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Alin Jacobs: I’m Alan Jacobs and I’m with DME from Daytona Beach, Florida.

Bob Hall: I’m Bob Hall. I’m editor of Quick Printing Magazine. The magazine is based in New York and I work out of West Virginia.

Karen Hall: I’m Karen Hall. I’m the Managing Editor of Quick Printing Magazine.

Katherine O’Brien: I’m Katherine O’Brien, editor of American Printer in Chicago.

Linda Casey: Linda Casey, editor of SCIP Magazine. It’s a publication for small commercial print shops and in-plant printing operations.

Ken Kailing: I’m Ken Kailing just taking pictures for What Do You Think.

Noel Ward: Noel Ward with What They Think.com and On Demand Journal.

Steven Duncan: Steve Duncan and I am Market Strategist for Quadtech; a division of QuadGraphics in Milwaukee and I also write the A Visit to Lornitropia Blog.

Michael Josefowicz: I’m Michael Josefowicz and ran a printing brokerage for about 30 years and taught at Parson’s School of Design for about six years and now I’m heading for the private sector again.

Kemal Carr: Kemal Carr, President of Madison Advisors, an independent technology and research firm in this space.

Gail Nickel-Kailing: Gail Nickel-Kailing from What They Think.com.

Jim Hamilton: Jim Hamilton Director of the On Demand Printing Post and Consultant Services at InfoTrends.


Gavin Jordan-Smith: Great, thank you. So next steps are is to get straight to the questions but ah, I will start off by saying, you know the industry in itself is very {?}. We understand today that the kids that we’re putting through college, the first two, and the first and second years will become redundant in their third and fourth years. We’ve seen that statistic, it’s really bad. People who are training for jobs today, when they graduate will not be around, those jobs when they go out and look so shift is changing dramatically and today you know notwithstanding the print industry, we’re seeing some major shifts there as well. So let’s bring it to the digital shift. What are the prevalent changes today for those shifting from offset to digital? A show of hands; who’s eager? Okay Karen.


Karen Hall: I think that one of the most prevalent challenges, one of the things that people really are concerned with, especially in the quick printing industry is the concern about training their employees. It’s a constant challenge to keep people current with the software, with the hardware, with all of the day to day changes that go on in the digital world and to stay current and to stay up to the minute on what’s going on and what their customers are driving them to do is a major challenge for our industry.


Gavin Jordan-Smith: Great. Does anyone want to comment? Alright Michael you get to comment.


Michael Josefowicz: I think the biggest challenge are legacy business processes and that offset printers have certain ways of doing business which really don’t work very well for some of the digital ways of doing business and I think that offset printers have a lot to learn from quick printers in terms of being able to handle small transactions quickly and efficiently and make money and I think that that’s a huge cultural change.


Linda Casey: And if you think about it, both your comments and Karen’s comments are somewhat related. You know it goes right down to the mindset, we really were a manufacturing business and now we’ve all suddenly found out that we’re knowledge workers and to find out that we really need to put more emphasis on the front end of the shop is something that’s very new to a lot of shop owners and managers.


Katherine O’Brien: You know I’m sorry, I think Michael, I really agree with your point really coming more from the offset world. I think that’s a huge challenge. Work flow is a huge challenge. When you have somebody that’s used to you know doing a job in the thousands and the millions, how will they handle this little job? You know if you are used to handling a thirty thousand dollar job or a three hundred thousand dollar job and now you have a bunch of thirty dollar jobs, how would you make that work? The other issue inherent in that is often times you’re not talking about a shift with digital, you’re talking about complimenting so you’re working with both so how do you make both work together? And I think, you know I really think that you sort of hit the, to me, one of the nails on the heads right there.


Jim Hamilton: To me it’s a shift from a focus of just ink on paper and cost associated with that thinking of it solely as a pure manufacturing process and expanding it to include other things because when you bring digital into the equation, all the things around quick turnaround, the ability to keep information up to date, the ability to target information and add personalized data, they come as part and parcel to digital but they don’t come free. You have to build in that whole work flow and make that happen.


Michael Josefowicz: I’d just like to respond to that. I think that in fact most printers should not concentrate on being solution providers. It’s not within their skill set or that in fact, yeah that’s what I believe and we’ll discuss it. I think printers should concentrate very, very hard on being great printers. They should be better, faster, and cheaper than anybody else’s. It’s their core unique value and it’s what they’re very good at and in order to be able to, but they have to have an attitude of being able to partner with other skill sets of people who are really experts and points of intelligence and experience because the issues of customized communications are non trivial. They require an enormous amount of expertise. You need sociologists, you need demographers, and you need people who really know what they’re talking about. This is not fun and games. You know Google in addition to having a great server form, also has some very, very highly expert people and I think the calls to ask printers to try to do that is wrong- headed. I think there’s a reason that they resist it and in fact if you take printers who really look at their manufacturing process, keep it completely under control have transparent communications. I look at my favorite as Lulu. They’re doing something right and I know the guy who started Lulu is not a printer at all but he puts in his network fabulous printers who obviously can print these folks one at a time and make money. And I think there’s a way we can help by re-framing this discussion and talk to printers more about being able to network with areas of expertise as opposed to trying to replicate those areas.


Gavin Jordan-Smith: So let me; let me, you had some good points. Let me bring you to the next question. I’m going to actually point this at Alin who’s breathing heavy next to me because either he’s getting fresh or he just wants to add something in there. What are the top technical issues and education issues that say vendors should be addressing and convincing you know printers, print advisors to help educate them and the facility of integrating these types of products and services?


