Offset Press Manufacturers; the lines are being drawn...

As you know the offset world has been growing at a pace just slightly under inflation which shows that this technology although needed is dying. As we watch the big iron manufacturers like Heidelberg, Kamori, , KBA, MAN Rolland, Mitsubishi, Ryobi, Sakuri, Akiyama, Presstek (AB Dick) and others what we see is large layoffs and very cautious maneuvering to stay alive. (keep these names close to mind these represent all the most common presses you will find)

Shinohara just filed for bankruptcy (January 2011), and many others are not far behind. Hamada pulled out of North America last year and many others are very shy about spending money.

Just like the copier industry everyone is closing aligning themselves to survive and digital press manufacturers are "WHERE ITS AT" As you may remember OCE and MAN ROLAND just annouced their partnership leading the way for other "big Iron" makers down the path of survival.

http://global.oce.com/news/press-releases/2010/oce-and-manroland-announce-global-strategic-alliance.aspx

And what you may not know is that the most prestigious press manufacturer has been partnering with a well know digital press manufacturer for sometime now.

http://www.heidelberg.com/au/www/en/content/articles/recent_news/newsletter/gen_2010/gen_1004/s8_km

You should also know that Heidelberg announced that it will later this year 2011 announce who their "full time" digital press partner will be globally. I think you will agree that it makes sense for them to remain partners with us. Our relationship with Kodak keeps them arms length to "their own" technology that they abandoned 10 years ago and allows them to leverage both the "entry" level and "high end" digital press lines.

What we will see from this is a stronger commitment to automation (JDF and CIP4) and faster advancements in feeding and registration (mechanical feat advancements) which might take us years to accomplish on our own. The battle is tough but we are making progress! Don't let any small setbacks or individual battle losses get in the way of the big picture! Stay the course!

Big Iron Mike,

Inkjet is building steam; will it ever do anything other than transactional…

Inkjet is building steam and this time in a new report!

"In its "North American Transactional Printing Market Update & Forecast 2009-2014" study, Interquest reports that inkjet presses are gaining volume and installations. Interquest is a leading market and technology research and consulting firm serving the digital printing and publishing industry.

The 2009 study notes that although inkjet equipment accounts for only four percent of the transactional printing systems (monochrome, spot and full color) used by respondents to the survey, inkjet presses produce 35 percent of the total transactional print volume reported – up from 31 percent the year before. The number of print operations using inkjet equipment took a big jump. The survey found that about one-third of the respondents now use inkjet equipment for transactional printing, up from 16 percent in the first half of 2008."

What will be interesting to watch is how well this technology is received as the quality gets better. All I have heard from printers lately have been thoughts that the volumes will not be there if they take the risk and invest in the technology. But transactional and trans promotional volumes are relatively untapped as not many printers have attempted to sell this business. As the economy strengthens companies will have to return to the drawing board and look at their capabilities and ensure that they are investing in areas they can make money in and that has growth potential.

Printers are struggling to reinvent themselves this time as technology is pushing them away from their traditional business. I have had many comments from printers that were a bit on the negative side on the high volume inkjet, I am worried that they will pass this opportunity up and allow the commercial sector to invest which will shut them out of the business completely. In house marketing departments already have the ability to add 3 or 4 small machines to take over much of their companies printing needs. As in-plant facilities grow in capabilities and skill sets traditional printers will lose their foothold.

It is interesting how much cross media advertising that I receive but printers are saying "no one is doing it." Traditional advertising agencies have stayed away from cross media as it requires them to add additional skill sets beyond just the creative. I think it is time to rethink business plans and put away the ideas of "this is how we have always done it." Every day another printer goes out of business or gets acquired by one of the conglomerates. As employment comes back and companies start thinking about capital reinvestment printers need to be the first ones in their ear talking about where they can spend their money.

The print salesman of the last decade will not be the print salesman of the next. Marketing services and solution selling will take over and the idea of asking for "cost center" business will be over with, as most companies can produce that work themselves. If printers keep shying away from the work the commercial sector will use their IT and marketing departments to develop their own cross media programs and printers will lose out on that business as well. The work is getting printed but will it get into the hands of a printer is the only question.

