{"id":22301,"date":"2017-01-29T00:41:11","date_gmt":"2017-01-29T08:41:11","guid":{"rendered":"http:\/\/www.enxmag.com\/twii\/?p=22301"},"modified":"2017-01-29T00:44:48","modified_gmt":"2017-01-29T08:44:48","slug":"production-print-growth-drivers-why-some-dealers-are-cashing-in","status":"publish","type":"post","link":"http:\/\/www.enxmag.com\/twii\/state-of-the-industry\/2017\/01\/production-print-growth-drivers-why-some-dealers-are-cashing-in\/","title":{"rendered":"Production Print Growth Drivers: Why Some Dealers Are Cashing In"},"content":{"rendered":"<p>Growth is hard to come by in today\u2019s document imaging market. Sales of many A3 and MFP models are flat, and clicks are declining. Dealers are looking for new, complementary product lines to boost growth and margins, and some are finding success with production print systems.<\/p>\n<p>Production print has several points in its favor. Most dealers already have relationships with production print OEMs such as Konica Minolta, Canon, Xerox, or Ricoh. Hardware prices are high, which means a good profit is possible on the initial sale. Best of all, production printers consume supplies at a prodigious rate, ensuring high-margin recurring revenue.<\/p>\n<p>So why aren\u2019t all dealers selling production print? Like any worthwhile venture, it requires significant thought, commitment, and investment. Dealers who understand the production print market treat it like a new business, not just a new product. It\u2019s significantly different from the copier business, and dealers need to ask key questions before leaping in: Who is buying and what\u2019s their buying process? What are the expectations for support? What market trends are shaping the production print opportunity?<\/p>\n<p>To help answer those questions and to explain what\u2019s driving demand for production print, ENX has spoken with leading dealers, OEMs, and analysts in the market. What follows is an overview of what\u2019s driving the production print market and advice on how best to leverage the opportunity.<\/p>\n<p><strong>What Is Digital Production Print?<\/strong><\/p>\n<p>Production printers are designed for high speed (60 ppm at the low end to 300 ppm or more at the high end), longer duty cycles, and large production runs. It\u2019s not unusual for a single production printer to generate a million or more clicks a month. Prices range from about $20,000 to perhaps $1 million.<\/p>\n<p>They can be monochrome or color, with color rising in popularity at the expense of monochrome. The light to mid-range production cycle models\u2014those most likely to be sold through the dealer channel\u2014are mostly toner-based. High-volume cut-sheet and continuous-feed systems are inkjet-based. They are typically sold through the OEMs\u2019 direct sales organizations due to their complexity and support requirements.<\/p>\n<div id=\"attachment_22302\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22302\" loading=\"lazy\" class=\"wp-image-22302\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/16-BobBarbera10.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22302\" class=\"wp-caption-text\">Bob Barbera, Canon BISG<\/p><\/div>\n<p>\u201cProduction inkjet is still a new, emerging technology that is currently having a big impact on transactional, direct mail and book publishing,\u201d said Bob Barbera, senior manager, production solutions division, at Canon\u2019s Business Imaging Solutions Group (BISG). \u201c[It requires] a lot of unique experience and knowledge with paper, media, inks, and workflows, and the Canon Solutions America organization has this experience from selling and supporting Oc\u00e9-branded production inkjet printing solutions.\u201d Canon markets a full range of production print systems from light volume production cut-sheet systems to Oc\u00e9-branded continuous feed inkjet systems.<\/p>\n<p>\u201cCompanies are creating devices that can do a lot in a smaller investment space,\u201d said Amy Machado, research\u00a0manager for imaging,\u00a0printing,\u00a0and document\u00a0solutions\u00a0at IDC. \u201cYou don\u2019t have to buy a Xerox iGen. You can buy the next step down Xerox and get really good finishing, good image quality, and color management. They are moving features you saw in high-end devices downstream.\u201d<\/p>\n<div id=\"attachment_22304\" style=\"width: 177px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22304\" loading=\"lazy\" class=\"wp-image-22304\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/16-Becky-and-Bob-maxwell-Komax.jpg\" width=\"167\" height=\"133\" \/><p id=\"caption-attachment-22304\" class=\"wp-caption-text\">Becky and Bob Maxwell, Komax<\/p><\/div>\n<p>Komax has been selling Konica Minolta production printers since 1999, most successfully in the last five years. Bob Maxwell, owner of Komax, attributes that in part to improvements in the capability and quality of digital production systems. Years ago, some of the manufacturers weren\u2019t serious about production and didn\u2019t do as good a job with it,\u201d he said. \u201cNow several manufacturers produce good production equipment.