Thursday, June 12, 2014

Further comments on HP's remarkable PageWide-technology wide-format printer

Before you read this post, please kindly read the first post I put up about HP’s wide-format PageWide print-technology printers.  That post immediately precedes this one.

Further comments about HP’s “PageWide” technology wide-format print systems, coming to the reprographics world in the 2nd half of 2015.

Disruptive Technology
HP’s PageWide wide-format print systems will print color CAD prints at the same speed that they print black & white CAD prints.  (Since I watched a live demo, I can tell you that the printer that generated the demo prints printed full-color posters at the same speed it produced CAD prints.)  HP’s representatives said that HP’s PageWide printers will print faster than LED printers and operate at less cost than LED printers.  That’s a very bold claim.  But, if it proves to be true, HP’s PageWide printers will completely disrupt the reprographics marketplace.

More than one PageWide wide-format model forthcoming
In the 2nd half of 2015, HP said that it will introduce three to four different models of PageWide systems.  HP did not provide any details beyond that.  So, at this point, one is left to speculate on how those models will differ from one another.  About two years ago, HP introduced its first small-format printers that use PageWide print technology.  A quick check on the Internet reveals that there are two models, one that offers output at 55 pages per minute, another model that offers output at 70 pages per minute.  Based on that, I think it would be reasonable to speculate that, when HP begins taking orders for its new PageWide systems, it will introduce one model with a very high speed and one with a somewhat slower speed.  And, I’m further speculating that there will be multi-function systems (scanner and printer) and printer-only systems (printer but no scanner.)  This sounds like a reasonable approach to me, for the very high-speed model(s) will be the one(s) that reprographers acquire for their production centers and the model(s) with a slower speed will be acquired by reprographers (and by A/E/C firms) for “OnSite” (FM) service sites.

Order Freeze
In 1995, OCE flew some 70 reprographers from the U.S. to The Netherlands to introduce the U.S. reprographics community to the (what proved to be revolutionary) OCE 9800.  At introduction, OCE pointed out that it would not begin shipping the OCE 9800 until 8-9 months later.  In the ensuing months, very few reprographers placed orders for Xerox or KIP wide-format plotter/printer systems; essentially, there was an industry-wide freeze, reprographers wanted to wait and see – pricing of, and operating costs for, the OCE 9800.  Simply speculation on my part, but I see the same thing happening with the introduction of HP’s PageWide wide-format systems.  I would not be surprised, at all, to see reprographers (and, A/E/C firms) hold back on orders for OCE/Canon and KIP LED and Ink-Jet wide-format printers and systems (and Ricoh and all other LED wide-format systems.)  The next 12 month period could be very ugly for those who make a living selling wide-format printers and multi-function systems.  And, if I were in the reprographics business, I’d certainly not want to be replacing worn out systems with “same old” systems until I had the opportunity to check out HP’s pricing (and operating costs) for the new pagewide systems.

HP will distribute through its channel partners
If you want to be a meaningful player with this new technology, I’d suggest that you make sure that you are one of HP’s channel partners or are tightly connected to one of HP’s channel partners.  You do not want to miss out on the opportunity to acquire these new systems at the lowest possible cost, and you will not want to lose out on the opportunity to be an authorized reseller of these new systems, especially if your company is already a reseller of wide-format print systems.

Outright Purchase vs. Contractual Acquisition
At the HP DesignJet Production Premiere event, HP’s representatives explained that HP will be working with its channel partners to allow for acquisition on a contractual basis rather than acquisition only on an outright purchase basis.  That sounds like a pay-for-usage plan, similar to how many reprographers offer FM deals.  A pay-for-usage plan typically bundles together – in the per unit usage cost (“unit” being per sq ft or per sq meter) – equipment, service (parts, repairs, maintenance), and ink consumables.  I’ll be very interested to see what HP comes up with.  But, let me further say that, if HP makes it very easy, very simple, for companies to acquire its new PageWide systems, HP’s going to quickly take market-share lead in the wide-format print system marketplace.

Current LED wide-format distributors and dealers (including reprographers who are dealers for OCE and/or KIP wide-format systems)
I’d suggest you take a very hard look at your dealership business plan going forward.  Make sure that you don’t get caught with inventory you can’t sell!