With the advent of Inkjet this ability to produce high volumes of print inexpensively will be just one more tool in the data center that could easily erode volumes that go out to the local print shop. With the resurgence of direct mail it is only time that Inkjet will get its hold on the industry. Now with everyone demanding quality 1 to 1 marketing in their direct mail programs and as those programs get adopted by larger institutions the run sizes will grow. This business lends itself to inkjet as long as the quality is there, otherwise it will go to the electrophotography devices that we are used to.

As digital presses advance (electrophotography) Inkjet will have new quality levels and substrate standards to meet. Maybe the technology will never get to that point but I doubt it. "The best way to predict the future is to invent it." - Alan Kay and the Inkjet companies are working hard to rival the "dry ink" technologies quality and substrate handling it will only be a matter of time before we see the technology mainstream. With Canon's latest purchase of Oce they are making sure that they do not have all their eggs in one basket. This acquisition could prove to be a very valuable one in the future.

Fortunately for those of us that sell the "dry ink" technologies, inkjet is new, expensive and the quality is not quite there. But many companies are joining in the race to develop a new level of inkjet so this will be a no holds barred battle. 

Pirate Mike

Canon U.S.A. Ranked Number - One in Total Copier Market Share in 2009

Here is an interesting Press Release:

LAKE SUCCESS, N.Y., Mar 23, 2010 (BUSINESS WIRE) -- Canon U.S.A., Inc., a leader in advanced digital imaging and office solutions, today announced that the Company has earned the top position for total U.S. copier/MFP market share for 2009 with 18.4 percent of the market, according to Gartner's Printer, Copier and MFP Quarterly Statistics Database for fourth quarter 2009.(1)

(1) Gartner, Inc. Printer, Copier and MFP Quarterly Statistics United States: Database, F. De Silva, C. K. Masaki, 17 February 2010.
 
It will be interesting to see how the landscape changes or gets better for Canon now with their new acquistion Oce coming into the fold and no longer having the distribution of IKON to help.

Canon in the driver seat; what’s next? Delisting Oce?

Well the news is out Canon now holds 87.51% of the total issued share capital of Océ.

tradingmarkets.com posted the release:
In part, "The total number of shares held by or tendered to the Offeror (including Océ's financing preference shares) as of the Post-Acceptance Closing Date represents approximately 87.51% of the total issued share capital of Océ (including Océ's treasury shares)"
You can find the press release on Océ's website here: "CANON HOLDS 84.65% OF OCÉ ORDINARY SHARES"

In Canon's original press release on January 28^th, 2010 "Recommended cash offer by Canon for all the issued and outstanding ordinary shares of Océ N.V. to create global leader in printing industry"

Canon spoke about the details of the offer.

Under the heading: Liquidity and delisting it goes to say "Subject to the Offer being declared unconditional (gestand wordt gedaan) and in the event that the Offeror has acquired 95% of the Shares, the listing of the Shares on Euronext Amsterdam will be terminated as soon as possible. This may further adversely affect the liquidity and market value of any listed Shares not tendered."

I am not a stock broker but it appears that if Canon acquires 95% they can delist the stock and anyone left holding stock is out of luck? If they are at 87.51% now that would seem prudent to dump the stock so that your investment is not completely lost, except that the Post Acceptance period is over and I do not know how that may affect tendered shares now. It would seem that Canon has every intention to go through with the purchase and that the groups that wanted more for their stock didn't get their wishes.

In a Reuter's report they stated: that "Canon made their offer unconditional after a Dutch court on Wednesday denied a lawsuit by Hermes Asset Management and the Universities Superannuation Scheme (USS) who opposed Oce management's handling of the offer and argued Canon's offer undervalued its target. Orbis Portfolio Management, which owns about 10 percent of Oce shares, had also opposed the deal."

It appears that we have now seen history strike four times in a row! Once with Konica Minolta's acquisition of Danka, Twice with Xerox's acquisition of Global Imaging Systems, Three times with Ricoh's acquisition of IKON and now for a Fourth time with Canon's acquisition of Océ.