Alin Jacobs: Well I think a lot of it; Michael I hate to disagree and start off that way but…I think you have to really, there’s a mindset change here that you have to really look at and that is that you are becoming a strategy, a solutions provider okay? That’s obviously, it’s just an opinion but I really think that you have to reestablish yourself. You need to rethink the way you do business; you know re-imagine whatever you want because it comes down to even on the sales side of this, okay is, I mean it’s a different type of sale. You’re no longer going in and talking to them, you know to someone of the financial side, but now you’re talking to the director of marketing and the VP of marketing or you’re talking to CEO’s. I guess maybe and possibly DME, the advantage we have is that we didn’t come out of the print industry and evolve okay? We were direct marketers okay that happened to print so we are printers okay so it’s not like we don’t print okay? But we evolved, we just took the digital world to another level and part of the challenge is also educating our clients and the best way to do that is proposing a test. Okay let’s, let’s take what you’re traditionally doing and let’s peel off ten percent and let’s do some testing and then see where the results come in.


Michael Josefowicz: But that’s clearly an attitude. Can I respond?


Gavin Jordan-Smith: Yeah. Okay it’s not a debate.


Michael Josefowicz: I think what you just described is a perfect example of a non printer who has the appropriate mindset who comes out of direct mail and understands those issues. It turns out that printing, as from my point of view, as an infrastructure manufacturing business is a different business. A printing sale, I think you would be very hard pressed and any printer would be to get a printing sales force to go in and try to do consulting or sales and stuff like that. I think it’s just the wrong mindset, the wrong belief. They do not do that. I’m not saying that that is true in every…


Katherine O’Brien: {Laughing} We beg to differ.


Michael Josefowicz: In every case okay? What I am saying is that every printer has to look at their own strengths and instead of trying to be something that they’re not very good at, they should put all their resources into being what they’re great at and then find other people to partner. I would assume that you had a relatively easy time finding a printing company to do what you had to do to get it done.


Alin Jacobs: Well we are; we do our own printing.


Michael Josefowicz: Right, but you started from the DME side, in other words you started from the, your knowledge base; your expertise was in direct mail. Is that fair to say?


Alin Jacobs: Correct. Yeah that’s fair to say but we were in printing.


Michael Josefowicz: And then printing was then clipped on to that knowledge base.


Alin Jacobs: Yeah.


Michael Josefowicz: And so what I’m saying is I think.


Jim Hamilton: Can I? I want to just give one response to that real quick with Michael. I think it’s, it’s important; I think you’re right in that it’s better to be a great commercial printer than a bad solutions provider and so if what you’re doing is manufacturing and doing that efficiently, there’s certainly always going to be space for that. But some of the trends that we see in terms of run length moving down into runs under ten thousand, under five thousand, sweet spots under a thousand, it’s, there’s writing on the wall for those kinds of people that the world is changing and then how do they change?


Michael Josefowicz: I think by becoming manufacturers who can produce that stuff at a profit.


Katherine O’Brien: Right. Oh I’m sorry. I think there’s one basic thing that’s different in the digital world. You’re not talking about a job; you’re not talking about a separate job. You’re talking about a project and I think that’s something whether you choose as a printer to, you know some offset printers may say I would prefer to acquire an established digital printer. I would definitely see that. Some of the things that you’re talking about, some of the really high end marketing skills, I would see that maybe you would want to partner with somebody, but I have to totally agree with Jim. A printer cannot just say I am just a printer. A printer had better be prepared to understand the digital mindset whether they can excel in that area, you’re right, that will be up to the individual company, but I do think that, you know I think that’s one thing that I have to say that Jim was absolutely right. I think it’s a different world. I don’t think; you can’t just be putting ink on paper. You better be thinking what kind of return on investment am I going to be able to give to my customer?


Michael Josefowicz: A counter example to that though is from what I understand…


Gavin Jordan-Smith: So let me interrupt okay, because I have to because I have to be babbling here.


Michael Josefowicz: Correct.


Gavin Jordan-Smith: Let’s go back to the second question. Which is an educational question not only for anyone who reads these blogs, is what we want to say about this, but do you think based on everything that’s being said here with respect to the digital shift. What can vendors do today to help educate commercial printers or quick printers or anyone who is in the print space or someone in marketing space to get into print in order to facilitate this shift to offer to them? What are we not doing?


Bob Hall: I think the discussion, offset and digital, you’re presenting this discussion I think that the digital work flow goes to a digital output device.


Gavin Jordan-Smith: Okay in this discussion.


Bob Hall: In digital, I have shops, we have shops out there, and the vast majority of shops take in digital files. They output digital files on computer plate. VI, perhaps that’s very rare or they run it through a Xerox or whatever so they have two output devices. They are perceived in the marketplace as a digital printer.


Gavin Jordan-Smith: Correct, to the commercial printer. I’m in the digital print space because of that. Yes.


Bob Hall: But their customers perceive them as such so they really don’t care about the output devices though so we’re talking a lot here about output, I think the output devices factor heavily into our discussion today because you want to buy, your end result is wanting people to buy digital output is what I’m getting at.


Gavin Jordan-Smith: The end result is to, is to talk about the digital shift and obviously to drive digital growth.


Bob Hall: Digital growth of digital output devices or just the general use of digital


Gavin Jordan-Smith: Digital growth of digital output devices that involve toner base, electric ink base or you know any sort of driven digital output engine; not necessarily inkjet in wide format which allows you to go in position, but specifically with respect to you know someone who considers himself forty inch press work alright and now need to consider looking at devices that allow me to do short run on demand digital printing and cross over into multimedia one to one personalization as well as a value add.


