Asked whether it’s time to bring wide format printing in house, analysts, commercial printers, and in-house print managers have one universal answer: it depends.
Not exactly a resounding reply but it’s what’s packed inside the answer that counts. "It depends" on a multitude of factors: your cash flow, the nature of your business, the health of your industry, your ability—if you’re in the print-for-pay business—to quickly turn wide format output into a profit, your ability —for in-house printers—to incorporate wide format output into your workflow and available facilities.
Buying a wide format printer, in other words, is no different than any significant capital expenditure, subject to the same return on investment (ROI) calculations and occasional bottle of Tums.
"Every business is unique," says Patti Williams, consulting partner at the research firm I.T. Strategies. "But in general for in-house and print-for-pay markets it’s making more and more sense."
"It totally depends on volume," says Tim Greene, wide format director, InfoTrends research group.
That said, there are some indications of where the wind is blowing. More print-for-pay and in-house printers are adding wide format, in part because they recognize its importance for their business’ bottom line and because the equipment is getting less expensive, says Lee Harrington, president, Imtek Reprographics, Inc. "Price drives placement and with digital, it’s a much less intensive purchase. People understand the technology and it’s getting a lot cheaper to do [wide format printing] yourself," Harrington says.
For commercial printers pondering the question of whether or not to bring wide format in house, the answer may hinge on one figure: $16 billion. That’s the projected retail value for wide format output in the U.S. by 2010, according to InfoTrends research group. In 2005, the retail value of wide format graphics was roughly $12 billion, which means the market is expected to enjoy a compound annual growth rate of a little under six percent throughout the second half of the decade, Tim Greene says.
"It’s not as sexy as years past because aqueous is pretty mature, but it’s still healthy," Greene continues.
Throw in revenues from the technical market—architectural drawings, etc.—and the market adds another $1 billion in revenue by 2010, though this segment is essentially flat in growth terms, Greene adds.
That’s the upside. There are several factors to consider when sizing up a wide format printer. As the name suggests, you’ll need space to bring in and set up the machine—many businesses have to physically cut down walls to get the printer installed—while the actual operation of a wide format printer and RIP software tend not to bedevil printers, many businesses that purchase a wide format printer quickly discover they need wide format finishing equipment as well, including laminators, mounters, and routers. That adds to the cost.
For color-critical applications, some new color management tools will also be required to handle the larger ink drops associated with wide format print heads.
In-House
Wide format printer adoption in the corporate world varies immensely by business type. If you haven’t added wide format capability to your in-house print capability, you are not alone. I.T. Strategies surveyed the in-house market in 2005 and found wide format printing capability fairly well entrenched—77 percent of those surveyed already had a wide format printer—but 11 percent did not own a printer, though they planned on buying one in the next 12 months. Only 12 percent did not own, nor care to possess, a wide format printer over the next 12 months.
Of the 12 percent who were not planning on buying a wide format printer, 37 percent reported no need for wide format inkjet output but more than half of the respondents reported that they used or would use wide format inkjet—31 percent noted that they currently outsource this type of output, 21 percent said they currently couldn’t afford to purchase a wide format machine. Companies with revenues under $1 million and over $50 million outsource their wide format work, leading I.T. Strategies to conclude that "size is less important than company type in determining which establishments are candidates for purchasing a wide format printer."
Businesses that are prime candidates for bringing wide format in-house include those that deal with sensitive data—hospitals, the government—or need to have iron clad assurances on print turnaround times—agencies—Williams says. Others need the cost savings associated with printing their own trade show graphics and doing in-house proofing.
Those who made the investment appear to be sleeping easy. According to I.T. Strategies, 65 percent of respondents reported being very satisfied with their wide format inkjet printers. What’s more: 23 percent of the respondents plan to purchase another wide format inkjet printer in the next 12 months.
While outsourcing is the right fit for some businesses, the investment in a wide format printer can reap future cost savings. Jack DeBolt director of graphics at Sycamore, IL-based Seymour of Sycamore, stopped outsourcing with the purchase an Agfa Sherpa two years ago for proofing.
"Previously we couldn’t provide a one piece proof of our prints, we’d have to tape it together which doesn’t look very professional."
The company is also using the printer to produce its trade show graphics. "We saved a lot of money on our show graphics," DeBolt says.
The industry with the largest wide format printer penetration is the professional and technical services advertising/design agencies, photographers, artists, and consultants. "This is the group that is currently outsourcing—and wants to continue to outsource—or waiting for the prices to fall before buying a wide format inkjet printer," I.T. Strategies notes.
InfoTrends’ Greene says that the fastest growth rate in wide format printing might just appeal to some of the hold-outs. "High end inkjet printing for fine art applications and photography is the really hot growth area right now," he says.
