Marco Boer is Vice President at I.T. Strategies, a custom consultancy house serving the digital print vendor community. Karis Copp speaks to Marco about his career in print, conducting research in a COVID-19 world, and challenges and opportunities in the inkjet market.

HOW DID YOU GET INTO THE PRINT INDUSTRY?

 I've been in the print industry since 1986. A long time! I started at a market research company that's evolved through many name changes, but the genesis was tied to Charlie Pesko, who has long since retired, but the last iteration of that company was InfoTrends. That's the history to a lot of the consultants in our industry, we all have some connection back to Charlie Pesko somewhere along the line.

 I started I.T. Strategies with my business partner Mark Hanley back in 1992, with the idea of getting beyond office print markets, which is what we were really researching at what was then CAP International. We set out to look at what we call the emerging markets for digital colour print; basically all the stuff that's not office, not home. So, we entered this market by writing a 500-page report about the opportunity for wide-format inkjet printing – may I remind you this was back in 1992!

 Since then we’ve become the specialists that help OEM equipment manufacturers to develop the specifications for their next-generation products. In other words, if you want to make a high-speed inkjet folding carton press, we will help you determine what you need in terms of width, print quality, resolution, ability to support white inks, duplex printing, things that you don't necessarily think of, as well as what happens more critically – if you don't hit those specs, what happens to your eligible market size? And then once you have it, what are your best ways to get to market? We do a lot of work behind the scenes but we help to source components, which printhead should you use and why, and so forth. We are under the radar company that helps, almost like trusted secondary employees, for all of these companies, and we work with most of the equipment manufacturers.

HOW DO YOU CONDUCT YOUR RESEARCH?

We do hundreds of interviews a year with commercial printers, textile converters, packaging converters, and brands to some degree, all across the globe. In our office, we speak English, French, Italian, German and Dutch fluently, so that enables us to break through a lot of barriers, particularly in Europe. Because we've been doing this for 30 plus years, you get a pretty good idea how to get a conversation going.

There’s a really important difference here; we tend to focus on qualitative interviews because we're dealing with future generation products that people can't often envision, so it's useless to do a quantitative survey of hundreds of people because they're never going to be able to get to the detail of answers that you really need to get out of them, to help them envision what this could be and why. For this reason, we don't typically do email surveys and the likes because while that's very appropriate for things like consumer markets, for highly specialised, fragmented markets, you just don't get the responses that are meaningful.

Secondly, we work often all the way up to the board levels of all of these companies, which gives us an enormous amount of insight into the technology development paths and again because we're neutral, we have no assets, we have to be highly confidential. We have deep insight into what the technologies are going to be able to deliver and what they won't be able to deliver, so when you marry those technology insights on top of all the qualitative insights from the print providers, you get an accurate picture of how these markets are going to develop.

HOW ARE YOU CONDUCTING RESEARCH IN THE CURRENT COVID-19 WORLD, AND WHAT ARE YOU NOTICING?

First of all, these are uncharted waters for everybody. Nobody knows what's going to happen because there are so many moving parts in terms of when quarantines ended or are going to end, which region, what the habit changes are that may be occurring as a result of all this. Take transaction printing for example – you would think that transaction printing would be stable because businesses such as banks and utilities are still going to be sending out statements for people to pay. It is stable at the moment, and sadly in some cases growing due to overdue notices that are being sent out. But longer-term, they are pushed internally to try to do it with less labour, because, particularly here in the US, we still use cheques. The last thing you want to do is receive a check from a customer that somebody then has to touch to redeem and put into your bank account, so you're going to push as hard as you can to encourage all your customers to pay electronically, which is going to drive down the number of statements that are needed.

We have to look really deeply into each vertical application. Some are going to have what we call the ‘deep V’ recession impact where things basically stop, like wide-format graphics. That's going to have an immediate impact because advertising is a discretionary expense; if you're not open for business you're not going to be advertising. But at the same time, as these quarantines get lifted and people reopen for business, you're going to want to have more impulse promotional signage in your stores, so that could come back very quickly. It all depends, but that quick return is great for print providers.

For equipment manufacturers, it may not be so great, because people are not going to buy new hardware. Instead, they're going to utilise that underutilised capacity of existing equipment, and they're going to probably be out on eBay when they do need extra equipment because there's going to be a bunch of shops that didn't make it that have nice, gently used equipment. At the same time, we are going to see lots of ink consumption. Again, the impact is going to vary whether you're a print provider, whether you're an equipment manufacturer, whether you're an ink supplier or a toner supplier, and what specific vertical you're in.

We're working on a paper to quantify all these potential effects for all these different markets. I think it’s the only way anybody can forecast what will happen to the print industry. There's no historical precedent to look back on, and there's no right answer because the impact is going to vary by region and the various lobbyists. For example, in the US market, it's the states that are shutting down businesses. There are exemptions for essential businesses – in some states, like Massachusetts, printing is considered an essential business, but in other states like Pennsylvania, it's not. So you're going to have different rates of economic resurgence depending on where you're based. It gets very complicated!

