Richard Romano: Hi, this is Richard Romano from WhatTheyThink.com, and we are here at the Océ Wow Live Event in Boca Raton, Florida. And we are talking with Francis McMahon, who is the VP of Marketing for Océ North America. Francis, thank you for talking to us.
Francis McMahon: Hi Richard, great seeing you again.
Richard: Now, tell us a little bit about this event. How many of these live events do you do a year or a quarter?
Francis: You know, we’ve had, for the first quarter this year; we’ve had four different events and will continue providing events. And the events really aren’t around just Océ, what the events are really meant to do is a part of our Presco Program and our Wow Live Series is to bring customers together to really talk about the transformation from analog to digital, the emerging applications, and really give our customers and some potentially new customers an opportunity to talk together to learn more about the industry, to share ideas and to really get a good community formed around the Océ family.
Richard: Now, who are some of the guest speakers you have at this event?
Francis: You know, we’re so blessed with so many customers that just want to share and first and foremost, a special thank you to the Yurchaks. The Yurchaks are here, they’re here with us at Boca Raton, Florida, talking about the success that they’re having working with Océ primarily with our 10000 systems and our 6000 systems. And we’re also, a special thanks to Patrick Kobal from NJM Insurance Group. Patrick’s here really talking more about the transactional and direct mail side of the business and the opportunities that really await a lot of the people that are joining us here at Boca Raton.
In the, you know, the book printing market on the analog side is the fastest growing application. In fact, we’re anticipating 73 billion pages printed in digital books by 2013, that’s a pretty big number. That’s a lot of pages. And it’s an opportunity for all of our customers to embrace, but they need to understand not only that the opportunity exists, so that’s step one, but then number two, how to really capture that opportunity.
We believe, number one, with the CS 10000, we have the CS 10000 installed in more than 50 percent of the top book publishing partners. It’s a black and white toner device primarily for mass market paperbacks, however it’s not designed just for mass market paperbacks it’s designed for the entire book community. And we’re that… that’s our primary product that we’re showing here today, but not just the product, it’s the complete end-to-end solution, it’s the partner pieces because you can’t sell a piece of paper off of a press, it needs to be a finished book. So we’re showing how the complete solution comes together. And with our professional service organization, our solutions architect organization, that’s really where it begins to help our customers execute this type of strategy.
Richard: Now were are… what are some of the drivers of the digital book printing market? We’ve all heard about e-books and things transitioning to electronic media. What’s driving the move towards digital printed books?
Francis: Great question. Interquest just put out a study. I recommend anybody who is interested in the book publishing side to really get a hold of that study and that’s where a lot of the great data has come from, and you hit upon a couple of those. So the e-books is driving lower runs or smaller runs of books overall, which is driving that digital transformation. That’s certainly one of them.
One concern though, overall, is that reading as a percent of all entertainment has dropped in half year over year. So if you look at all the things that you can invest in, in entertainment, reading is becoming less. For digital book production, maybe there’s good news in that if you look at it, it means you’re printing less in shorter runs and that’s also good news. But the key is automation. Reduced inventory, and certainly with that reduced inventory becomes the impact on the environment. We have a strong social responsibility initiative here at Océ and books on demand and on demand book publishing in an automated way if very important to us and our customers.
Richard: So now, you mentioned in your presentation this morning that you worked with Harlequin to develop a custom solution.
Richard: How did that work out? Did they approach you or did you approach them or how did that prOcéss work?
Francis: You know, we’ve been in the book publishing market for over 15 years now, and Harlequin is one of our customers. And the opportunity there was, Harlequin had a very specific need. And what you notice with these book publishers or book publishing printers and they’re kind of the same and in some cases very unique, they all have a very unique requirement. So the key is to have the professional services organization that specifically understands that market that can go in a design the solution that they need. And in the harlequin case, which is just one example of many, it required a number of pre and post partners that we needed to work with, a complete end-to-end solution around workflow, our Prismo Preparer is a key asset inside of their production. And then everything that we do around the engines it’s primarily a continuous feed application. And the way in which that’s evolved and the way that it’s been customized was a joint partnership with Harlequin and we worked on it together.
Richard: One of the other pieces of the puzzle at this event is transactional printing. If you could just define what you mean by transactional printing and is transpromo or transpromotional printing, part of that equation as well.
Francis: All right you know, transactional printing is growing in digital; believe it or not, it is growing. It’s growing at two percent year over year and that’s great news.
Richard: Even though we keep getting all those messages on our bills saying, “Go Paperless.”
Francis: Yes. So it’s growing two percent in print and digital. So that’s good news. The other good news is that it represents about 56 billion pages by 2012, 2013, I think it’s 2013. So again, big number, big opportunity. On the transactional side, you know, if you talk to Patrick Kobal who is here from NJM Insurance, he’ll tell you again, unique requirements, end-to-end solution, the complete portfolio in the partner pieces, but the Océ people to enable it and execute it are really the key.
And when we talk about transactional, we are talking about the statements. We’re all talking about MICR check printing, a big opportunity, something that we embrace, but also the security that’s required around transactional type printing and Océ has got a long history and heritage in this market of making sure these very secure documents are printed appropriately, professionally, and go out to the right people.
Richard: So now, what are some of the growth strategies that Océ sees going forward, not only for you guys, but also for your customers?
Francis: Specifically to Océ, again, long history on the transactional and direct mail side. We will continue to embrace those two markets and the applications within those markets and embrace the change that occurring and helping our customers through business development services continue to grow their business. We want to take that platform, the success that we’ve had in the transactional space. In that space transactional direct mail, you know, on the continuous feed side, we have over 58 percent market share. Now think about that, that’s a big number. And this is an area that Océ has played very aggressively in for a number of years. We want to take that success, I talked earlier about secure printing or just a second ago about secure printing, reliability, up time or just critical needs of that type of market, which also translates very nicely into book publishing, but also into commercial print.
So commercial print, looking at up time, reliability, 24/7, service with 98 percent up time, these are all critical needs of the commercial print market. We’ll take that and extend it into commercial print graphic arts. For our customers, it goes back to what I said earlier. I think that is, as the market continues to change, providing them with a professional services to solution architecture, product, it doesn’t’ matter if it’s toner or inkjet or color or black and white, that we let them choose, with the help of our professional service and solution architect organization and build solutions and get them up and running as quickly as possible to embrace the trends we have talked about.
Richard: Great, well thank you very much.
Francis: Hey, thank you Richard. Great seeing you again.
Richard: Good seeing you.