\u201d<\/p>\n<p>\u201cXerox had a stronghold [in production print], but now we have alternatives,\u201d said Barry Simon, president at Datamax. Datamax sells Canon and Konica Minolta brands, and Simon says their products compete well and are very reliable.<\/p>\n<p>\u201c[Ricoh\u2019s] Production Print Business Group started with literally zero customers and not a lot of products, and in 10 years we\u2019ve built it to a very, very large business,\u201d said John Fulena, vice president of Ricoh\u2019s Production Print Business Group.<\/p>\n<div id=\"attachment_22307\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22307\" loading=\"lazy\" class=\"wp-image-22307\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/22-John-Fulena-1.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22307\" class=\"wp-caption-text\">John Fulena, Ricoh Production Printing Business Group<\/p><\/div>\n<p>While Fulena credits Ricoh\u2019s direct sales group for some of that growth, he sees a lot of opportunity for the dealer channel. He sees the annuity stream from that print volume as the most attractive part of the production print sale to dealers. \u201cIf it\u2019s priced right, there\u2019s a lot of upside and opportunity for the dealers.\u201d All of Ricoh\u2019s cut-sheet and wide-format production print lines are available to the dealer channel. Its continuous feed inkjet systems are sold direct only.<\/p>\n<p>Production printers are commonly sold with finishing options that, for example, coat, die-cut, or bind stock. Those options, however, are typically sourced from third-party providers, and it\u2019s common for both dealers and OEMs to partner with those providers for sales, support, and installation.<\/p>\n<p><strong>Production Print Market Drivers<\/strong><\/p>\n<p>To understand the total opportunity for digital production print, you have to look at the entire commercial printing market. Smithers Pira reports that the total market for printing equipment was $16.3 billion in 2016. The overall market has declined since 2007 when that number was $25.3 billion. Fewer newspapers, magazine, catalogs, and so on are being printed, and they relied heavily on offset presses. Digital production systems provide more flexibility, capability, and ease of use, so they are not only replacing offset presses for many jobs, they are being used in applications offset simply cannot do.<\/p>\n<p>\u201cEighty to 90 percent of all printing today is still offset and gravure printing. The transition from offset pages to digital pages is driving a big part of the growth we\u2019re seeing in the market,\u201d said Barbera. \u201cThe application range and capabilities that digital printing devices can now serve is significantly growing from a user perspective between the quality, the types of substrates and media they can print on, the types of finishing they can do, and the types of workflows they can use. This combined with the market transition to shorter run lengths, print on demand and color are all helping to fuel the transition from offset to digital.\u201d<\/p>\n<p>There are two primary markets for production print: in-plant and pay for print (P4P). Companies with their own print production facilities or centralized reprographics departments (CRDs) make up the in-plant market. These organizations see in-plant operations as cost centers, but have enough volume or specialized requirements to justify their own printing operation rather than outsourcing.<\/p>\n<p>The decision to support an in-plant digital print operation is driven by many variables depending on the application, which might be transactional (invoices), publishing (books, manuals), direct mail, packaging, labels, or marketing\/promotional material. Variables include color capability and quality, volume, finishing needs, and page rate. It comes down to whether in-plant is more cost effective and best meets the requirements\u2014not necessarily in that order.<\/p>\n<p>Not just big companies have in-plant operations. Market research from a PRIMIR 2016 study \u201cDigital Printing Technology\u2019s Influence on the U.S. In-Plant Printing Market\u201d reports that there are more than 10,000 in-plant operations in the U.S. with five or fewer staff running them. Barbera sees these operations as a great opportunity for Canon\u2019s channel partners.