We are looking at each application to come up with both a worst-case scenario and a silver lining. The reality for each of these markets is probably somewhere in between. In the US we don't have a lot of social benefits, there’s not a great safety network, so I think we’re going to see a far sharper recession in the US than in Europe because we have so many part-time workers and the like, that you can you're going to see different things happen.

IS THE FACT THAT IT’S SUCH A MOVING TARGET MAKING IT DIFFICULT TO ASSESS?

It’s not difficult in part, because nobody has the answer. All we are really offering is an educated opinion. Nobody really expects you to be 100% right because again, it's so uncertain for everybody.

It’s easy enough to come up with all the downsides, but ultimately what people really want to know is, what can we do collectively as an industry to make print better? What can we do to make it more relevant? There are silver linings in all of this. A lot of print will go away, particularly the stuff that wasn't really relevant to begin with, the tolerance that people have for things like ordering excess point of sale signs that never get hung up? That's going to disappear because we can’t afford to have all that waste. Therefore run lengths are going to come down dramatically, your expectation for the turnaround is going to increase, and all of that is very positive for digital printing. However, it’s very negative for screen printing to some degree and offset print. So it all depends on which side of the fence you're on.

The silver lining long term for digital printing is actually quite good, because overall print volumes are going to plummet, and what's left is going to have far more relevancy and value. So it's a way to restart our digital printing industry, but if you're caught with lots of legacy infrastructure and the likes, probably not so good.

YOU HAVE SPOKEN BEFORE ABOUT CONVERGENCE IN THE INDUSTRY – DO YOU HAVE ANY ADVICE FOR BUSINESSES LOOKING INTO NEW REVENUE STREAMS?

Because all the traditional business models are basically unstable at this point, the only thing that's certain is that if I'm going to grow, I probably have to expand what I do. I think you're going to see a fairly significant interest at a low capital equipment cost level of companies that are surviving at this point getting into new markets. For example, we've seen this for years where commercial printers have gotten into signage, poster printing, point of purchase printing, but I think what you're also going to see now is people are going to say wow, I could buy this gently used piece of equipment that I couldn't afford before from somebody who's gone out of business that will enable me to get into soft signage textile printing, for example.

Or, I'm going to buy a UV flatbed printer because I want to get into printing customised promotional goods. Things that were the furthest thing from my mind, and were never big enough for it to make a meaningful top-line revenue impact on my business, but because my core business has now shrunk so much, and I know that the profit margins on printing things like promotional goods are so much greater than the profit margin on a point of purchase sign, that's looking far more interesting all of a sudden! I think that's the kind of thought process that you're going to start to see become more and more common.

It’s really enabled by having access to lower capital investments than what we might have seen before, and/or willingness to make a low capital cost investment in something new that before wouldn't have been impactful enough. So I think that's good news for equipment suppliers that have lower capital costs goods, but if you're an equipment vendor selling a three and a half million dollar press, it’s probably not going to be so easy. 

WHAT ARE YOUR CURRENT INSIGHTS ON THE INKJET MARKET?

What we’re seeing on the inkjet side, in particular, is big advances in ink substrate capabilities. In other words, we're going to make inks that stick to things that historically have been difficult for inkjet to print on, at the ever-better quality. Quality is going to become more subjective than ever before – does it need to be the most beautiful silver halide type quality, or does it just need to be good enough to be sellable? Yes, we all want better quality, but we want it at a cost that we can afford. We will see some impact, even among the designer community, because inkjet ink is a fairly significant cost as part of making a print, although substrates are always going to be the bulk of the cost.

So you will see trend shifts in fashion and designs, but in terms of technology, inkjet is not going to go away and long term, although it’s sort of difficult to envision today, over the next 10 years we'll probably accelerate the tipping point from analogue printing to digital printing because inkjet is getting increasingly faster, more and more productive, and as you get more of these short runs and less waste of low relevancy print, it's just going to fit better. The long term outlook for inkjet is actually very positive, and it's not contingent upon the next technology breakthrough, it's more contingent upon these bigger patterns changing.

WHAT ARE THE DRIVING FORCES BEHIND INKJET ADOPTION?

The biggest thing that's going to be driving it is a business model change within the print provider community. If I can't find the operators to run my business that's one issue. Digital by all implications is far easier to operate than traditional conventional technology because you don't need the skill set, or at least not that to that degree right you need more data skillsets, but you don't need to have the artisan skillset, understanding ink/water balance and all that kind of stuff. 

But the bigger issue as I mentioned before is you're going to see customers order a print in far smaller quantities than ever before because they want to make sure it's impactful. So as you get these higher job frequencies and smaller and smaller run lengths, there's no way the analogue process can keep up with that. And as inkjet technology gets faster, the amount of jobs that you can put onto inkjet is going to be better and better. Yes, quality matters, but at the end of the day, it's not something people are willing to pay for – there’s a threshold. Take cars, for example, the actual cost of buying a basic car today is a lot less now than it was 20 years ago, and you've got many more features; airbags, anti-lock brakes, automated braking, etc.– it's not helping to sell any more cars! You’ve got to look at the bigger picture, and for the print industry that bigger picture is effective that people are going to order smaller and smaller quantities more frequently.

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