Steve Duncan: Am I correct in assuming that, because all the comments I’m hearing so far are based on the presumption that if you’re going to use digital, you’re using it because it’s got all this sharper capability, the ability to do variable data and all this wonderful stuff because you’d never use it for the mundane long run work, you’d use your four color offset or whatever equipment for because the per copy cost are too high or consumable costs are too high. Is that pretty much correct? So what’s going to happen though is those costs come down as the print output, okay you’re talking about the cost of twenty pages coming down, the cost of color coming down, coming closer to black and white. Well we’re just going to see that digital presses displace offset presses and you don’t necessarily need to be an expert in variable data to do some of the stuff that’s being done now. It helps certainly to offset the price of this expensive digital press and the consumables that go with it so I don’t know that it will necessarily be that any printer who takes a digital press is going to have to be expert in providing the whole package and the whole marketing and all this big fluffy, clouded stuff.


Katherine O’Brien: If that’s what they want, yeah.


Alin Jacobs: I was going to say as long as you have competitors out there, I think you need to know how to do it. That’s one of the advantages is that you’re able to raise the bar on your competition by being able to add the variable into it.


Michael Josefowicz: But given the marketplace, my feeling is you can only raise the bar successfully if you are the best at it within your local market at that. You’re just trying to do it because it’s the right thing to do and you do in an expensive, slow way, I’m not, it doesn’t, I’m not convinced that that’s an appropriate strategy.


Gavin Jordan-Smith: Katherine, you were saying something.


Katherine O’Brien: Oh I was going to say that, to Steve’s point it depends with offset and digital. You cannot on an offset press; you cannot do variable data printing. You can do hybrid printing but you cannot do variable data so if you wanted to do that then certainly you would need your digital press. I think too that some things are probably, I don’t think it’s an either or proposition. I think that what you see are complimentary technologies. I think when you’re talking about some long run things, I think what you’ll see is, what, where it all comes down to is what do you need this to do? What is it for? How quick do you need it? So for a long range, a long run product what you might do is maybe you had a test run and so you would run those on your digital press. Maybe you needed something quickly like for this trade show; just a few hundred. You would do it for that but I don’t, I think it’s almost a mistake because I don’t think it comes down to either or. I think it comes down to what works best for me and you know probably most of all, what does my customer want? What can I, how can I use this technology most effectively to deliver the results that my customer needs? And I think one thing that you know a real advantage for digital is with internet ordering as well as personalized URL’s. I don’t think you can do that as effectively as you can with the digital combination.


Gavin Jordan-Smith: Okay let’s talk about the digital opportunity and again we’re going to make this focused on what the vendors in this space can do to help transition this shift and help it grow and be something that is important in terms of a customer. So what should print industry vendors be doing to helping vendors grow their business? Should we be showing them how to fish and fish for them in the sense that you’d be yielding these applications and then going to their shops and say we have an application for you or should we simply understand our customer’s business and understand what businesses they’re selling to and then cater that solution to that?


Bob Hall: I think that one of the things that, and you’ve all done it, other people have done it is how to market those capabilities, or help printers market those capabilities. And one of the things that I’ve seen in a lot of new technologies that have come along is to sales force start talking to the printers and whatever it is, I don’t care what it is, it’s going to solve everything and we don’t.


Gavin Jordan-Smith: One size fits all.


Bob Hall: So I think that a little bit more realism in the approach because well I won’t go into specifics but we all are aware of situations where people have gone out and sold technology as an answer. That’s not…


Gavin Jordan-Smith: And the printer has taken the technology and gone to the customer and said I’m in to one to one business and in fact…

Bob Hall: And the customer says so what? What is variable data printing? You know how’s, why is it important to me? And why is it going to cost more? Well it’s not going to cost more but why are you doing, why is the printer doing it because if you’re not going to charge for it, why in heck is he doing it in the first place?


Gavin Jordan-Smith: So vendors should be understanding of that process and build enablers to allow them to talk to it as well as allow them to take the digital box and bring it to market.


Bob Hall: I think what vendors need to understand is not just the printer’s but the printer’s customers.


Gavin Jordan-Smith: Customer’s customers.


Alin Jacobs: I was going to say that I think Xerox is impressive when I see the marketing materials that they provide to the printers on the various how to talk to you know the various, you know verticals we know whether it be hospitality, health care, whatever. They have packaged it together which gives you the core of how to talk the talk and walk the walk and of course from there you go out on the internet and research it better. Now even though we work in so many different verticals, I go back and look at this a lot of times just to see what you know what is provided. I’m not saying that I use it all but it gives me a basis you know of framing myself before I go in and talk to an organization. I think it’s very helpful and I was most impressed with that material.


Michael Josefowicz: I think it’s an approach that the vendors could take though that would be incredibly helpful but I think it is overlooked which is I think some of the best uses of technology is actually innovated on the ground. They don’t come out of Rochester, they come out of Atlanta, Georgia by some printer who figured something out and I think. I love the quick printing industry because those guys have to innovate to stay in business every twenty seconds. This is a day like you know this is life and death decisions for them and I think that it would be quite remarkable for an outfit like Xerox or any of the others, but Xerox I think because of the networks and the fact that they know where everybody’s clicks are. It would be great if they could go out there and find out what works, I mean in a completely specific way and not, because I think that the notion of a sector is a concept that doesn’t make much sense because there’s a hospitality industry in one part of the country that’s very different from a hospitality industry in another part of the country and my customer has a totally different thing on that which is not to say that the general principles are not correct, but the thing that creates value is the specificity of the solution and being able to spread those solutions within the industry.


