Editor's Note: In part two of the 2010 State of the Industry Report, we'll focus on the future of the market, including: the top growth markets, what technology will drive change forward, and where we see ourselves in one year's time. You can find part one of the 2010 State of the Industry Report in the October 2010 issue of Wide-Format Imaging which covered the current state of the wide- and grand-format industry and addresses the biggest challenges in the industry today.
As outlined in Part One of this two-part series, while the wide-format industry has not been immune to the economic factors that have caused so many challenges in the market over the past 12 to 24 months, many industry experts believe that the worst is behind us. According to InfoTrends' director of wide format, Tim Greene, "Conditions are improving, but I would definitely say any existent overall wide-format graphics market recovery is fragile."
While caution seems to be the operating mode everyone is working under, many experts also believe that there is a great deal of potential—and technological expertise—that will help to get the market back on its feet and drive it forward.
Advances in ink technology, printer technology, as well as a focus on workflow / automation solutions and green technologies are key areas where experts see real opportunities for the market to expand.
"From a printing standpoint, in the past the wide-format market has taken huge leaps and bounds when new ink formulations have come to the market, whether it is pigmented water-based inks, solvent and eco-solvent inks, UV-curable inkjet inks," said InfoTrends' Greene. But it's more than just ink—at least as far as he's concerned. And other experts agree. Ink and substrate compatibility as well as new substrate options will have a huge impact on the market.
"Most of the innovations will stem from improvements in ink/substrate interaction. Notably as companies which make their own inks including EFI/Vutek and Agfa are making strong advances on UV-curable inkjet inks. HP has introduced its Latex inks which have been well received in the market. We expect others will follow with similar innovations," said Marco Boer, vice president, I.T. Strategies.
As Boer noted, HP's Latex ink technology has proved to be a driving force of change in the durable aqueous inkjet market. "I see major innovations coming by way of new inks," said Michael A. Andreottola, president and CEO, American Ink Jet Corporation. "I totally love the HP Latex inks. You can print on virtually any substrate and there are no serious volatiles emitted. I think that we still have a way to go on the so called ECO-inks as I see them being developed from derivatives of other organics rather than corn or soy. I believe that in order to be classified as a true Eco ink that this is what is needed. Is it possible? Time will tell."
"Aqueous durable (latex) is also interesting and is projected to increase rapidly at the expense of low- and eco-solvent as well as aqueous technologies," said Sal Sheikh, vice president, marketing, Océ North America. "The energy required to dry latex inks today is a major factor in limiting this technology today."
"The technology that will likely continue to evolve the fastest, and provide the biggest leap in innovation is pigmented ink. The market wants high performance inks with greener characteristics, but does not want to give up the key market requirements of color, glossiness, light-fastness, dry-time, cost, or adhesion," said Patrick Ryan, general manager, Seiko Instruments USA. "As we have seen in the marketplace as new technologies evolve, each step forward on the green front comes with a sacrifice. Both UV and Latex style inks have made some in-roads into the solvent-dominated outdoor graphics market, but the weaknesses of both types of inks leave the market still searching for a better alternative. So the opportunities to engineer new types of inks is where the greatest innovations will be during the next five years. Printers and substrates will continue to evolve, but ink is where the action is."
Eco-inks—as Andreottola mentioned above—and other green technology has been a growing trend in the wide- and grand-format market. Industry experts believe that this will continue to shape new technology innovations in the future.
"We believe that green technology for consumables—media and ink—will shape the future of the industry," said Phil LaFata, director of marketing and international sales, Arlon. "As UV/Latex ink experience mass adoption and solvent inks become undesirable and obsolete, the media manufacturers will face increasing pressure to launch truly 'green," non-PVC, recyclable, non-toxic products to the print market."
"The need to be 'green' will have a large impact on this industry and already has in the type of inks that are available," said Melissa Thompson, flexible magnetic products sales manager, Master Magnetics.
Jaime Giannantonio, marketing manager for Ultraflex Systems Inc., also points to the increasing pressures from state and federal governmental regulations as incentive for manufacturers to develop new sustainable options. "Better and greener products, technologies, and services," according to Giannantonio is one of the market's greatest driving forces. Why? "Governmental regulations, leaders in the industry and our clients will put more pressure than ever on sustainability," she said.