Rethink how you will equip FM sites
Ever since the first affordable, low-end color plotters were introduced to the reprographics industry, A/E customers have been interested in having the capability, in-house, of generating black & white CAD prints at relatively fast speeds and having the capability of generating color CAD prints when necessary.  (Many also want to use their wide-format color printers to produce poster-type prints for marketing and presentations.)  To satisfy this need over the past 15 years (and perhaps longer), reprographers who offer FM services have been installing two different wide-format devices at each FM sites:  an LED black & white print system and an ink-jet color print system.  When HP begins shipping its new “PageWide” wide-format systems, reprographers will need to install only one system at each FM site, an HP PageWide system.

Do A/E/C firms want their documents printed in Color instead of in Black & White?
A couple of years ago, OCE distributed a white paper that essentially said that construction documents printed in color reduce errors and save money.  Users of CAD systems draw in layers, layers are in different colors.  A CAD file is then converted to print in black & white.  The primary (and, I think, the only) reason why 90% of A/E drawings in the U.S. are printed in black & white instead of all being printed in color?  Pricing.  If prices for printing sets in color are reduced to the point where they are little different from prices for printing sets in black & white, I can’t see where customers won’t want all of their sets printed in color.  It won’t happen overnight, but this change is almost certain to happen.

Resistance to Change
Even if HP’s new PageWide systems prove to be breakthrough, game-changing technology, there’s no guarantee that orders will be significant in numbers, at least during the first year they are available.  Many years ago, around October 1981, Darris McCord introduced the remarkable Shacoh 920, the very first wide-format xerographic system that offered 36” wide output (on plain bond paper, vellum or mylar).  Most reprographers already had Xerox 2080’s (which cost over $100,000) and many reprographers operated engineering photographic labs, the latter threatened by a 36” wide plain-paper output device.  Orders were not significant the first year, but, as one reprographer in each market area made the move to acquire a Shacoh 920, others had to follow.  Orders the second year were significant; reprographers who did not have / offer 36” wide xerographic output were at a disadvantage to those who did have / offer 36” wide output.  Let’s face it, today reprographers have high-speed wide-format b/w print systems, and they have wide-format color inkjet printers.  Reprographers have invested significant sums in their existing systems.  Just because remarkable, game-changing technology comes onto the market, doesn’t necessarily mean that there will be a rush to acquire the new systems.  But, if no one in a market area makes the change, then that – resistance to change - could open up that market to a new entrant who does adopt the new technology.

Costs and Prices and Margins
One of the wisest (and most successful) people to ever grace our industry, Mohan Chandramohan, wrote a booklet about “managing a successful transition from analog to digital”.  When new technology comes to market, and, when that technology does or will eventually obsolete then-existing technology, costs change, pricing models are upset and have to be changed, and margins are affected (sometimes negatively, but sometimes positively.)  I do think that, when HP’s wide-format PageWide systems hit the market in numbers, costs are going to change, prices will eventually changed and margins will be impacted.  When HP releases cost info, study that info and plan accordingly.

Who/what is going to be affected by HP’s new PageWide wide-format printers?

-Manufacturers who’ve previously introduced Memjet-powered wide-format print systems (OCE, RT, Xerox).  All of the Memjet-powered models are priced at over $100,000.  If HP prices its high-volume PageWide model at less than Memjet models are priced, and, if the operating costs of the PageWide model are less than the operating costs of Memjet models, HP is going to bludgeon the order books of those who are selling Memjet models.  Memjet print technology has not yet proven itself to be highly reliable.  But, HP has a very long track record of manufacturing very reliable equipment.

All non-HP wide-format inkjet equipment manufacturers; Over the past ten years, Canon has done a great job eroding HP’s share of the wide-format (technical document) inkjet market.  But, that may soon change – in HP’s favor.  HP’s wide-format PageWide printers will print lightning fast compared to Canon’s current line-up of inkjet printers. And, it may well be that the operating costs of HP’s PageWide printers will be less than the operating costs of Canon’s wide-format inkjet printers.

-KIP and OCE and Ricoh and all other manufacturers who offer LED wide-format black & white printers.  It could well be that HP’s wide-format PageWide printers will put a severe kibosh on sales of any and all LED wide-format black & white systems.  (Are you old enough to remember what a diazo printer did?)

-KIP’s c7800.  A high-volume, high-speed LED color output system.  We’ll have to wait and see what HP does with pricing and operating costs for its PageWide print systems, but, if they are low, KIP’s going to have trouble moving its c7800 systems.

-Reprographers.  It’s going to be costly to acquire new technology that, itself, may render obsolete existing equipment investments.  Reprographers who operate FM’s will face the same issue.

Thank you for reading this post.  Your comments are invited. 

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