Katherine O’Brien: Right but I think, just to jump in. I actually, I have to say I think Xerox does because they have the PIXI Awards which you see some really interesting things. And then also I know I was thinking of Alan’s company, DME. I know we actually saw a presentation they did. It was not a printing show, I believe it was a direct marketing association or one of those outfits so I do think that you know, I think those are good things and things that should just continue but I do think and I just wanted to point out, I do think that some things like that are you know are already in the works.


Kemal Carr: I think the trouble is too is that you’ve got as an example like Alan’s firm DME, they’re doing great work.


Katherine O’Brien: Mm hmm.


Kemal Carr: And to a degree they’re willing to share right? But they know that as they share they’re educating their competitor’s right?


Katherine O’Brien: That’s an issue, yes.


Kemal Carr: So while you’re interested in, you know I mean somewhat selfishly in your own market share and what you’re doing to achieve customers.


Alin Jacobs: But we do share. I mean, we do. I mean anybody can come in and take a tour of our facility. You know a printer will do it and it’s interesting that you would say that because I’m on the Board of Dice and we’re Dice; Digital Impressions, they used to be the Ice, you know Indigo and now it’s, we have Kodak and Xerox as well as Indigo and is now in there as well and one of the things is that we’re talking about bringing in printers that are contemplating buying you know digital press and give them a six month membership so that they can learn more about it and all of a sudden we’re getting this uprising of our members saying wait a minute we’re educating our competition and I’m saying that’s what DME does all the time. Maybe I’m missing something that we’ve grown because of that you know and personally I think the more people that you know are out there promoting you know variable data communications, the better off our industry’s going to be. We’re creating a demand. Then it’s a matter where my company goes and competes against another printer but let’s go out there and raise awareness and that’s actually with the Xerox’s and XMPie’s help, we’re actually taking the show on the road starting May 22 in New York City and we’re going to actually be doing sessions all over the country you know inviting people in for free breakfast and do just that.


Gavin Jordan-Smith: Let’s talk a little further about an opportunity competitive with respect to the privately-owned businesses out there, I mean there is a strategic you know they’re all doing the same thing; Office Max, Staples, the big entities out there. Is that a serious competitive threat to the small print provider today?


Bob Hall: It all depends on the small print provider. If they’re trying to make a living off of business cards and letter head and whatever, they’re in competition with those folks and I don’t hold out a lot of hope for the long term survival. I think that we have seen that a lot of times the Kinko’s in town is viewed as a wonderful thing because of service issues, because they are not the cheapest even though they say that they are in some of their loss leaders but in the same town there’s another printer who is scared to death of them so I think it depends. But if you’re trying to compete on small quantity commodities, small marginal items, it’s.


Gavin Jodan-Smith: So you think that someone in that space should be thinking about innovating how they can bring more value within their quick printing volume?


Bob Hall: Absolutely.


Gavin Jodan-Smith: Whether they’re an independent quick printer or they’re an in plant; let’s transition it over to that.


Bob Hall: Well in plant, I mean I can’t really speak to in plant although I mean there’s a, they use the same basic equipment on run lines and all that kind of stuff. I think there’s some different dynamics that work between the two of them.


Gavin Jodan-Smith: The interesting thing is I’m seeing workflow play a bigger role today across the board especially with quick printers because in order to bring value we have to make it easier, quicker for and a feel good effect for the consumer.


Bob Hall: PDF.


Gavin Jodan-Smith: PDF.


Bob Hall: PDF work flow. It’s still being resisted by a lot of the, a lot of the DTP people in the smaller shops saying they want native applications but PDF is becoming more and more accepted used in various ways.


Linda Casey: I think the important part with PDF though and I kind of feel for some of these DTP people who are resisting PDF and the reason why they’re resisting PDF isn’t doesn’t excuse you from creating good documents. You know the content creators still have to use images with the resolution over 72 dpi and they can’t pull things off the web and even though it’s PDF doesn’t mean that it’s print ready so you know this is, this is something that is true in both digital and in offset output that you know we constantly have to make sure as a community that we are educating the content creators so that they are creating documents that can be printed.


Jim Hamilton: Yeah I mean educating the customer, I think out of your top 25 customers and they’re going to spend some time with us so they create the files. They feel better, you feel better, and you make more money.

Gavin Jodan-Smith: Some of the biggest printers in the world, you know they figured out very quickly that in a pre press environment if they don’t have to touch that file and they work within a PDF work flow, they save considerable amounts of money whereas you know a small print shop would consider, oh pre presses are a major to cost center and can’t build for it now. How can I make it a profit center? So they’re struggling with these things all the time so, but that brings me to the next question. What is the biggest mistake that a print provider, okay, can make in this competitive marketplace because we, we could consider ourselves in commodity space today.


Noel Ward: Charging too little. Yeah, charging too little. Quick printers in particular are really good at going out and then destroying a market by keeping a price too low because they’re accustomed to competing on price. One of the things, I think that we’re seeing some of at least in some markets is quick printers starting to sell variable data printing and they basically sell it for the cheapest price they can possibly sell it for when instead of selling the value, they’re selling clicks. And they’ll eventually go out of business fortunately and they deserve to but they are damaging the market for everybody else who could realize the value of printing, the variable data printing for example and is charging appropriately for it.


Bob Hall: Well that’s across the board right now. I mean there are printers out there now that are dropping out of, quick printers and small commercial printers, they’re trying to be the lowest cost or lowest price provider but they’re not the lowest, they don’t have the lowest production cost and they’re not making any money but they’re destroying the market, the local market for everybody else and so they’re doing commodity printing at the loss.


