The web-to-print market is fragmented, not only are there many providers, but it's also not easy to determine clear leadership or market share.

What makes the web-to-print space so fragmented?

The web-to-print market is relatively easy to enter because it doesn't cost much to get started. I didn't say it was easy to be good at it – just easy to call yourself a web-to-print provider. We have seen hundreds of players in this space over the last two decades – anyone who could program an HTML page and hook it up to a database could call themselves a web-to-print provider. Every one of them thinks they are solving the problems in a unique way.

Why isn't it easy to determine clear market leadership in the web-to-print space?

Most of the players in this space are privately held companies who don't share revenue numbers or exact customer counts. Even the public companies don't break down their revenue enough to truly be accurate about their specific results in the web-to-print space. A lot of web-to-print solutions are sold through channels, and in my experience this means there's a lot of bundling going on. A web-to-print solution becomes an easy add-on to a major equipment purchase (translation: it's given away).  Companies report on the numbers that make them look good, for example  # of stores, # unique users, # of catalog products, etc… all of these numbers say something, but none of them are directly correlated to what is most vital to printers (revenue).

Up until now we have generally tried to look at total revenue and customer count in order to evaluate web-to-print providers, but even if you had all those numbers, I would be skeptical. Too many web-to-print solutions were sold, but never fully implemented. A customer count gives more credit to those providers who have alot of little customers vs. those providers who have a few large customers. The providers of web-to-print technologies have different business models; some are SaaS subscription models, while others are selling software licenses where you get one lump sum and then annual maintenance. This greatly impacts revenue numbers over time.

Have I convinced you that it's hard to stack rank web-to-print providers?

What would be the best way to properly evaluate web-to-print providers? I believe the success of web-to-print providers should be directly tied to the value they deliver to their customers (primarily the printers). Doesn't that make sense?

Here's a suggestion for how we could evaluate existing players in the market and determine leadership in the web-to-print space. This would of course require a magic wand and access to lots of private company data. I challenge the market – who is willing to provide these numbers and start a trend of transparency and trust?

1.    Total revenue passing through the web-to-print solution (across all customers)
2.    Average revenue per store
3.    Average transaction value across all stores
4.    E-Commerce conversion rate (% of users who transact)
5.    Specific customer breakdown by geography (countries/languages/currencies)
6.    Breakdown between B2B vs. B2C

In this fragmented and difficult to evaluate market, EFI is a major player. The Digital StoreFront product has been around for more than a decade and their purchase of OPS gives them approximately 300+ more customers, deep penetration into Asia Pacific through the Fuji Xerox channel and probably most importantly, the marketing services tools (pURLS, e-mail campaigns, etc...) that will round out their overall web offering.

Why acquire vs. grow organically?

Acquisitions are a mixed bag, we all know the hype wears off and the real work of integrating people, technology, and processes takes longer and is more expensive than anyone cared to discuss during the purchasing phase. The acquisition always gets covered in the news; the mind-numbingly slow process of integration rarely gets covered. Remember when BitStream bought iWay? Have you heard much about it recently?

Acquisitions do make sense under the right conditions. I don't like when public companies simply buy their growth outright – this is not happening here. As reported in the press release, the OPS acquisition will not have a measureable impact on EFI's earnings, nor does the acquisition even double EFI's overall web-to-print business. If not for outright growth, why did EFI buy OPS?

The OPS product extension into marketing services is the primary reason. DSF customers will now see that functionality sooner. OPS customers will benefit from greater integration to the key EFI products behind order entry (e.g. production workflow, Print MIS, Fiery, Vutek, etc…). Both companies have something to gain in this transaction; there is synergy between the companies and the technology. Both applications are written in .NET, their target market is and will continue to be printers. Their customers overlap by "dozens" with many OPS customers already having EFI MIS solutions and Fiery. OPS already have integration into Prism (acquired by EFI in April 2011) and Pace (acquired by EFI in July 2008).

The channel relationships will be complementary as well. OPS are currently selling through Kodak and Fuji Xerox, and EFI has a wealth of channel relationships globally which will now be accessible to the OPS product. According to Marc Olin, senior vice president and general manager of EFI's Productivity Software division, "the platforms will continue to co-exist and follow complementary product roadmaps; we won't build anything twice for our overall web offering." At Graph Expo, OPS and EFI will both have booths; they will be co-branded and co-staffed so customers can see both web-to-print solutions in either booth.