<\/p>\n<p>Businesses that outsource their printing do so to a P4P service provider. These are mostly traditional print shops that are adding digital systems to complement their offset equipment. If they don\u2019t do so, they risk losing print jobs that are too small to run cost-effectively on offset presses. The main question for P4P providers is whether digital production print will make money for them. \u201c[For P4P], what are the applications that you have now that you can move to a digital device, and what are the applications that you currently aren\u2019t offering but could create? It\u2019s about finding new markets and new customers that you can go after,\u201d said Machado.<\/p>\n<div id=\"attachment_22309\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22309\" loading=\"lazy\" class=\"wp-image-22309\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/18-Lucy-Perez.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22309\" class=\"wp-caption-text\">Lucia Perez, Xerox Corporation<\/p><\/div>\n<p>\u201cThe movements toward color digital printing and value-added services are key growth drivers within the in-plant segment,\u201d said Lucia Perez, marketing manager, in-plant for Xerox Corporation. \u201cHowever, the growth was blunted by a decline in black-and-white digital print volume. Furthermore, trends toward digital communications and media, print suppression, and outsourcing have accelerated in the past five years, negatively influencing the transactional in-plant segment, in particular.\u201d<\/p>\n<p>\u201cThere\u2019s a four to five year cycle to in-sourcing versus outsourcing,\u201d said Erik Holdo, senior vice president Production Print Solutions at Konica Minolta Business Solutions U.S.A. Inc. \u201cWe\u2019re currently in a period of more outsourcing, but that\u2019s just today. It will continue to flow back into the in-plant and the CRD as well.\u201d Konica Minolta sells both toner-based cut-sheet and high-volume inkjet systems, all of which are available to its dealer channel.<\/p>\n<p>A key reason companies shut down or scale back their in-plant operations is the cost to staff them with skilled personnel. \u201c[Digital production systems] are not as difficult to operate,\u201d said Simon. Datamax has sold to a few churches, for example, where volunteer members run the production printers with a little training.<\/p>\n<p>Some key market factors behind the demand for in-house digital production printers are as follows:<\/p>\n<p><strong>The ability to print color in volume<\/strong>. Dealers are finding that some customers with color copiers or MFPs are running jobs larger than what the machines were designed for. Those dealers are upgrading customers by showing how they can get cost-effective, faster, higher quality, and more reliable volume output on a production printer. Perez noted that some companies want more control over quality and color accuracy for the sake of their brand image.<\/p>\n<p><strong>Faster turnaround times<\/strong>. With in-house capabilities, you can send material when it comes off the printer, and you\u2019re not on an outside print shop\u2019s schedule.<\/p>\n<p><strong>Lower cost<\/strong>. This depends on a lot of factors such as print volume, print stock, and finishing requirements, but cost per page is generally good for digital production print, especially for shorter run lengths.<\/p>\n<p><strong>Print on demand<\/strong>. Digital production print allows a business to produce and stock only what\u2019s needed. Hunter McCarty, COO at RJ Young, a Canon and Ricoh dealer, sees more in-plant customers adding digital production units for this purpose. \u201cYou print what you need when you need it, and then you don\u2019t have a shelf full of documents you have to reprint three months later because they are outdated.\u201d<\/p>\n<p>Social media is driving some print-on-demand business where people create books from their Facebook, Twitter, or other social groups using several different specialty and book publishing providers. \u201cYou can order a Facebook book that creates a book from all your postings, your pictures, the things you like, and these things run 400 to 500 pages and are bound as your social media journal. Self-publishing or vanity press, traditional photo books, and even cookbooks continue to create explosive demand,\u201d said Holdo.<\/p>\n<p><strong>Increased security<\/strong>. Having digital production in house better ensures data integrity and security. The full tracking and audit control it provides is highly desirable and needed in specific industry segments such as banking.<\/p>\n<p><strong>Automation<\/strong>. The ability to tie digital production systems into workflows via software eliminates many manual tasks. The value of that is lower overhead in support staff. Barbera cites the example of an in-plant operation where enabling a workflow solutions that streamlines order submission through production has allowed it to do five times the volume of work with the same number of employees as before.