Karen Hall: And at the risk of disagreeing with Michael. I’m sorry. Where, where they are really making a difference, the ones who are succeeding with using variable data printing; the ones who are succeeding with really selling digital printing as it should be sold are the people who are selling it not as a commodity but as a solution and counseling and forming a consultation, a consultative relationship with their customers so that they can lead them into finding the solutions were the customers problems and becoming a partner because when they become a partner with their customers, then they’re no longer a commodity.


Bob Hall: I think that one of the big mistakes that we make is we tell them what we can do for them. We don’t ask them what they want to accomplish.


{Inaudible – several people talking at once}


Gavin Jordan-Smith: Go ahead, we have hands up. There you go, foul.


Gail Nickel-Kailing: I just wanted to go back to the chicken and the egg issue and you started to talk about it when you said people are buying technology as a solution. So they get the technology, they get the equipment on the floor, they’ve got to feed it and the first thing they do is drop the price.


Gavin Jordan-Smith: So basically what we’re saying here is that equipment vendors, digital print vendors should not be setting pricing. Let the commercial printer or the print providers set a pricing that enables them to sell at a higher price. And I agree with it. You know from a commercial print standpoint, there’s a reason why a thousand printers are going out of business practically every year and that is a contributing factor. They push the price bucket down so much that they can’t have any contributing value to pump in the company.


Michael Josefowicz: Do you think it’s fair to say, do you think it’s fair to say that they push their price down because they really don’t know what anything costs them?


Noel Ward: That’s part of it. No, that is part of it.


Michael Josefowicz: I think what happens is they think everything is overhead so it’s like we already have the equipment so it’s overhead. And one thing that the vendors could do which might make it you know a little pressure back on the vendors, be absolutely clear about what the all in costs of clicks are and not.


Jim Hamilton: The vendors have no incentive to do that.


Michael Josefowicz: I understand that. No, no, no, no. I’m not talking about the real…


Jim Hamilton: There’s no incentive to be transparent and that’s an issue for the vendors.


Michael Josefowicz: Well we talked about the vendors and I’m saying if you want to stop printers from grossly under pricing their product, one thing that would help them is if they clearly understood the all in cost that everything they’re doing.


Jim Hamilton: Sure.


Michael Josefowicz: But we have vendors who are not incented to make that clear.


Jim Hamilton: Well the vendors may be but it’s coming down from the top.


Noel Ward: There’s another way you have to look at that though. I mean sure, to set your prices you’ve got to know what your costs are.


Michael Josefowicz: Yes.


Noel Ward: On the other hand, if you’re just selling print, okay print itself can be a commodity; that’s fine. But if you’re selling something that has some added value, you’re adding some variable data to it for example, that has value the printer has to be able to charge for. What the printer doesn’t understand is what that value is to their customer because they don’t understand the way their customer thinks about using that document. So the printer has to educate themselves to understand where the customer’s coming from; what the customer needs to do with the document, whatever its purpose may be so they’re doing value based pricing as opposed to cost based pricing. Printers work in a cost based pricing world. That works fine if your selling, if your selling ink on a page. If you’re trying to selling a little bit more than ink on a page, you’ve got to charge for that. You know for example, as a consultant, we have a relatively low cost structure. Do we charge based on our cost or our value? Kemal and I have had this discussion and it has to be value based pricing.


Katherine O’Brien: That’s a rhetorical question.


Steve Duncan: But with ink on paper you still have opportunities for value. I just ordered some business cards and I went to Overnight Prints.com. I looked at three or four other sites. I’ll be darned if I could tell what one site was going to do for me over another.


Noel Ward: Well this is true.


Steve Duncan: The one thing I heard from a networking group thinking which company to use was you know I had I think the color blue that I was going to use on this piece and I sort of ask people, so how’s the color work? Because I work for a company that does color controls so I’m thinking about that. And they’re like, well what do you mean? If you ask for blue you get blue. Yeah but all of the shades of blue. I won’t go there but and they’re like well you know I ordered purple one time and it came back blue. Well that’s a long, there’s a long difference to me. So you’ve got a big problem because of the quality. One of the questions you have is about quality. What you see is not necessarily what you get apparently, but if you could start selling that; the predictability. I mean it’s great that you have a money back guarantee so if I get my stuff and its wrong I can send it back to you and have it done again but I’d rather get it done right the first time.


Noel Ward: Yeah but look at a commodity thing like Vista Print. I got my business cards from Vista Print. It shows up on the screen, it looks right, the cards come four days later and yeah that’s what I wanted. But then I created the file myself so I knew the colors were going to probably be okay.


Steve Duncan: And I hope that’s going to be true in my case but what I’m hearing is that’s not always the case.


Linda Casey: And that’s, that’s a huge problem as far as when people are creating files that don’t know what they’re doing because you know if their monitor isn’t calibrated and they’re looking in the monitor it’s purple; it might really be blue.


Steve Duncan: And that’s a huge problem in photo printing. You know you talk about what’syou know you’ve done all these pictures, you print them out and everybody’s lips are bright red on the screen. You know if I sent them to Wal-Mart or Walgreen’s or whoever are they going to come back bright red or are they going to be green this time?


Michael Josefowicz: But I think we have to be very careful in terms of what we think we can sell as value. I don’t think you can sell that. I think what you can do is you can look in the customer’s eyes, you can try to understand how big of a problem this is and then you can assign a value. You cannot convince someone of the value of variable printing I don’t think.