Now the stage is set; 4 Global Mega-Manufacturers are on the starting line prepared to make an Olympic 100 yard dash! With the proving grounds in the areas of Managed Print Services and Production Print it is anyone's race. This is a very scary time for anyone in this industry as the list of refugees grows! Be watching for upsets in the Fabulous 4; there are still competitors lurking in the shadows that could at any time appear as a newly positioned contender for the crown!

Happy Sale'ing…


Pirate Mike

Mega Manufacturers – Canon and Oce; one more day, one step closer…

The office equipment industry has gone through several iterations of how they wanted to go about distributing their wares. From a simple direct from the manufacturer through an owned distribution and sales force to a myriad of convoluted multi-level channels and VAR's through a complicated series of licensing agreements.

Many times looking for partners that were not interested in selling their goods as a primary source of income as they didn't want to give deep enough discounts to actually compete in the market place against their direct organization or to create a newly formed competition in their industry. These "Value Added" partners were given the right to purchase product at a slight discount (like 15-20%) and were left to basically "throw in" the goods to create more impactful solutions with their core product. Many times the reseller doesn't even service or support the goods much like many of the resellers of bindery and finishing equipment.

 Although these arrangements sound great for both parties it eventually waters down the market with disenfranchised dealers of products they work twice as hard to find business for which in the end pay less than have as much. Since they are not on the same buying schedule as "Fully Authorized Sales and Service" dealers they do not get the same discounts and incentives to market the merchandise and in many cases the same level of support (if any). These arrangements do nothing but ultimately take the VAR's focus off of their core product.

The office equipment industry has tried this many times a notable agreement of this nature was the "On Demand" dealer program that Konica Minolta launched. The "On Demand" program was launched to dealers of other products say a Fully Authorized Canon Dealership to fill a hole in the product line that Canon didn't have which at the time was the "light production color" arena. The dealer would not have high capital investments to get started which appealed to dealers that didn't want to be a full line dealer but needed a quick shot in the arm in one area. These dealers jumped on the 'light requirements' only to find out that they would not have the proficiency to sell and service the product and truly be able to compete against the "real dealers" and the direct outlet and win. These "On Demand" dealers were buying relabeled Konica Minolta equipment and selling directly against Konica Minolta Direct and Dealers that were far better suited to market the product. This arrangement was quickly cancelled by Konica Minolta once they realized that this was not the way they wanted their product sold and serviced.

 In the end it only served to water down the market places with inexpensive deals sold as the newly formed "On Demand" dealers had inventory that they needed to turn and were not savvy enough to sell with margin so the local Direct and Dealer Channel ended up getting hit in the head with inappropriately priced deals by a desperate channel. This was during the great expansion when each manufacturer had many channels and multi level agreements and heavily weighed these channels against their direct operations.

 Now we have the pendulum swinging the other way where Ricoh went back to huge dealer channels and bought them back to be able to shore up the level of service and support that their customers were getting. The Lanier purchase was an example of this "channel repurchasing." Canon which lived by the dealership channel has taken some serious blows to the head and pocket book and is now "joining the club" in respect to being more responsible for their own success. The level of support they have dedicated to their own group has doubled or tripled compared to the level of support that they give their best and largest dealers. Minolta didn't have much of a dealer channel but Konica did so the merge of Konica-Minolta added hundreds of new "competitors" to markets that only had one source of "micro toner." This created new issues for reps that walked up to signing tables and had to answer why the 3 bids came back for the same product and all the prices were different!

 Now manufacturers want to control their own destiny and are bringing full line solutions to the table themselves cutting out as many VAR's and alternate channels as possible so that they can have a tight grip on the bottom line and ultimate control of the customer's destiny. These relationships are hard to manage when there are so many partners involved that no one wants to take ownership of an incompatibility. No one wants to go back to the drawing board and rewrite firmware.

Canon took its first step by making their offer for Oce. This was first announced January 28^th 2010 with a public press release.

