Market Intelligence: The Continuous Feed Inkjet Production Market in 2014

Now entering its sixth full-year since its introduction, the continuous feed inkjet printer market shows no signs of maturity. There are few other markets in either the printer segment or consumer electronic segments that continue to show growth after five years. To keep growth going, equipment and supplies manufacturers are making major investments in the creation of variable data and ink/substrate range compatibility expansion (both connected to lower total-cost-of-ownership).

Applications

Transaction printing remains the largest application of all pages printed on these devices. While inkjet pages are projected to double through the forecast period, it is effectively a shift from toner to inkjet pages. IT Strategies is projecting that by 2017 nearly all toner-based mono continuous feed pages remaining will have been replaced by continuous feed inkjet printers. This means that future page volume growth will become more dependent upon a combination of both offset page replacement and new application page volumes.

Transaction printer sales continue to do well, but a significant amount of engine placement volume was due to large account sales. Some of the sites purchased in excess of six engines in a single deal (all US-based), with one account reportedly acquiring in excess of 15 engines. Units intended for direct mail applications also grew, mainly due to growth in Asia (mitigating decline in Europe).

Direct mail is the application were there is “unlimited” upside, driven in part by the fact that rising postage costs is going to force retailers to better mine their customer data in order to make more relevant offers. While much direct marketing investment continues to be aimed at non-print communication channels, there is no better provable return-on-investment than highly relevant direct mail. The challenge is getting retailers to the mine their data to get to the high-relevancy stage.

Engines for book printing applications grew in 2013 as existing accounts added more engines. It could however be growing more, as the technology and print quality are well proven at this stage in the market. The issues may well be related to costs. I.T. Strategies is projecting slower adoption for 2014 among book printers as those that have not yet moved to inkjet printing systems continue to be slow to make the large investments required. When adding in-line finishing, the cost of total investment can often be double the system acquisition price.

The “Other application” includes those units that are neither strictly transaction nor direct mail printers. Some are printing variable data catalog inserts, some wealth management reports with photographic image content, customized travel itineraries/brochures, etc. The common link is the heavy dependency on variable data and color photographic images.

Page Volumes

I.T. Strategies is projecting demand for nearly 600 billion continuous feed inkjet pages by 2017. While an estimate, we project that about 40 percent of pages will need to be sourced from new applications. These applications are apt to include a high-degree of personalized data—something that doesn’t commonly exist today in the volumes projected. Many of these new application pages will be things like highly relevant loyalty reward coupons, personalized wealth management reports, etc. There is arguably some overlap with transaction pages, and some might define these pages as transpromotional, but the common link is these applications did not require a response nor were they possible to produce with the degree of high-relevancy available today.

Conclusion

The continuous feed inkjet production printer market is a great market to participate in for equipment manufacturers and print providers, especially in context of most other printer market segments. Total revenue growth is expected to average 18 percent annually for the next five years.

It may well grow even faster than projected in our forecast here, providing some of the ink coverage and substrate challenges get solved sooner than expected. The focus on applications will be:

  • Short-term: Remains transaction focused
  • Mid-term: Must come from direct mail and books
  • Long-term: general commercial print applications on broad range of substrates and PQ, with a heavy focus on variable data print value creation

We should also not count on emerging markets to drive above market rate growth in this segment. There just is not enough print volume to support many of even the less productive systems, and the OEM service/support costs in these often-distant locations from headquarters can make it less profitable than it initially appears.

To outpace the forecast projections, I.T. Strategies believes the equipment suppliers will need to make a large investment in:

  • Substrate and ink technology development to open up broader application range beyond transaction, direct mail, books—which are mostly printed on uncoated papers
  • Large-scale development and accessibility of variable data sources to enable the production of high-value pages

While the journey to be able to print on inexpensive offset coated papers is underway, and may take more resources and time than we’d all like, these issues will probably be solved. The large-scale development and accessibility of variable data is a more complicated challenge. It involves the many more stakeholders, including the specifier who orders the print, the print provider, regulatory bodies, and ultimately the OEM equipment supplier in whose interest it is to have their customers print more page volumes, page volumes that are valuable. Both of these are good challenges to have, ones that the industry leaders will be working hard on to most efficiently and time effectively resolve.

Loading