<\/p>\n<div id=\"attachment_22310\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22310\" loading=\"lazy\" class=\"wp-image-22310\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/20-Amy-Machado.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22310\" class=\"wp-caption-text\">Amy Machado, IDC<\/p><\/div>\n<p><strong>Personalization to engage, influence behavior, and achieve the desired response<\/strong>. This is also referred to as variable data printing where the content printed changes depending on the profile of an individual or demographic group. \u201cFolks are focusing more on using data to drive more targeted pages,\u201d said Machado. She cited banking as a vertical that uses data to target customers.<\/p>\n<p>The ability of digital printing to do variable data printing and customize content also enables integration with digital media. \u201cIt is exciting to see new integrated communications that leverage print and digital media such as cross media programs that utilize QR codes to drive [the reader] to a website or a link to a video that has more information,\u201d said Barbera. For example, a printed training manual might point a user to a video tutorial. \u201cPrint is morphing to complement digital communications.\u201d<\/p>\n<p>Another example: Personalization has made direct mail much more efficient. \u201cIn the past, pieces were offset printed at high speed and it was a generic message for everybody. With the ability to apply some business analytics, data mining, and consumer profiling, you can make much more intelligent choices in how you market with direct mail combined with other media to create a complete omni-channel campaign. That requires digital,\u201d said Holdo.<\/p>\n<p><strong>Growth of wide-format printing<\/strong>. More wide-format printing is moving from analog to digital production systems, mostly in the P4P space but also in some in-plant operations for applications such as sign printing. \u201cWe used to call it a secondary business. I wouldn\u2019t call it that anymore,\u201d said Fulena. \u201cThe move from analog to digital makes it much easier to produce these applications, and that\u2019s a big driver.\u201d<\/p>\n<p><strong>The Death of Paper Is Greatly Exaggerated<\/strong><\/p>\n<p>On the negative side, several factors are diminishing demand for production print within certain applications. \u201cPrint suppression is real within the transaction space,\u201d said Machado. \u201cThe number of envelopes is going down.\u201d<\/p>\n<p>\u201cThere was the threat that transactional printing was going to go all electronic statements. Clearly there has been a transition, but the printed transactional statement is still one of the top page volumes applications for digital printing,\u201d said Barbera.<\/p>\n<div id=\"attachment_22312\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22312\" loading=\"lazy\" class=\"wp-image-22312\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/20-Erik-Holdo.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22312\" class=\"wp-caption-text\">Erik Holdo, Konica Minolta Business Solutions U.S.A. Inc.<\/p><\/div>\n<p>In fact, the rise of electronic bill presentment may have helped digital production print. As companies cut back on the number of invoices they print, it becomes less cost efficient to run them on offset presses. \u201cMany printers are starting to go back to color and monochrome cut sheet printers where they can produce a smaller set of these statements or other transactional documents like explanations of benefits in, say, the insurance market,\u201d said Holdo.<\/p>\n<p>There has also been concern that e-books would hurt the book and manual printing business. While there might have been some effect early on, Barbera sees growth opportunity for digitally printed books. \u201cThe printed book is still very healthy, very strong and actually growing because of digital\u2019s ability to do on-demand publishing and produce out-of-print books.\u201d<\/p>\n<p>Similarly, many school textbooks have moved to tablet- or laptop-based course material, but Holdo cites research that shows more students want the traditional printed textbooks. \u201cThey want that physical book, to be able to annotate it. Textbooks are not as threatened by the digital side of things as they had been in the past,\u201d he said. With digital production printers, publishers can print only the number needed with up-to-date content. \u201cThat\u2019s driving some of that publishing from the traditional publishers to the more local companies, some of which used to be in the small-run publishing business,\u201d said Holdo.<\/p>\n<p>\u201cThe market has seen some interesting ebb and flow,\u201d said Holdo. \u201cWhen tablets and digital distribution of information became more popular, the death of paper was proclaimed by many. That has never held to be true. There are a few areas that have continued to grow.