Thursday, June 12, 2008

Inkjet Printers Get Set to Turn the Page

Has Xerox lost the battle?
New Technology Battle Xerox In Commercial Jobs

Inkjet-printing technology that dominates inexpensive desktop printers is about to enter the world of commercial print shops. If the new technology succeeds, it could spell trouble for Xerox Corp. and lead to expanded business for Eastman Kodak Co., Hewlett-Packard Co., Ricoh Co. and other inkjet makers.

The world's printing industry gather Thursday at the Drupa trade show in Dusseldorf, Germany, where a host of companies are showing new inkjet presses touted as the wave of the future. Giant offset presses, which cost several million dollars apiece, dominate the $400 billion-a-year printing business. But inkjet and laser technologies are nibbling at market. The new presses challenge Xerox, which laser-technology iGen3 and Docutech presses account for more than half of all digitally produced pages world-wide.

These inkjet presses, costing as much as $2.5 million apiece, are more expensive than the $500,000 Xerox machines but cost less per page to operate. Inkjet machines produce a page for a penny, versus about four cents for the laser technology used by Xerox. As with desktop printers, the digital-printer makers expect to earn the bulk of their profits by selling ink.

Inkjet makers said their technology makes digital printing competitive in price and quality with offset printing, which produces 95% of all printed pages world-wide. Digital presses account for only 2% of offset pages, or $8 billion annually. That share is expected to triple in the next three to four years as quality and speed improve. With digital printing, every page can be different. That can mean customized textbooks for each professor's class, beautiful brochure printing national magazines with local restaurant ads or glossy calendar printing with color pictures and elaborate catalog printing with detailed photographs of your business' products.

Matthew Troy, a Citigroup Inc. analyst, cautions digital printing won't supplant offset as fast as digital photography replaced film. But he said the move to digital printing provides a significant growth opportunity, especially for Kodak, of Rochester, N.Y.

Kodak has been building a printing-equipment business for the past four years by buying smaller companies. At Drupa, it will demonstrate its Stream inkjet technology, which will be available as a fully functioning press in 2010. Kodak said Stream can print at a speed of 500 feet a minute, about half the speed of traditional offset. Analysts who have been given advance looks at Stream's output said its quality fits glossy clothing catalogs, opening a potential new market for custom catalogs. Kevin Joyce, chief marketing officer for Kodak's graphiccommunications group, said Stream will produce "offsetclass output" in terms of price, reliability and appearance.

H-P, of Palo Alto, Calif., will show its Injet Color Web Press, which prints at 400 feet a minute and will be available for sale next year. Analysts sais the $2.5 million price tag is lower than they expected for its speed. H-P's laser-driven Indigo press already is used by printers for specialty jobs, and a new version will nearly match the speed of Xerox's iGen3.

Japan's Ricoh moved into the production arena last year when it reached a deal to buy the InfoPrint unit of International Business machine Corp. InfoPrint's $2 million inkjet printer went on the market in February.

Xerox President Ursula Burn s dismisses inkjet technology as suited "for relatively low-quality, high-throughout documents." Ms. Burns said she is confident commercial printers will keep buying Xerox's iGen laser presses for prducts like personal photo books and directmail adverstisements. She said Xerox, of Stamford, Conn., is unveiling a new iGen4 printer that will increase quality and productivity for commercial printers.

By: William M. Bulkeley
Wall Street Journal