Discussion

By Barry Happe on Jan 18, 2011

Nice to see Andy agreeing with what we at VSM have been saying for more than 10 years now!
Maintain the clarity of objectivity Andy.

By Joe Webb on Jan 18, 2011

Andy, can we really believe H'berg forecasts? For years they have been blaming a decline in revenues on tight advertising budgets, and even did a stock buyback at more than 30 euros (and it now languishes between 3 and 6). The key is the new markets, and I advise to not assume that print will play out the same way it did in developed markets. The new markets do not have a traditional print business to displace, and print will be in the arena with growing advertising and communications markets at the same as new media is getting there. In many ways, other than newspapers, these markets are seeing compelling print applications for the first time. I don't know what the results will be, but I suspect from what I see of Internet, smartphone, and other connected devices, that it will be hard to deal with that momentum. These Asian markets have a far younger demographic profile, while Europe's total demographic profile and its age may actually seem like a haven for printed goods. Whether or not offset and digital can play nice is no longer the issue: their sandbox is being annexed by other media.

By Andrew Gordon on Jan 18, 2011

Andy, the focus on the study was to understand where there is opportunity for digital printing to penetrate the market. This is why there is a exhaustive analysis of different application categories and it is also why it focused on page volume. The study didn't focus in-depth on the value of pages, run lengths or frequency of jobs by run length. We could probably argue that we have already reached a tipping point towards digital, or it is in sight for these characteristics. The report does recommend future research to cover these topics. Your feedback is greatly appreciated and I hope you can suggest future areas of inquiry to better understand these market dynamics.

By Clint Bolte on Jan 18, 2011

It would be interesting to see a study analyzing the over capacity of digital print engines in so many markets. The DPE manufacturers continue to push the latest generation of equipment, which is simply exaggerating this over capacity reality.

The latest generations are certainly more mechanically reliable than those units that are only 5 years old. The high mechanical failure rate of these units across all two dozen manufacturers has got to be an overwhelming reason for the ugly carbon footprint of this technology.

If its ink on paper, these two are going to exist side by side for a long time.

By Andrew Gordon on Jan 18, 2011

Clint, this is a great study topic and I think it applies to both traditional and digital technologies. We are going to look at this in a new PRIMIR study that was just launched. The focus of the study is on the commercial print market, including a look back and lessons learned for the future. One of the areas for inquiry will be capacity. We actually had a heated debate on the topic during the kickoff meeting because there was a difference in understanding between the theoretical capacity of equipment and the operating requirements for a specific business. For example, transaction printing equipment is capable of producing enormous volumes but is often only required for a peak period during each business cycle. Another example would be a retail oriented print provider who only operates 1 shift. What is their capacity? 3x5, 3x7 or 1x5?

By Marco Boer on Jan 18, 2011

Hi Andy,

As the lead analyst and author of the PRIMIR Megatrends in Digital Printing Application study it is clear to all the printer manufacturers that participated in this 400-page study that analog printed pages will remain dominant for the foreseeable future, which effectively means 10 years or more. But it is also true that the value or price users are willing to pay for digital pages is 5-20X greater than analog pages. Analog press manufacturers like Heidelberg cannot afford to sit still as both the value and volume of analog pages continues to decline.

Minimizing the effect of the recession, Heidelberg's 2010 revenues are down 41% from 1998 to 2010 where as HP's printing revenues are up 38% during that same period. Heidelberg's effective withdrawal from digital printing (both EP and IJ) in 2004 has put it in a position where it has but few choices to enter into an OEM arrangement with another digital printer manufacturer. As Dr. Joe Webb states, emerging economies probably aren't going to grow to the size where they make a material difference to Heidelberg; the impact of migration to electronic communication technologies in those regions is unpredictable. Whatever Heidelberg choses to do, it must act quickly. It can't recover the time it lost between 2004 and now.

Marco Boer, VP IT Strategies, Inc.

By Erik Nikkanen on Jan 18, 2011

I am always glad to hear that the tipping point is not so close at hand even though I am now thinking that those involved with offset are damaged badly and have little chance of seeing good times ahead.

There is still great potential for the offset process to improve but the likely chances of that happening are low. Years and years of mainly refining old concepts without true innovation is now taking its toll. The experts have held the process back. Experts with forty years of experience think they understand the future but unfortunately they can not think past their past.

The Dark Ages still exist in printing even though there appears to be advanced technology. A dark age is defined not by the quality of technology but by the lack of rational explanations for how things work that can be used to make predictable advancements.

Heidelberg and other technical companies are struggling and are not innovating at the rate required. Some blame this on the economy and the shift to other media but these same companies did not innovate enough when times were good.

In the good days, innovation was a tool that could put one ahead of your competition. Now in the bad days, innovation is required for survival in a shrinking market. The need to innovate has not changed just because the economy or other forces have changed. It was alway critical and needed.

Offset is in decline for sure but the people who claim to love it so much are the ones that will not let it advance. Unfortunately, they will get what they deserve. If you don't destroy and rebuild a broken way of thinking, it gets swept away.

By Ira Goldman on Jan 19, 2011

We should not lose track of the other conclusion of the PRIMIR study and that was the larger potential impact on all printing from electronic substitution for printed communications. Consistent with earlier such studles, the very applications that lend themselves to digital printing are also the most adaptable to electronic substitution as we are seeing in the transaction printing market. So as several others have already commented, the various print and other media will continue to co-exist for many years but will need to adapt to different market realities just as radio has successfully repositioned it's advantages in the face of the introduction of television and now internet and satelite delivery.

By Carlos Gomez on Jan 26, 2011

Well, according to what we live here in our country (Colombia) i had seen that digital labels industry had been growing during the past years and it is easy for us to understand it. We live in a country with several local industries where the volume of products is very low and the flexo printers cant afford the short runs for their customers. Once you approve a design the production is done and forget about changes.... We see a lot of old-fashined designs in our market because customers dont want to pay for new cyrels but they see digital printing as a solution for new products, short runs, emergencies, modifications on designs, market testing, etc.
I see a real opportunity TODAY on this industry.