Gavin Jordan-Smith: Unless you’re solving a problem for the customer.


Michael Josefowicz: Unless you’re solving a problem. What I’m saying I think is the slightly different approach, in other words the approach is you have to be able to look clearly at the customer and somehow have some guidelines as to how expensive a solution they are willing to pay for this particular problem. What you say about color stuff and stuff like that; lots of people don’t care. Most of the mass market doesn’t care.


Gavin Jordan-Smith: Well let’s move on to applications right because we’re kind of reaching that right now. We’re a quarter way through 2007. It’s pretty hard to predict what’s going to happen in 2008, but where do you think the application world is going to be if we’re talking about applications? I mean maybe very specific for, specific segments in industry but when do you think the biggest worth is going to be in respect to the raw industry that it is in 2007 as we move into 2008? Any hands?


Alin Jacobs: Photo books. I mean what’s it like, a thirty one million cameras, digital cameras are being sold out there right now? As a matter of fact DME has just put a deal together and we’re moving into that direction.


Michael Josefowicz: It’s working pretty good for Ofoto.


Alin Jacobs: Yeah you know and so you know actually we’re working with Color Centric. We put together a relationship and we see that as the next you know strong area to get in to. First we thought it was trans promo but I think photo books is actually where it’s at. That’s the next opportunity that we see out there. But you know at DME we’re always looking for that next opportunity. We’re trying to stay ahead of the curve. That’s why we can educate all the printers out there because we’re already moving to the next level.


Gavin Jordan-Smith: Mr. Carr what do you think?


Kemal Carr: I would agree. I think that there are, we see on the transaction side you know we’re talking about the trans promo but we’ve yet to see huge adoption there. Part of the issue is the data requirements that go into that. There isn’t really an all good solution for companies to mine and quantify the accuracy of their data and actually to go into that is something you can put on a document.


Gavin Jordan-Smith: So you think maybe next year or next year in 2008 maybe we’ll have quicker, better, easier systems to handle that data migration and intelligence or not? Or is it a little further out?


Kemal Carr: It’s a little further out. I think the problem, I mean the reason we’re not doing it today is because, there are a couple reasons. One is that there’s some, the data quality is suspect; there’s multiple data sources which means you can’t necessarily clean one data source and be done with it. There isn’t necessarily an elegant tool to do really one to one personalization because while the data may be, you know Citibank knows more about me than anybody else right? So they should build or put together a market campaign that would reflect my ten years of purchase history with them to give me something meaningful right?


Gail Nickel-Kailing: Yet they’re still trying to give you another credit card.


Kemal Carr: Right so it’s not that the data’s not there, but you can’t have, there isn’t any tool that would automate that process and you can’t have people sitting down and making a campaign for Jim and a campaign for Gail and a campaign for Kemal right? So there has to be some kind of mechanism that we don’t see yet. So there’s, you know there’s a couple different hurdles and the reason you know that I think it has so much allure is because it is hard and the first people to crack it I think will you know. We’ve seen some people do some level of it, but it’s very, it’s very rudimentary at this point.


Linda Casey: Alin I have a question regarding photo books with you, for you. Last Christmas I tried to buy a family member a digital photo frame and I could not. What I didn’t realize was that one point seven million digital frames were sold in 2006 and I was one of those people trying to get one of those frames.


Alin Jacobs: They’re readily available this year.


Linda Casey: Well it’s not Christmas any more, but I am sure the manufacturers have also upped you know the amount of digital photo frames that they’re churning out. Now just like print has you know has some competition with the Internet, do you see digital photo frames as a threat to your potential photo book business?


Alin Jacobs: Yes and no. I think that it’s almost like the catalog business. Many people want to see a printed catalog and then they order online. I think the same thing is true while it’s nice to have the digital photo frame, people like to sit down, it’s easy to pull it out, this is the trip that we took last year and it’s all in a book form so you have it right there. Frank Romano yesterday spoke about just that. He said his son bought him a digital frame and he bought his son some family photo book of their reunion I think it was and the kids end up going, always pulling the photo book down because there you can look at the picture, you can talk about it, and you can go. You know we want to touch something and while the frame’s nice to have on the wall, but when it comes down to really looking at pictures now, personally we keep ours in a drawer and never get them into an album. One of the nice things about the photo books is now that you can create them in an album, you can do it online, you drag and drop and everything else. I think there’s a really strong market.


Katherine O’Brien: But do you have any seasonality concerns about that because Linda was giving the example, oh it was for Christmas. What happens then, you know these other eleven months of the year?


Alin Jacobs: Well I mean you’ve got photo books for hospitality for cruise lines, casinos, vacations, events, I mean you…This afternoon’s a good example. Xerox is doing a Fenway Park event this afternoon. We’re creating a photo book off of that and so I mean this, you know this.


Gavin Jordan-Smith: Events drive photo books right? So family events drive photo books and you know we talk about over using an application, Xerox is probably overusing real estate application or the lot you know especially with respect to one to one and I sat there even as a customer of Xerox at one point I’m sitting there and I’ve seen this before and I don’t want to see it again but you know photo books, you know that’s the high quality application. If you think about it, if someone could put together a portfolio of high end houses and put it together in a photo book and then distribute that that brings value to their customer. So you know again the application is slightly different but the solution is probably the same.


Gail Nickel-Kailing: Gavin, don’t you think then that that is no longer a photo book? That’s a catalog or promotional piece and I think we’re coming up on that term photo book as a, most of us think of those as a consumer, a consumer application.


