In the beginning, there were writings on cave walls. Then came the Gutenberg in the year 1440. For 400 plus years, things really didn’t change much. In the 1800’s the offset press was patented and changed the industry forever, we thought. For about the next 70 years, advancements were made with regards to efficiency and power, but nothing huge. Fast forward to1937, when a law student, Chester Carlson, invents duplication via Xerography in what we have all come to know as the “Xerox” machine. This still wasn’t enough to upset the printing industry. In fact, it increased commercial print for small businesses due to its expense and limitations.
It wasn’t until the proliferation of the desktop PC, accompanied by the convenience of the desktop printer, that small to medium sized printers began to feel the pain of print reduction in order quantity and demand for higher quality 4 color print. In this era, equipment providers like HP, Xerox, Heidelberg, Kodak, Fuji and a slew of others began to introduce their technologies accompanied with their presses and partners to the PSP community. All in the name of technology and cost savings, they suckered the PSPs into high cost iron solutions. The PSPs bought into it because technology would reduce their costs, increase their automation and make it much easier to compete and maintain margin.
But technology didn’t stop there. Two of the most disruptive advancements in the last two decades were Computer to Plate (C2P) around 1996 and High Performance Raster Image Processing (RIPs). With the creation of PostScript in the 1970s, the onset of raster images as opposed to type began to require large processing power soon to be referred to as RIPs. It took nearly 20 years for this technology to make it to the laser printer on your desktop. This new way of printing forced the PSP to further invest in C2P and the necessary RIPs to prepare the artwork coming from their C2P systems to make plates for press. As the cost escalated in order to compete, banks and lenders lined up to make the finance “painless”.
Add to all of this the digital press (the Indigo invented in the 1990’s, later purchased by HP), the high speed 6, 8, 10 color perfecting presses (prints both sides on single pass) and you have a technology curve heaped at today’s PSP at warp speed. Keep in mind that PSPs are not in the business of technology, they are accustomed to putting ink on paper and brought up in a manufacturing mindset. We have incurred more technology change and its associated costs in the last 20 years, than the previous 500 years combined. Modest offset and web presses required to compete, can exceed 3 million dollars each. RIPs, C2P systems, MIS systems, Digital Presses are all technology expenses which cost hundreds of thousands and tens of thousands in services and interest annually. As print becomes less and less expensive, PSPs are forced to add more and more for less return. The model has been turned on its head.
Iron won’t fix this problem. PSPs cannot afford to buy more iron. Many struggle just to keep their lines of credit open for overhead and operations (print buyers aren’t the greatest payors). Their markets are shrinking and scattered due to Internet gang printers (Vistaprint and others). Moore’s Law is now knocking on the PSP’s door. Read his original statement here:
The complexity for minimum component costs has increased at a rate of roughly a factor of two per year… Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 1975, the number of components per integrated circuit for minimum cost will be 65,000. I believe that such a large circuit can be built on a single wafer.
Unlike high tech providers, PSPs cannot move their manufacturing to China and simply become brokers. Their customers don’t have that kind of patience nor require the quantity such an undertaking would require. So how is a PSP to cope?
A PSPs satirical impression of Moore’s Law applied to their trade:
The demand for lower print costs has increased at a rate of roughly a factor of two [times] per year… Certainly over the short term this rate can be expected to continue, if not to increase. Over the longer term, the rate of increase is a bit more uncertain, although there is no reason to believe it will not remain nearly constant for at least 10 years. That means by 2015, the cost per printed piece for minimum cost will be .01. I believe that such a large demand can be built on the Internet and produced on demand and shipped overnight [shipping included of course].
In my honest opinion, PSPs are doomed unless they partner with those who possess the expertise required to move them into this new technology driven paradigm. This cannot come from the equipment and consumables providers who are intent on selling more iron. It must come from outside the printing industry as we knew it. The change will be painful, entirely foreign and egregiously disruptive. It will turn most businesses upside down, close many, and for those who come out on the other side, it will morph them into something unrecognizable to their past. Some will choose to go all digital. Others will merge while others will become service providers and outsource the final product. Print will not go away completely, but it will morph from the form that Gutenberg envisioned to something more in line with Steve Jobs.