Print’s Darwinian Evolution: Vendors

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The current US housing supply is at roughly a 9 month supply. The good news is that this is down from an 11 month supply at the end of November of 2009. The housing bubble, which carries the bulk of the blame for our recent economic struggles, is a cautionary tale of simple supply and demand economics. In boom times, developers rush to capitalize their profits due to housing demand with a formula of build more houses to reap more profit. A gold rush ensues as all developers ramp up the supply to meet demand. Then the bubble bursts and the demand goes to zero, yet supply still increases beyond current levels due to the builder's ongoing projects. The real estate industries are on a path of struggle until recover when inventory levels drop and demand returns. After a couple of years, the US housing market is showing blips of this recovery process now.

What, you ask, does this have to do with print vendors?

After years of overcapacity coupled with technology changes and media buying shifts, traditional printing press manufacturers have seen a similar correction period. Supply was high and demand fell. A tightened credit market and reluctance to invest in capital equipment have also caused stress for new equipment purchases while bolstering used equipment. Tim Kirkland even posed this question on LinkedIn, "Are used equipment sales stalling technical advancements in printing?" To date, there are 24 comments.

Both manroland and Heidelberg have been increasing their services and consultative services. This is a continuation of the overall spike in consultative services and business support seen at Print09. Heidelberg has also expressed intentions to re-enter the digital printing market through a strategic partnership to be announced by the end of the year. As a corrective measure, most industry analysts think there will be consolidation in this space. (video, registration required)

Although software and digital press vendors have shown resiliency, this marketplace is just as competitive. Agfa, Screen, and Fuji, have all moved beyond prepress to digital presses. The vendor activity in this space is a true vote of confidence on the future of digital printing as a growth opportunity. Not to be left out, Canon recently shook the space up further by buying Oce.

There as also been a flurry of partnerships forged from Canon & HP to Kodak & Ricoh, et. al. Both Xerox and HP jumped into the IT services game through acquisitions of ACS and EDS, respectively.

The result is that all print media vendors are reshaping their business plans and offerings to match economic and competitive forces. As with printers, print vendors will likely see more consolidation going forward. Ultimately, printers will reap the benefits from more "fit" and more innovative vendor relationships.