Gavin Jordan-Smith: Okay I consider a photo book high quality end photos.


Gail Nickel-Kailing: Photographs in a book form?


Gavin Jordan-Smith: In a book form that is high quality.


Gail Nickel-Kailing: I agree with you but I think that we have to be careful using the term photo book because most people think it’s a grandma’s, grandma’s book that goes in her photo book.


Alin Jacobs: You’re right. I want to make it known that I didn’t put that that was Gavin’s…


Gail Nickel-Kailing: It’s going to be a fad. I think the application of high quality photos presented in that form, I think we have to be careful and say that that’s a different kind of application because it really has a different use and purpose okay?


Alin Jacobs: For variable catalogs, call them what you want to, but a variable catalog still is another area that has tremendous growth you know as we go into it. You know because to send out these big catalogs with you know flat rates going up and everything else, it’s a lot cheaper to send out an eighteen page catalog because we know what you’re buying, we know what other products that you might buy and then drag it off the internet.


Michael Josefowicz: In other words at some point somebody’s going to figure out how to do the analytics right and its just Google and print. Google knows how to do it. I do it every day.


Jim Hamilton: It’s really frustrating to me from the photo perspective that some of the very basic simple things haven’t gotten done right. I have like Adobe Photo Shop Elements and I can give captions to my photos and yet I have to upgrade to a higher version if I want to print a catalog; print a photo album with those captions. I also don’t want to upload all my photos to somebody else’s site. I want to keep them on my desktop. I want to be able to create an album and then I want to be able to send it to a print provider. It’s really difficult to do that today.


Noel Ward: Apple log, Apple does that just fine in IPhoto. Apple does that just fine in IPhoto. The pictures are all sitting on your computer, you click on, click on whatever it is, create a photo book and you pick all your pictures and it goes off to wherever Apple has in process and it’s done.


Jim Hamilton: No I’m just saying when that happens on a Windows platform…


Noel Ward: You know in ten years when Windows catches up you’re fine.


Gavin Jordan-Smith: Xerox has to convince Bill Gates.


Noel Ward: Yeah right, that’ll happen.


Linda Casey: Actually I think it shows you know the need for you know what Alan’s doing. What you know, I’m a Mac user but I realize that most people out there are using Windows and they’re not using IPhoto. Now Alan comes around and he says I’ve got this great program on the web and I’ll make it easy for you. Now that’s a prime example of adding value for your customer and that’s what we’re trying to do as you know as an industry is to add value for that customer.


Michael Josefowicz: I just came out of an environment where I basically had the opportunity to hang around with 20 year olds; I would say that’s about how old that they are. And I think we should be aware that they are in the print generation. They grew up with the internet. They are generation Google. So for generation Google the idea of uploading to the internet is a non issue. My son who’s 31 or 32; I have a four year old granddaughter and every year my favorite present is a calendar produced with my granddaughters pictures that arrive and it’s part of Christmas and that’s the way it goes. We had a trip to Italy and produced a hard cover book at Ofoto and if that, if you look at the numbers aside from whatever we say, if you look at the numbers of the growth of Ofoto, there’s no question that that market is exploding. We could argue whatever we want but consumers are taking that on and I think that that’s consistent with one of the uses of digital print. I heard a very interesting stat by I think the guy who runs Google and he said you know what the average blog reader is, how many readers the average blog has? One point three okay so basically people…


Katherine O’Brien: Traffic is double.


Michael Josefowicz: There you go, check his stats and that’s with the big blogs and so I think what the reality is, people love their own stuff. Well if you give people a way to make their own stuff, that’s worth fifty bucks. That’s worth ninety bucks. Its worth, who cares what it costs to print?


Steve Duncan: Be careful though because I think the day is coming and it’s probably coming in the next year or so when people are going to get to the point where oh another photo book, great.


Michael Josefowicz: No, not if you’re talking about pictures of my grandchildren. Baby boomers have grandchildren. No, this I think is an important point because we tend to look at objects. Real people tend to look at the content of objects. Anything that has my granddaughter in it I love and value and would pay money for and it think that that’s just a natural human being. I think one thing though I want to add about another way that I think we could look at where printing industry goes is we’ve been very focused for the last 50 years or so on selling stuff and it’s possible that in America people already have enough stuff and it’s possible that one of the reasons that our industry is under such stress is that we keep trying to sell people more stuff.


Steve Duncan: Instead of increasing the value of the stuff that we have.


Michael Josefowicz: Well what I want to do is point to some other problems that print has always done very, very well with and very, very important. In print, the real thing about print is that we know how to spread information; we’re great at it. That’s what we do, that’s what books do, that’s what we really do and we’re in a society now where our education and health and government are huge social problems. There is an enormous amount of money floating around in all of those sectors and while the for profit sectors are stressed and strained and have global competition, we have educational money. Anybody who can show that you can use print to pop test scores by ten and fifteen percent will have the entire federal government up their nose in about twelve seconds giving them money for it. The other thing that is.


Gavin Jordan-Smith: That’s an interesting application.


Michael Josefowicz: Another, I think another thing that we should look at as an industry is the application of, I mean the health industry is ripe for re-invention there’s no question about it and here we are AIIM, digital printing, customized documents and you have the health industry that’s being clogged with information that doesn’t work. I think that’s a huge opportunity. Another thing that I think people need to think about is that textbooks as an industry are broken. Nobody likes them, no teacher wants them, no kid wants them and just recently the federal government has required every textbook manufacturer to make available an XML file with all the content.


Katherine O’Brien: But I think those are, yeah I mean I really agree. I think those are all excellent on demand applications. We’ve already seen that.


