Guest Column

By Ann Priede; VP Publications Group, Lyra Research

The hard copy industry was in good spirits at the end of 2010, having survived the worst of the Great Recession and buoyed by strong year-end activity that promised continued growth in 2011.

Unfortunately, optimism for the new year was quickly overshadowed by the massive earthquake and tsunami that hit northeastern Japan on March 11 and the ensuing destruction and loss of life. In a somber reminder of our interconnected worldwide economy, every industry was impacted by these terrible disasters, while the huge outpouring of aid highlighted the generosity of our global community and renewed our faith in the resilience of the human spirit.

While the March earthquake and tsunami cast a long shadow on the printing and imaging industry in 2011, most manufacturers recovered more quickly than anticipated and were able to resume production and shipment of equipment and supplies with minimal interruptions. The worldwide recovery was not as cooperative, as the pace of economic growth faltered in many countries, with unemployment rates still alarmingly high, which does not bode well for most industries, including the hard copy market that relies on workers to print—often and offhandedly. Fewer employees in the workplace translate into fewer printed pages, and severe vigilance with respect to costs means that every printed page is highly scrutinized.

All is not doom and gloom, however, and against this backdrop of thriftiness, a number of familiar trends continued to drive growth opportunities in the printing and imaging industry, and in fact are borne out of the need to print less. For example, the analog to digital transformation plays directly into the need for short-run book production, which is the sweet spot for digital color and monochrome presses that are more cost effective for shorter runs than traditional offset technology. The digital production printing market is also benefiting from an increased desire for personalization and customization so that businesses can maximize their precious marketing dollars with faster and higher returns on investment—again a task better suited to digital than analog equipment.

In the office printing world, the device consolidation trend that emerged early in the 21st century to drive growth in color and monochrome MFPs has morphed into the managed print services (MPS) movement, which offers opportunities for supplies and hardware revenue, although much of this fulfillment activity is merely revenue changing hands and not new growth. The added benefit of MPS, however, is the opportunity to deliver high-margin solutions and services that help companies optimize their output environment, streamline their business processes, and ultimately save them money in terms of operating costs and overhead.

While MPS may be perceived as a double-edged sword, the impact of smartphones and tablets on today’s printing behavior is clear-cut, and not in a good way. More consumers and office workers are using handheld devices to view and share information, and the printing community is being left out in the cold as it struggles to create easy, relevant ways to print from these mobile appliances. The key to success is for vendors to get past their myopic view of the market that limits their vision to specific brands of products and deliver a simple, broad-based, brand-agnostic solution.

The market appears to be moving in this direction, with the help of Apple Airprint and Google Cloud Print, but the possibility that this movement is “too little too late” begs a fundamental question: Have user behaviors changed beyond the point of no return? With the economy pressuring employees to print fewer pages, and mobile devices simplifying the exchange of information without a printed page, how does the hard copy industry continue to make itself relevant? Not surprisingly, the executives that we interviewed for our year-in-review coverage in The Hard Copy Observer and The Hard Copy Supplies Journal have some very definite ideas and examples of how printing and imaging vendors are tackling and overcoming these real-world challenges. These articles are available at observer.lyra.com and journal.lyra.com.

Hardware Trends

The aforementioned trends are reflected in the worldwide unit shipment and revenue figures for 2011. (Please note that shipment and revenue numbers are projections for 2011 based upon forecast data published in June 2011 in the Lyra Hard Copy Industry Advisory Service and Wide-Format Advisory Service. Lyra will publish final numbers in June 2012 based upon actual shipments reported by vendors and other sources.) In 2011, Lyra expects that worldwide shipments of monochrome laser printers, color laser printers, and ink jet printers will increase year-over-year by one percent, five percent, and one percent, respectively, while worldwide shipments of monochrome laser MFPs, color laser MFPs, and color ink jet all-in-ones will grow by approximately four percent, eight percent, and five percent, respectively. Lyra projects that worldwide shipments of wide-format printers will increase six percent year-over-year. According to Lyra’s forecast, total worldwide unit shipments will grow four percent year-over-year, from 112 million units in 2010 to 116 million units in 2011.

The 2011 revenue picture is not quite so rosy, as declining average selling prices will dampen revenue growth in most market segments and result in a worldwide year-over-year revenue decline for monochrome laser printers and MFPs. Worldwide hardware revenue will hover at $54 billion in 2011, flat from 2010, according to Lyra Research. Wide-format printers (ten percent) and color laser MFPs (five percent) are the year-over-year growth leaders for worldwide revenue, followed by ink jet all-in-ones (two percent), color laser printers (one percent), and ink jet printers (less than one percent). Lyra expects that worldwide revenue for monochrome laser printers and MFPs will drop five percent and nine percent, respectively, from 2010.

Supplies Trends

The worldwide shipment and revenue numbers for ink, toner, and media tell a similar story with respect to the growing use of color, and a drop in annual media shipments speaks to the overall decline in page volumes. (Please note that shipment and revenue numbers are projections for 2011 based upon forecast data published in June 2011 in the Lyra Hard Copy Supplies Advisory Service. Lyra will publish final numbers in June 2012 based upon actual shipments reported by vendors and other sources.) In 2011, total worldwide shipments of ink jet cartridges and color toner cartridges are expected to grow four percent and eight percent, respectively, while Lyra forecasts that worldwide monochrome toner cartridge shipments will decline four percent year-over-year. According to Lyra, worldwide shipments of plain paper and coated electrophotographic (EP) paper will be essentially flat in 2011, while worldwide shipments of plain, coated, and specialty ink jet paper will drop three percent year-over-year, and worldwide shipments of desktop ink jet coated and specialty papers will both decline two percent.

Worldwide supplies revenue is a bright spot in 2011, as Lyra forecasts year-over-year growth of nearly one percent, from $102 billion to $103 billion. According to Lyra, 2011 worldwide revenue from the sales of ink jet cartridges will be flat, while a six percent decline in worldwide revenue from the sale of monochrome toner cartridges will be nearly offset by a seven percent increase in the sale of color toner cartridges. In the media market, worldwide revenue from the sale of plain, coated, and specialty ink jet paper, desktop ink jet coated paper, and desktop ink jet specialty paper is expected to decline three percent, four percent, and three percent, respectively. Lyra forecasts that worldwide revenue from the sale of plain paper and coated EP paper will increase three percent year-over-year.

Ann Priede has broad managerial responsibilities for the various product lines in her group, which currently include The Hard Copy Observer, The Hard Copy Supplies Journal and the Hard Copy Datasource, as well as new services that have been and will be developed based on these brands. Priede is a veteran of the printer industry and previously held positions with Konica Minolta (formerly Minolta-QMS and QMS) and NEC Imaging Technologies. Priede most recently held the position of director of product planning for Konica Minolta. During the past 20 years, she also has held the positions of senior product manager, manager of national accounts, manager of sales training and application support specialist. She joined Lyra in 2004.