"The future of the wide-format graphics market will be print technology with less impact on the environment and on the workers who use the technology, while providing greater value to the customer. In the past, many eco-friendly solutions in this market were extremely expensive, with tradeoffs in image quality, media support, or product value," said Mark Radogna, group product manager, Professional Imaging, Epson America. "Today’s printing technology can produce amazing print quality, while still being friendly to the environment. Advancements in ink technology from both Epson and HP have resulted in a fundamental shift in the way we look at this market. This is an exciting time."
Automation / Workflow
One of the largest areas experts anticipate innovation to come from is concerning automation and workflow technologies in the wide-format market. Automation has been a mainstay in the commercial print and screen print markets, but until recently has not seen much progress in the wide-format market. Things, though, are changing—according to industry experts.
Workflow solutions—from MIS to JDF—and automation systems are beginning to come to this market.
"There has also been an increasing interest in workflow software among wide-format printers. While take-up of these solutions is relatively high in commercial (offset/digital) print businesses, workflow is an area of technology which, so far, has only scraped the surface of the wide-format market," said Frazer Chesterman, managing director, FESPA. "As businesses emerge from recession streamlining workflow is a clear way to improve profit margins by maximizing productivity, and integrate different output formats and processes in a unified process."
"The companies that can afford to employ the latest technologies are gaining market share," said Michael E. Robertson, president & CEO, Specialty Graphic Imaging Association (SGIA). "Using the latest equipment, they reach more markets and provide customers with a wider range of product options. These companies are taking advantage of the latest automation advancements to speed production and reduce overhead."
"We are seeing many innovations supporting the end-to-end workflow of customers in the signage market and, as a result, our customers are looking to improve the efficiencies of their business from start to finish," said Yariv Avisar, vice president and general manager, Scitex Large-format Printing, H. "We were also recently selected to chair a Wide Format Workgroup within CIP4 with the goal of defining open JDF standards for wide-format printing workflows."
"We see the industry moving to more production workflow automation. For example, we are part of a new initiative to develop a wide-format JDF specification for automation of PDF workflow," said Dean Derhak, director of marketing, ONYX Graphics.
"The big three continues to be solutions that make digital printing better, faster and more cost effective. The difference will be that those solutions won't just be wrapped up in the printer and ink. Web to print and workflow solutions have been a recurring topic for the past 18 to 24 months and will continue to be a requirement as more analog print moves to digital and as digital print providers continue to grow margin and extend profitability," said Scott Schinlever, vice president and general manager, EFI Rastek & EFI Ink Business.
Other Market Drivers
While the above three make up the major drivers of industry change, according to industry experts, there are other more subtle changes happening within the market.
QR Codes / VDP: "On the front end I am becoming convinced that there is a real play for wide-format signage and graphics providers to incorporate QR codes and other variable data that could help drive digital printing," said Greene. "I think the opportunity to provide measureable value with these types of tools is a solid near-term opportunity for many wide-format print providers because you don’t have to be big or invest tons of money to be able to do these things."
Long-term Upgrade Paths: "I think that the top three to four output technology providers will begin shifting much more deliberately towards providing platforms engineered with long term (seven to 10) year upgrade paths," said Kevin Huseman, president, Point Imaging. "I do not believe it is healthy long term for any industry to have capital equipment manufactures focusing on increasing the 'Installed Base' verses helping their existing clients become more profitable. Typically, financially healthy companies pay their bills much more reliably than chronic under-performers."
Textile Printing: According to Heidi Luck, marketing communications manager, Gerber Scientific Products, a long term innovation driver will be in the textile and fabric markets. The more important, though, is in the "lucrative textile market where the final product meets retail demand. We are seeing results in the work being done today with dye sublimation to meet some of the soft signage, but a complete textile printing solution is a little further out," said Luck.
BIM/IPD: "The advancement of BIM (Building information Modeling) and IPD (integrated project delivery) have brought a higher level of color into the planning process. Color in construction documents increases user retention, and helps eliminate costly errors," said Rich Gigl, vice president of marketing, KIP. "Monochrome LED and inkjet products will continue to integrate offering tremendous color functionality at the user interface level with the ability to scan to file in color, color copy and print to color via Color LED or inkjet technology."
New Applications: "Our customers are continuously evolving what we think of as signage printing with new applications," said HP's Avisar. "More and more, we are seeing signage printing devices used to produce applications that are not traditionally considered signage, from custom interior design pieces to printed shoes. Customer innovation and application development are changing the market and opening the door to new growth opportunities."