\u201d<\/p>\n<p>One of those areas is direct mail. \u201cBack in the 80\u2019s, we\u2019d see 4,000 marketing messages a week. Now some estimates put it at 5,000 messages a day in the electronic space alone,\u201d said Holdo. \u201cThat creates clutter, noise in the delivery of your message to your target audience. Direct mail is the only thing you can do as an advertiser or brand manager that can\u2019t be filtered out.\u201d You can opt out of email or be on a do-not-call list, but you can\u2019t keep marketing material from appearing in your mailbox.<\/p>\n<p><strong>Vertical Markets and Applications<\/strong><\/p>\n<p>Other than traditional print shops, no single vertical stands out as big buyers of production print. Dealers cited education, healthcare, financial services, and public sector as their most important verticals, in addition to traditional print shops. In truth, dealers consider any company that produces print media in volumes that would stress a high-end copier as a prospect.<\/p>\n<p>Machado sees verticals such as finance and insurance moving away from toner-based systems to higher volume inkjet systems bought directly from the OEM. She sees the best opportunity for dealers in government, education, healthcare, and banking (marketing materials more than transactional documents). \u201cAn opportunity for the dealer channel is selling devices that can be used for more than one type of document or application,\u201d said Machado. For example, a print services provider might want a machine that can print both documents and packaging.<\/p>\n<p>A few industries that had not typically had in-plant operations are starting to buy digital production print systems including creative agencies, architectural firms, designers, and retail. \u201cThere have been some changes in the marketing and creative space that have brought some opportunities to production print,\u201d said Holdo.<\/p>\n<p>\u201cWe\u2019re also starting to see some true print-on-demand in manufacturing,\u201d said Holdo. Manufacturers use production printers to produce labels, inserts, operations manuals, and other items that go with the products being made.<\/p>\n<p><strong>Advice to Leverage the Production Print Opportunity<\/strong><\/p>\n<div id=\"attachment_22313\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22313\" loading=\"lazy\" class=\"wp-image-22313\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/18-Hunter-McCarty.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22313\" class=\"wp-caption-text\">Hunter McCarty, RJ Young<\/p><\/div>\n<p><strong>Define your market<\/strong>. For most dealers, that\u2019s mainly selling small- to mid-range production systems to the in-plant market. \u201cThe P4P market always had a reputation for being low margin and very time consuming from the service side,\u201d said McCarty. Other dealers report that print service bureaus sometimes have trouble getting equipment financing.<\/p>\n<p><strong>Define your offerings<\/strong>. You want to start with products that you can support and are right for your market. As you learn the technology and market, you can always move up.<\/p>\n<p><strong>Develop a sales and marketing plan<\/strong>. Expect most of your production print business to come from new customers. McCarty said that 60 to 70 of its production print customers were clients they had never sold to before. All the OEMs offer support to help sales have conversations around production print with both new and existing customers.<\/p>\n<p><strong>Hire or train specialists<\/strong>. This applies to both sales and service. On the sales side, you need people who think like analysts and act like consultants with clients. You\u2019re not selling a box. You are selling a solution that includes hardware, software, and services. Your service department will be held to a higher standard than for copiers, so they need specialized knowledge and ability to respond quickly. \u201cMost if not all our successful dealers selling production have dedicated people,\u201d said Fulena. \u201cTo Ricoh, that\u2019s really a prerequisite. We\u2019re always there as a safety net, but if they are not self-sufficient, it\u2019s very hard to maintain and grow the business.\u201d<\/p>\n<p><strong>Be prepared to invest<\/strong>. The higher up the production print market a dealer goes, the greater the commitment. \u201cIt\u2019s really up to the dealer to make the investments needed to attack the market,\u201d said Holdo. That investment includes specialized staff, demo equipment, ongoing training, and perhaps facilities upgrades.