"28 January 2010— With reference to the joint press releases of Canon Inc. (trading symbol CAJ) ("Canon") and Océ N.V. (trading symbol OCE) ("Océ") of 16 November 2009 and 14 December 2009, Canon Finance Netherlands B.V., a wholly owned subsidiary of Canon (the "Offeror") and Océ hereby jointly announce that the Offeror is making a fully self-funded, public cash offer for all the issued and outstanding ordinary shares with a nominal value of EUR 0.50 each in the capital of Océ (the "Shares") at an offer price of EUR 8.60 in cash per Share (the "Offer").

• Canon made this offer unconditional with its press release March 4^th and set a time limit for the "post-acceptance period" which ends March 19^th.

 Canon has been making plans on what to do with this "new acquisition" rumor has it they will stay in their normal form and immediately cut off all sales of other manufacturers products which adversely affects Konica Minolta being an OEM for sister company Imagistics for some time now. Konica Minolta has already terminated their relationship with Oce for the Black and White "big iron" and has moved forward with their own platforms. Rumor also has it that Konica Minolta has been working on an IBM relationship for roll fed devices. It will be interesting to see how Canon divide up their new purchase and how much "Oce" do they keep for themselves and how much do they let sit as acquired "intellectual property."

• Either way they will be on their way to becoming the next Mega-Manufacturer.

Happy Sail'ing

Ricoh – IKON; Canon – Oce; Konica Minolta – Danka; Xerox – Global Imaging; Can You Say “World of Uncertainty?”

In an industry that is collapsing into a few very powerful mega manufactures it leaves an uneasy feeling in the minds of many salespeople that call this business their own. With the Canon-Oce purchase moving forward this brings some "heavy iron" that Canon desperately needs in its arsenal. The Kodak relationship with Canon surely is being undermined by the Ricoh – IKON acquisition. IKON was 60% of Canon's distribution network and placed most of the KODAK "heavy iron" and has been able to keep that piece of the business intact. Kodak at least locally has let go almost all of their sales force. In a market segment that is not conducive to "over the phone" selling; Kodak doesn't have the bandwidth to really market their big iron Digimasters/NexPresses. I think it is hard to believe that with such a coverage model that they can be successful. It almost appears that they are hoping that the Ricoh – IKON relationship will move the hardware for them.

I could see in the very near future Kodak divesting from their Digimaster and NexPress technology and selling that portion of the business to Ricoh. Canon will soon move away from their platform as they develop their own hardware that meets the higher end of the spectrum anyway. Now with the Oce B/W heavy iron they will no longer need the Digimaster technology in their portfolio. This will leave KODAK very vulnerable and weak with no way to move their hardware. What makes sense is that KODAK deal with the software and solutions end (which is the most profitable) and leave the hardware up to Ricoh they have a distribution network for their products that they cannot afford to create themselves. I think KODAK will retain the patents and continue to manufacture the hardware but I do not think they are being very successful moving it. Or maybe they sell off the entire division to Ricoh. Ricoh has deep enough pockets to take it over and the economy of scale to actually make money with the science. They will revamp the lines and come up with a new pricing structure that will give the NexPress some teeth.

With Black and White volumes decreasing the need for Digimaster type products is declining as the fast plastic gets more reliable and "self serviceable. " Xerox and Ricoh have perfected the art of getting the user to replace the majority of the simple parts. Digimaster type products require very skilled and expensive technicians. The Digimaster may go away completely not handing the substrates that are required today and never developing their image quality over 600 x 600 dpi. It will be interesting to see if Ricoh just takes the NexPress and leaves the Digimaster to die a slow death as they have some high speed black and white technology that will handle these volumes. Surely it will save them money if they can just purchase the piece that they need (high end color) and leave the black and white to their developers/engineers as they already own some of the technology to do datacenter printing. Konica Minolta is quickly developing their own "Black and White Big Iron" as they have no choice.

Xerox is the only manufacture that has the whole thing covered soup to nuts. Canon & Konica Minolta will come in second place with a close fit for most applications. Ricoh still has some terrible gaps in the mid and production color. With the C900 being only 2 bit color and the fact that many stocks won't even allow the toner to fuse to the paper it just isn't a very good option for anyone that wants better than mediocre business color at high speeds. IKON has done a great job trying to convince people that it is "ok" to be average. Talk tracks of close registration (which it will do) and productivity (only if you can get the toner to stick) are their battle cries. Now with a Creo controller and a robust Fiery Q-Series server only adds to the anguish of how much can you do with so little? I do believe that the kinks will be worked out in the second round of the machine which promises to be built around a new engine that will not use pulverized toner and fuser oil as its base technology but come up to this century with an engine that can use a polymerized toner like its slower office counterparts.