DeBolt notes that "if you can use a desktop inkjet printer, you can handle wide format." The learning curve is minimal and there have been no unpleasant surprises associated with the technology, he adds. "You just need to do your research."
Print For Pay
According to I.T. Strategies, wide format has had a "profound impact" on the print-for-pay market. "It makes sense for them to invest in wide format, and not just for proofing, because their primary business is declining rapidly thanks to the Internet. They have to ask—where am I going to get new business," Williams says.
According to I.T. Strategies, most print-for-pay shops that have wide format digital printers are small companies: 58 percent have revenues of less than $1 million and another 26 percent have revenues of less than $5 million. Only two percent are large companies with revenues of more than $50 million.
Still, it’s not an easy transition to go from a long run business to the short runs typified by wide format, Williams cautions. It requires different accounting and a different approach to selling output.
"There are two types of people that get into wide format," in the print for pay category, says Matt Neuhoff, VP of operations for Clearwater, FL-based GSP Marketing Technologies, Inc. "Those who go out and buy the machine and then try to build a business around it and those who have the business and wait for the costs and other variables to align when they make the purchase." The first option, he observes, is a vastly tougher road to hoe.
"We were attracted to wide format for the ability to do high quality short run graphics," Neuhoff says. The company brought in wide format capability in the mid-1990s. They embraced a variety of technologies including aqueous, e-stat, and raster graphics. "You could spend hundreds of dollars for a single print with screen printing. Wide format digital lets us offer that for a fraction of the cost with a much quicker turnaround time," Neuhoff adds. This summer, GSP added an HP Scitex XL1500.
"Our customers do a lot of short runs and we needed a competitive edge," Neuhoff says. With the falling price of wide format and the birth of new technologies, that edge has softened, Neuhoff observes. "So many people are venturing into the market."
Orange County, CA-based Primary Color brought in wide format printers from Epson in the late 1990s as a means for proofing. "We noticed there was a market for short run graphics," says Jay Sato, manufacturing technology manager, Primary Color. The company expanded its wide format portfolio with printers from Roland and additional Epsons to sell their wide format output. Wide format, "really took off," Sato recalls.
For Chris Kelly, sales manager, K&M Printing, Schaumburg, IL, bringing wide format in-house was a matter of gaining control over quality and deadlines. "When you outsource, you’re at the mercy of your supplier. No one likes to miss deadlines. We had trouble with the quality and the delivery of our wide format work; we couldn’t get jobs done on time."
One of the issues, Kelly says, was that a lot of businesses were outsourcing their wide format work to wholesalers who, "say yes to everything. We were at their mercy."
When K&M brought wide format in, they created a whole new separate business division, with the new branding, SpotLight Graphics. It would market POP, trade show, and banners. "It helped our sales force immensely to be able to call on clients they were working on and offer something new. Sometimes if K&M couldn’t open a door, SpotLight could," says Kelly.
The new business has been prosecuted aggressively by K&M, Kelly says. "A wide format machine is expensive, that’s a big nut to crack every month, so you have to be aggressive." That said, Kelly finds an "absolutely healthy" market for wide format graphics, especially at retail. "You see a lot more large banners in the mass retailers, more end caps, more vehicle wraps."
Building the new wide format business was not so different then building the 32-year-old family printing business. "Once you establish yourself as a supplier of choice, as a business that does good work, and once you build those relationships, the business will follow," Kelly says. "High quality work done on time, of course you have to be competitive, but quality is the key."
The biggest issue GSP Marketing encountered was space, Neuhoff says. "We had to cut a hole in the wall to get it in." It’s important to consider not simply the space the printer will take up but the electrical power it will drain and the proper indoor environment required to maximize print quality, Neuhoff adds.
The technical learning curve is not terribly difficult, particularly for those already familiar with RIP software and inkjet printing, Neuhoff says.
Color management was the most serious issue Primary Color encountered, Sato says. Despite the falling costs of inkjet printers, there are also some hidden costs associated with bringing wide format in house. "You have to buy the supporting equipment—the finishing equipment—laminators, routers, etc., and that’s more expensive then your printer. I used to think you could just buy a printer and run it out of your garage," Sato jokes.
Non-Zero Sum
When corporate printers bring wide format capability in-house, "it’s not as if the print-for-pay market loses," Williams observes. Many in-house printers will continue to outsource jobs that are too complicated or too large for them to handle, she says. As most in-house wide format printing is aqueous-based, applications that involve solvent solutions will also find their way to the print for pay market, Williams adds.
With the introduction of solvent and UV-curable technologies, "forward looking" commercial printers will also have a variety of new markets available to them, Greene says.
Everyone wants a piece of that $16 billion, but you have to go wide first.