<\/p>\n<div id=\"attachment_22314\" style=\"width: 110px\" class=\"wp-caption alignleft\"><img aria-describedby=\"caption-attachment-22314\" loading=\"lazy\" class=\"wp-image-22314\" src=\"http:\/\/www.enxmag.com\/twii\/wp-content\/uploads\/2017\/01\/22-Barry-Simon.jpg\" width=\"100\" height=\"133\" \/><p id=\"caption-attachment-22314\" class=\"wp-caption-text\">Barry Simon, Datamax<\/p><\/div>\n<p><strong>Bring a solutions focus to sales<\/strong>. Selling production printers requires a more consultative, solutions selling approach. \u201cThe prospect is looking to the dealer for business services. \u2018How are you going to help me make money with this device. How are you going to streamline my business. How are you going to improve my workflow,\u2019\u201d said Machado. Simon added that sales need to be able to speak to things like media substrates, finishing capabilities, and color correctness.<\/p>\n<p><strong>Be ready to react to new opportunities<\/strong>. Dealers who understand their production print customers\u2019 businesses and workflows can often find ways to add value for them and sell more products and services. For example, McCarty said that RJ Young offers what it calls a morning walk-through where its techs test equipment every morning to minimize downtime. Other dealers have decided to offer printing services with the equipment they sell with the idea that their service customers might eventually buy equipment. RJ Young also provides facilities management for some in-plant customers who want an in-plant operation but don\u2019t want to staff it.<\/p>\n<p><strong>Future Outlook<\/strong><\/p>\n<p>The dealers we interviewed all expect the strong growth for production print they saw in 2016 to continue into 2017. McCarty said that RJ Young\u2019s production print business grew 38 percent in 2016, and he sees that growth continuing for the next few years, some of that coming from copier customers. \u201cAs [customers] reduce the number of convenience copiers or printers they have, they start looking at jobs that should be going to higher volume or higher speed machines.\u201d<\/p>\n<p>Simon expects at least 20 percent growth in Datamax\u2019s production print business. \u201cIt could be a big number. Hit a big order and we could double our business,\u201d he said.<\/p>\n<p>Fulena sees more growth potential in focusing on complete production solutions, from workflow automation to finishing options. \u201cIt\u2019s not just a hardware play anymore. It\u2019s software and services.<\/p>\n<p>So, how do you pool that all together and become that one-stop shop?\u201d said Fulena. \u201cAnd if you create a document, what happens to it on the back end? Every document has some sort of finishing, so we see growth with dealers getting more into finishing.\u201d<\/p>\n<p>For Xerox, inkjet will be its main priority for production print. \u201cWe want to make inkjet accessible to all types of customers, helping them produce high-demand applications like transactional, direct mail, and catalogs,\u201d said Perez.<\/p>\n<p>What will drive the production print business for dealers going forward is what\u2019s made them successful to date: dedicated resources, providing value-add solutions to customers, and a keen eye on the market for new opportunities.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Growth is hard to come by in today\u2019s document imaging market. Sales of many A3 and MFP models are flat, and clicks are declining. Dealers are looking for new, complementary product lines to boost growth and margins, and some are finding success with production print systems. Production print has several points in its favor. Most dealers already have relationships with production print OEMs such as Konica Minolta, Canon, Xerox, or Ricoh. Hardware prices are high, which means a good profit is possible on the initial sale. Best of all, production printers consume supplies at a prodigious rate, ensuring high-margin recurring revenue. So why aren\u2019t all dealers selling production print? Like any worthwhile venture, it requires significant thought, commitment, and investment. Dealers who understand the production print market treat it like a new business, not just a new product. It\u2019s significantly different from the copier business, and dealers need to ask key questions before leaping in: Who is buying and what\u2019s their buying process? What are the expectations for support? What market trends are shaping the production print opportunity? To help answer those questions and to explain what\u2019s driving demand for production print, ENX has spoken with leading dealers, OEMs, and analysts in the market. What follows is an overview of what\u2019s driving the production print market and advice on how best to leverage the opportunity. What Is Digital Production Print? Production printers are designed for high speed (60 ppm at the low end to 300 ppm or more at the high end), longer duty cycles, and large production runs. It\u2019s not unusual for a single production printer to generate a million or more clicks a month. Prices range from about $20,000 to perhaps $1 million. They can be