The Digital Transformation Stays On Course

Alon Bar-Shany, VP and general manager, Indigo Division, HP, provides a digital perspective on the current state of commercial printing and what print service providers (PSPs) should be doing to help increase business.

Show Daily: With the worst of the global economic crisis now hopefully behind us, do the results for FY11 reflect this so far?

Alon Bar-Shany: There, is of course, an impact of the economy on our customers’ and our results; however, the mega trends in the world and in the printing industry are clearly enabling continued fast growth for digital. Our customers’ page growth is estimated to be around 25 percent a year.

SD: How do you view the recent spate of agreements/alliances from graphic arts suppliers to provide and/or expand their digital offerings?

 Bar-Shany: The recent competitive announcements reinforce the picture that shows the transformation from analog to digital printing accelerating, and we agree with analyst firms such as Gartner that industry consolidation and alliances of this nature will likely continue.

 HP sees strong growth opportunities in this industry, so we are continuing to invest in innovative systems that expand our Indigo and Inkjet Web Press portfolios. We also have an extensive network of partners who work closely with us on complementary finishing and workflow solutions as well as media. Together, we provide customers proven end-to-end solutions that help them capture more high-value color pages and open new revenue streams.

 While these deals show that competition in the digital solutions market is increasing, they also demonstrate that our strategy to drive the analog-to-digital transformation is on target, and we have no plans to alter our course. Competition and choice are very good for our customers. We have been a market leader for years and will continue to innovate and stay ahead of the pack.

 SD: What advice would you give PSPs that want to expand their businesses and break into new markets using digital print? What would be good for their next investment?

 Bar-Shany: The place to start is with a vision of where you want to be in five years, an analysis of your customer needs, and where you can add real value. There are numerous opportunities for digital, but the starting point needs to be, “how do we create incremental value and innovate.” I would also suggest looking at the end-to-end process – not just the Indigo press, but web-to-print, finishing, MIS connectivity and other value-adding and process enhancing solutions. Indigo presses enable a much broader transformation of a PSP business model than just adding a digital printing capability. 

 SD: Which products from the HP Indigo digital portfolio are proving to be the most popular?

 Bar-Shany: That is a tough one. I have four children and love them all equally. Clearly the market is demanding higher productivity to support the fast page growth – and therefore our latest-generation products, the HP Indigo 7500, WS6000 and W7200 are today the bulk of our revenue. However, in terms of units, the HP Indigo press 5500 remains our most popular product.

 SD: What do you think are the best potential growth areas? Are there niches where you see growth potential that haven’t been developed as much as you expected?

Bar-Shany: Packaging is a fast-emerging segment. HP Indigo is the most widely used digital printing technology in the label industry, and we are seeing strong interest for flexible packaging and folding carton applications. Clearly photo remains a large opportunity, as does self-publishing. However, our largest segment remains marketing materials and other general commercial print applications, many driven by web-to-print solutions.

 SD: We can observe that workflow solutions are an increasingly important component in the HP Indigo portfolio, why is this?  

 Bar-Shany: As digital demand grows the number of jobs and complexity is increasing. So, to manage the production floor efficiently is critical. Getting hundreds of jobs out each day takes a lot more than just a digital press.

 SD: How important is it today for a digital supplier to additionally provide business development tools for its customers?  

 Bar-Shany: This is critical. In such a fast-changing market, education is a must – as is sharing best practices. In this respect, the Digital Solutions Cooperative users’ group has done a wonderful job in North America and now is expanding into Asia and Europe, and we are significantly expanding our business development program, Capture.

 SD: Will digital printing continue to drive the growth of web-enabled print? How?

 Bar-Shany: Clearly the Internet is having a huge impact on print driving rapid decline in some areas, and enabling new pages as well, with the explosion of content. Our customers are innovating around these new capabilities in many areas – photo, publishing, cross-media – and this will just continue to grow.

SD: What role does digital print play in the modern marketing mix and increasing use of cross-media?

 Bar-Shany: Marketing is becoming more complex and personal. Consumers are overloaded with information, and the smartphone is one example of how information is generated fast and personally. Digital print can complement the capabilities of virtual marketing, fully utilizing the ability to customise and personalise and do it with Indigo offset quality, vibrance and permanence that only print can enable.

 SD: Do you believe that end-users/brands fully understand the opportunities and benefits provided by digital print, or is there yet more education required?

 Bar-Shany: Honestly, we find the understanding of the potential for end-users and brands to use digital printing is only very partially appreciated. In surveys we have done, we have found the lack of awareness is still amazing. This is why we are doing a lot more work to educate the brands, and to help our customers reach out to them more proactively, and create more demand for Indigo pages.

 SD: What are your predictions for what lies in store for the rest of FY11 and on the road to Drupa next year?

 Bar-Shany: Overall, this year has been a good year this far for us and our customers. Twenty-five percent page growth for our customers is a very realistic estimate. I do not see major changes in the trends we have seen in the last few years. China, Brazil and other emerging markets are growing at faster rates than other geographies. Offset is facing challenges, and the trend of shutting down over-capacity and consolidation should continue.

 Sadly, many printers will go out of business in the more mature markets. The traditional vendors will also struggle to recover and consolidation will continue there as well. Now, as we get closer to Drupa we will hear a lot of hype around new technology and products. I would caution all to treat dramatic announcements with a grain of salt and wait to see what is real and what is hype.

At HP Indigo, we take great pride that we deliver on our promises and protect our customers’ investments. Clearly we will continue to innovate in a way to help our customers continue growing their pages by at least 25% in a profitable way. HP sees the analog to digital transformation in the commercial print world as a large opportunity and, as a result, our R&D budget is larger than ever and our customers can be confident that digital print, and HP Indigo specifically, has a bright future.