet most any customer need in the graphic arts industry. Near term, we also expect to be able to add incremental value to our customers by wrapping our solutions with a workflow offering. WTT: Regarding distribution, KPG currently uses xpedx, Enovation, Graphline etc as well as direct sales. Will you continue this strategy into the foreseeable future? JS: In the United States and Canada Region, KPG continues to use a variety of distribution channels. We do this to meet the broad array of needs of our very diverse customer base. WTT: Enovation is a significant distribution partner for KPG products. Considering Enovation is a FujiFilm company and that Enovation is also selling the Xerox digital color portfolio, could you tell us how that relationship is progressing? JS: KPG is driven to meet customer needs, not to create barriers because of changes in ownership. Customers continue to buy and rely on KPG and our products, whether those products are distributed by Enovation or other distribution channels. WTT: Are there any plans to utilize Sun Chemical's new distribution unit Vivitek? JS: Since its inception in 1998, KPG has operated as an independent company. Sun Chemical is one of the two shareholders in the company. Vivitek is a Sun Chemical business initiative, formed independently of, and separate from, Kodak Polychrome Graphics. The products in Vivitek's product portfolio are different from those distributed and sold by KPG. WTT: John, thanks for your time today. Before we close, are there any words of wisdom or other thoughts you would like to share with our readers? JS: The printing industry is a great industry with a great future. It's an industry experiencing a lot of change presenting many new opportunities. KPG is intent on providing our customers the right mix of solutions to optimize their current business and leverage these new opportunities.