monochrome or color, with color rising in popularity at the expense of monochrome. The light to mid-range production cycle models\u2014those most likely to be sold through the dealer channel\u2014are mostly toner-based. High-volume cut-sheet and continuous-feed systems are inkjet-based. They are typically sold through the OEMs\u2019 direct sales organizations due to their complexity and support requirements. \u201cProduction inkjet is still a new, emerging technology that is currently having a big impact on transactional, direct mail and book publishing,\u201d said Bob Barbera, senior manager, production solutions division, at Canon\u2019s Business Imaging Solutions Group (BISG). \u201c[It requires] a lot of unique experience and knowledge with paper, media, inks, and workflows, and the Canon Solutions America organization has this experience from selling and supporting Oc\u00e9-branded production inkjet printing solutions.\u201d Canon markets a full range of production print systems from light volume production cut-sheet systems to Oc\u00e9-branded continuous feed inkjet systems. \u201cCompanies are creating devices that can do a lot in a smaller investment space,\u201d said Amy Machado, research\u00a0manager for imaging,\u00a0printing,\u00a0and document\u00a0solutions\u00a0at IDC. \u201cYou don\u2019t have to buy a Xerox iGen. You can buy the next step down Xerox and get really good finishing, good image quality, and color management. They are moving features you saw in high-end devices downstream.\u201d Komax has been selling Konica Minolta production printers since 1999, most successfully in the last five years. Bob Maxwell, owner of Komax, attributes that in part to improvements in the capability and quality of digital production systems. Years ago, some of the manufacturers weren\u2019t serious about production and didn\u2019t do as good a job with it,\u201d he said. \u201cNow several manufacturers produce good production equipment.\u201d \u201cXerox had a stronghold [in production print], but now we have alternatives,\u201d said Barry Simon, president at Datamax. Datamax sells Canon and Konica Minolta brands, and Simon says their products compete well and are very reliable. \u201c[Ricoh\u2019s] Production Print Business Group started with literally zero customers and not a lot of products, and in 10 years we\u2019ve built it to a very, very large business,\u201d said John Fulena, vice president of Ricoh\u2019s Production Print Business Group. While Fulena credits Ricoh\u2019s direct sales group for some of that growth, he sees a lot of opportunity for the dealer channel. He sees the annuity stream from that print volume as the most attractive part of the production print sale to dealers. \u201cIf it\u2019s priced right, there\u2019s a lot of upside and opportunity for the dealers.\u201d All of Ricoh\u2019s cut-sheet and wide-format production print lines are available to the dealer channel. Its continuous feed inkjet systems are sold direct only. Production printers are commonly sold with finishing options that, for example, coat, die-cut, or bind stock. Those options, however, are typically sourced from third-party providers, and it\u2019s common for both dealers and OEMs to partner with those providers for sales, support, and installation. Production Print Market Drivers To understand the total opportunity for digital production print, you have to look at the entire commercial printing market. Smithers Pira reports that the total market for printing equipment was $16.3 billion in 2016. The overall market has declined since 2007 when that number was $25.3 billion. Fewer newspapers, magazine, catalogs, and so on are being printed, and they relied heavily on offset presses. Digital production systems provide more flexibility, capability, and ease of use, so they are not only replacing offset presses for many jobs, they are being used in applications offset simply cannot do. \u201cEighty to 90 percent of all printing today is still offset and gravure printing. The transition from offset pages to digital pages is driving a big part of the growth we\u2019re seeing in the market,\u201d said Barbera. \u201cThe application range and capabilities that digital printing devices can now serve is significantly growing from a user perspective between the quality, the types of substrates and media they can print on, the types of finishing they can do, and the types of workflows they can use. This combined with the market transition to shorter run lengths, print on demand and color are all helping to fuel the transition from offset to digital.\u201d There are two primary markets for production print: in-plant and pay for print (P4P). Companies with their own print production facilities or centralized reprographics departments (CRDs) make up the in-plant market. 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