Battle for 1st place heats up - commentary by Patrick Howard

Getting bigger is the recipe for success in the digital printing world. Consolidation is the only strategy for survival, let alone growth, in a shrinking market. Canon’s takeover of Océ highlights the continuing battle for scale among the top players in the market.

Unlike the offset press manufacturers, the digital printing equipment suppliers are huge profitable conglomerates with deep pockets. Fujifilm, the senior partner in Fuji Xerox is the world’s largest supplier of imaging equipment; HP is the world’s largest technology vendor while Canon is a US$44.9 billion company. Even Ricoh is a US $19.5 billion company.

All of them, with the possible exception of Canon (until now) have grown their portfolios of products through a series of takeovers.

It all began to heat up when at the start of this century HP declared its intention to become the Number One printing technology supplier in the world. It kicked off its strategy with a whirlwind of acquisitions including Indigo (2001), Scitex (2005), MacDermid ColorSpan (2007), and NUR Macroprinters (2008).
Its sudden emergence as an industry giant set the competitive benchmark for all other digital suppliers.
Some of these, such as Fuji Xerox and Konica Minolta were already the result of mergers and acquisitions. Now that Canon is about to take over Océ, the room at the top is set to become even tighter.

Ricoh made its own takeover moves in recent years. In 2004 it acquired Hitachi Printing; in 2007 it bought IBM Printing Systems Division for $725 million plus to form a new Ricoh subsidiary, InfoPrint Solutions Company that will be 100% Ricoh-owned next year.

On the other hand Océ is a comparative tiddler with a turnover of AUD$4.6 billion company while Kodak is still bleeding money in its turnaround strategy from being a film to a digital-based enterprise. Konica Minolta is also a significant-sized company in the graphic arts with AUD$6.4 billion revenue.
[The Konica Minolta entry has been changed from the mistaken original.]

The inevitable result of such consolidation will make life tougher for any company that does not have a wide range of products and the wherewithal to invest in R&D. It will also hasten the transfer of offset printing to digital as the companies dig deep to secure market share.
The stage is set for the next technology battle with the arrival of inkjet. The top three are all well placed to compete and introduce the new industry-shifting technology. But in this war having the best solution is no guarantee of success – size and scale is everything.

Canon has stepped up to the plate to take on HP and Fuji Xerox as the leading printing equipment supplier. Its acquisition of Océ gives it a strategic position in high-speed printing, which it lacked before. With its impeccable record for colour quality, combined with the Océ industrial infrastructure, the industry is set for a radical shift in market share.