Once the Mega-Manufacturers settle down the rest of the Sharps, Toshibas etc will either go away mad or just go away! I do not think that they have the ability to rush into the market with robust product lines. Maybe I'm wrong and there will be a place for the Kyocera fleet machines. I just see leaving the production equipment an opportunity to lose the fleet. I was once told "own the head and the body will follow." If you have a Kyocera or Sharp fleet but use Canon in the marketing department and in the print shop and probably in billing and statements or the datacenter how long will it take for them to undermine your position in the fleet? More than likely not long…

Now that we have the newest "Gold Rush;" MPS is providing dealers and manufacturers alike a new toy to play with for a while until it becomes the next new commodity on the block. I am interested to see how this all pans out. Everyone is in turmoil. Xerox is trying to figure out how to "eat the elephant" that they bought both in ACS and Global, while Ricoh takes their medicine trying to keep down the sour grapes that they got with Ikon. Konica Minolta has survived the arsenic that they consumed with their acquisition of Danka, and we have yet to see how Canon will do trying to control the mad house that is Oce/Imagistics.

Wow a 4 ring circus now all we need is a master of ceremonies or a ring leader! What fun it is to be a big iron salesman these days!

Pirate Mike

Eastman Kodak, another one bites the dust…

Ok this is purely conjecture but I am starting to hear about push back when proposing Kodak products to high level clients. My local superiors are saying the typical, "business as usual." But we know what that means, "They dont know and they want us to keep marching without missing a step."

The rumors are that at the higher levels they are being told not to go forward with Digimaster and NexPRESS products as they will be going away soon. So I am putting my feelers out to get more feedback from YOU. Many times you know what is happening before the news hits the street. I had heard months ago that Ricoh was looking at Kodak for the high end production black and white and color and so they would not have to develop a strong workflow product.

I was recently in a position to be aware of a huge Federal deal that would involve thousands of machines, the word from the silver hair and black tie side of the business is a "no go" on the Kodak products the word coming down from their superiors in the fancy building with the pearly gates is that HP is making a play for Kodak and that that product line is going away anyway!

Going away anyway? What do you mean says the innocent pirate who sells the big iron? Yes going away says the silver haired man in his late 60's. Could it be that Ricoh the 'new' one world leader is coming forth with its own product to replace it. Replace it wow; that sounds well wow…

Could it be that the great minds that gave us the engine for the IBM infoPRINT have stepped down to create for us "the ants of the 'new' one world leader" a great and ultimately powerful multi-function of destruction?

The great destroyer of all that is Docutech, Varioprint and Digimaster? Wow, (for those of you that don't know better don't hold your breath.) I am very interested to see what we are going to replace these MaMaMaMillions of clicks a month Machines.

What could this new Multi-Function of Destruction look like? What will be its call to arms. Will it cost those that wield it their souls? Will it be like a cyborg and run itself? How far into the future do we have to look to get a small glimpse of what is coming down the pike from our engineering friends across the great oceans from our 'new' one world leader?

I do not know of what could be motivating people to NOT sell the Digimaster products especially since we have always been the largest channel for these products anyway I would rather us buy them than another competitor especially like an HP that already is whooping up on us with their Indigo sheetfed and web products I really do not need them coming down into my small shops and taking away all that which Ricoh has giveneth.

One thing that is very apparent is that Kodak is a bit vulnerable at the moment. After posting a “preliminary Net Loss of $137 million, or $.51 per share.” For the 4th Quarter of 2008 and watching their stock dwindle from a close on April 28th 2008 of $17.89 to $3.95 April 28th 2009 they have seen better days. Watching a company prepare to lay off 4500 people or almost 18% of their workforce could start a few rumors all by itself.

Hey if you have the inside track please feel free to enlighten me as this has become the great soap opera for all things pirate-like.

Pirate Mike…