Michael Josefowicz: No, no, that’s all I’m saying. I’m just trying to focus on a little bit way from the selling stuff as the main purpose of things.


Katherine O’Brien: But that’s also really true too because that’s a main shift is when you’re talking about in the offset worlds, you know if you bought more you paid less and now we’re telling people well we want you to buy less and pay more for it so the challenge there is because if you, you know is it worth it? Yes it is. I mean if you can show it. You know if you can show this will do this for you or this is unique in this way.


Gail Nickel-Kailing: And aren’t you talking more about the total cost of use as opposed to the total cost of you know the purchase because the use is what’s really adding the value; how you’re using something, how people are responding to it so instead of making you know five thousand copies and using two thousand and wasting them, you make the two hundred copies and make the bigger sale so it’s a total cost of use as opposed to total cost of ownership.


Gavin Jordan-Smith: Very interesting. Let’s try to move into the next and final stage of this round table and I know that we can talk more and more about it and I’m sure we can incite debates but. I myself have bitten my tongue a number of times. But industry outlook; I mean it’s so difficult today. You know are we chasing a trend, are we developing the trend, are we falling behind the trend? I mean what’s going on? Where are we going in the next; I’m going to take it out ten to fifteen years. Yes Bob.


Bob Hall: This is not ten to fifteen years. I just got this Friday, it’s from MPDS and it’s a synopsis of their premier study and it’s proprietary. I was looking at planned capital investment by 2011 and I thought hmm this is very interesting. Eighty one percent of printers that they talked to plan to invest in color digital equipment and also fifty nine percent plan to invest in monochrome digital equipment and rather surprisingly thirty two percent want to invest in the DI Press. So this is; I commend this to you for, to take a look at.


Gavin Jordan-Smith: Very interesting.


Bob Hall: But those three numbers jumped out at me so.


Gavin Jordan-Smith: Yeah.


Bob Hall: And the other, the thing that the other information that I saw here jives pretty close to what we think and I mean we argue with associations all the time about who’s doing what and how many of them there are.


Gavin Jordan-Smith: Linda give me your glass ball perspective.


Linda Casey: Well I’ve never been very good at telling the future otherwise I’d be very rich. I think what we are, what we are seeing, I think we’re going to see more work in the, I think short run. I think when people thought digital printing immediately the first thing they thought was variable data; VDP and I, I guess in a nod to Michael, some people have found that working with the databases are very difficult and it’s hard to get people to pay for that so there’s going to be more work in the very, very ultra short run.


Gavin Jordan-Smith: Noel, I’m interested, what would your glass ball say?


Noel Ward: Oh ten to fifteen years. Well you want ten or fifteen?


Gavin Jordan-Smith: Well let’s go ten to fifteen.


Noel Ward: I’ll go backwards from that. Fifteen years out, the oldest baby boomers will be dying with some regularity. Now you ask me why that makes a difference. That makes a difference because the usage of print is going to become increasingly generational. Michael said not long ago that we have generation Google. Well I have two kids in generation Google and they don’t print very much at all. They look at stuff on the screen. When they want to look at it again they turn the computer back on and I think we’re going to see more and more of that. I see the print market shrinking substantially over ten to fifteen years. I don’t have stats to back this up, it’s just my instincts say that the print market is going to change and it’s going to be a generational shift.


Gavin Jordan-Smith: So would you say that digital ink and I think I read this somewhere; digital ink on eBay will be cheaper than paper in ten to fifteen years.


Noel Ward: Could be. Say that again. Digital ink?


Gavin Jordan-Smith: E-ink or digital ink okay will be cheaper than paper in ten to fifteen years considering …


Jim Hamilton: Only if you copy a user like forty times or something from the same image.


Gail Nickel-Kailing: Okay but I think we should go back and say what did fifteen years ago look like and then you’re looking at that distance forward and looking at that change.


Noel Ward: Yeah but that distance forward is not the same length of time.


Gail Nickel-Kailing: It’s going to be faster.


Noel Ward: It’s going to be substantially faster.


Gavin Jordan-Smith: Growing in exponential rates at times.


Noel Ward: It’s going to be going; it’s going to be closing on exponential rate of time so I think looking forward fifteen years is probably more like looking back thirty, thirty five, forty years. And forty, if we look at it forty years back, forty years back is what, nineteen sixty seven. But I think that’s, I think that’s the level of shift we’re going to see in terms of the technology and how it gets applied is still a question of course. But I think we’re going to see substantially less print ten or fifteen years out and it’s going to be driven off the generation. I think the first thing we’ll probably start to see go away is statements. They’re just, I think they’re just going to become more and more electronic and that’s going to happen because kids are going to look at their cell phone bills and everything else on their computer in their email or on their cell phone and they’re going to pay it that way and they’ll never see a printed statement and it’ll extend to all kinds of documents. As it goes to things like direct mail and stuff like that, I think we’ll ultimately see it shrink because it’s going to become more and more targeted.


Linda Casey: You know I have a question though to ask you. You know when you talk about print and what do you think people are, you know what do you think printers are really selling today? Are they selling a printed page or are they selling a finished printed page?


Noel Ward: It depends on the printer and depends on the application.


Gavin Jordan-Smith: Well this is I’m sorry. I’m going to have to cut you out and say foul.


Linda Casey: Okay.


Gavin Jordan-Smith: This has been and engaging conversation and I know that we can talk more about the future and there are a lot of maybe if’s and we are in an exponential phase. This has been an enjoyable event and I do want to thank you all for coming today.

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