Future Growth Opportunities
But where are these "new growth opportunities"? Industry experts list several areas they think will have the "biggest bang", so to speak. The top four most mentioned include: fabric and textile printing, POP and retail signage, interior décor, and vehicle graphics.
"With regards to textiles," said Chesterman, "printers are becoming more inclined to print on fabrics due to their added benefits. For example in comparison to a non textile material such as PVC, textile can be recycled and is therefore ecologically friendly; it is also lighter and saves the printer, and therefore their customer, noticeable shipping costs."
"Fabrics and soft signage represent another growth area for the industry. Europe is way ahead of the US in this market, but we see the demand for fabric rapidly coming our way," said Rick Scrimger, vice president and general manager for Roland DGA Corp?. "Demand for vehicle graphics and wraps continues to grow as businesses everywhere discover the power of this application for branding and advertising."
"As the economy improves I think we will see POP as one of the primary growth markets based on higher spending levels among manufacturers and retailers," said InfoTrends' Greene.
"The retail sector will continue to expand as customers make purchase decisions closer to the product. In fact, 76 percent of graphic imagers view retail stores as the leading growing market for 2010 according to SGIA’s 2010 Market Trends survey. Also, retailers are in the entertainment business and need to change the customer experience more frequently," said SGIA's Robertson.
"I also think there is still a great opportunity to go beyond promotional graphics with interior décor’ applications such as custom wall-coverings. The new print technologies seem to help address some of these growing applications quite well with outstanding image quality and durability on the types of substrates that are required," said Greene.
"Most high growth applications will have to have a consumer slant, as the business to business market for wide-format signage is fairly mature," said Boer. "Decorative applications require a skill-set beyond wide-format print. It requires the ability to convert the print into a finished product. It could be as simple as putting grommets on a printed vinyl sheet to make custom shower curtain to printing of fabric to create home furnishings. Print service providers who are able to develop new application/finishing skills may find their business transitioning well beyond just being a print service provider."
"Vehicle graphics is a great product segment for true growth. Any sign shop looking to expand their product offerings should consider this segment," said Radogna.
Although caution seems to be the word of the day when it comes to the industry's recovery, industry experts are still optimistic about the future—even though the landscape of the industry and the way we've done business in the past might be different altogether.
"There's going to be significant growth in the market and much of it's going to be driven by the convergence of what we define as analog and digital today," said Schinlever.
"We see the wide-format market improving over the next 12 months, but we also realize that the market will be forever changed in certain aspects," said Ryan. "The economic downturn has and will continue to reduce the number of companies in all levels of our market, effectively forcing out companies that are not managed well, or ones that fail to add value over time. The financial environment is also likely to be forever changed. Credit, once available to almost anyone for equipment, is now much more difficult to get and will continue to be so. We see a continued contraction in all facets of the market. However, we also see the demand for digital graphics bouncing back quickly and growing significantly over the next three to five years. So this represents an opportunity for companies that can survive, manage themselves efficiently, and offer products/services that add value for their customers."
"I would say that there is less visibility now than ever because of the economic situation which remains murky," said Greene. "That said, I think it is clear that there are two ways to get ahead in this business now. They boil down to: 1) finding new ground and 2) operational excellence. You can do both but it is hard. Finding new ground means really doing something different, such as offering design and content consulting, embedded QR codes, measurement and management service, etc. Doing this may require the addition of new people, skills, or tools and may require a different kind of sales approach, but expansion of services into new ground is a way to grow. Operational excellence is another way to grow. Can you out-perform your peers in terms of service, quality and cost? Can customers and prospects find you and do business with you easily? If so, you can likely grow by gaining more of your customers’ business and more new customers."
"I think 2011 will build on 2010 regarding media sales, but it is my opinion that real growth will stabilize the market when sales of equipment return to normal," said Rick Moore, director of marketing, MACtac Graphic Products. "The economic conditions are uncertain for next year as to whether confidence will return and owners will make those capital investments. When that returns, we can say the industry is back to normal."
"Wide-format imaging will continue to benefit from being the right imaging solution at the right time," said Robertson. "Emerging wide-format technologies have given graphic producers the ability to help their customers minimize inventory, and change promotions and environments quickly to address customer interests and customize their message to their hearts content. These are all great things for wide-format graphics producers."