Strategic perspective
Océ in the world of digital printing
Rapid and continuous change is influencing the markets in which Océ is active. Several of these changes have been accelerated due to the very challenging economic climate of recent years, particularly in industrialized countries. Various developments are relevant in this respect. Océ aims to anticipate and respond to them while aligning its own organization, systems and processes. The following section provides the key trends and developments that are the cornerstones of the Océ strategic plan. They will influence the future of Océ as a leading supplier of a complete line of printing related hardware and software products and related services.
Creating a global leader in the printing industry
Scale benefits are driving the current period of consolidation in the digital printing industry. Scale is needed to remain competitive in a changing market and industry. Market competition is increasing while market growth is flattening, especially in the US and Europe. Only players able to improve profitability through increased scale, efficient processes and a streamlined distribution infrastructure will play a leading role in the printing industry going forward.
Being a global leader in digital printing brings scale, breadth and ability to invest in interesting business opportunities. These opportunities include the accelerating shift from black & white to color; the shift to digital printing in the graphic arts market and display graphics; increased outsourcing by customers to document related services; the growth in software and services facilitating the smooth integration of paper and digital document flows; and the growing economic importance of the Asian market. To further unlock its value, Océ needed to partner with a strong, sizable and complementary industry player.
Océ has played its part in the trend towards consolidation of the digital printing industry. With the acquisition of the American distributor Imagistics in 2005 , several smaller distributors since then and ultimately the combination with Canon, Océ has positioned itself as a leader in digital printing and document management. Through combination, Canon and Océ intend to attain the No. 1 position in the digital printing industry, best-in-class in terms of sales size, sales growth and profit ratio. In each of its key business domains – Document Printing, Production Printing, Wide Format Printing and Business Services – Océ and Canon intend to further strengthen their foundations and become a global leader in the printing industry over the next few years.
In March 2010, Canon acquired the vast majority of the shares of Océ. Together Canon and Océ are well positioned to optimize the servicing of their customers and become the undisputed market leader. By enhancing the Océ portfolio with Canon products and technologies and selling Canon products through Océ distribution channels and vice versa, customers will continue to benefit from an enlarged range of high quality products and services through an extended global sales and service network.
Océ has been pursuing a strategy based on the three pillars of distribution power, product portfolio and operational excellence since 2007. The combination with Canon will enable Océ to expand, strengthen and optimize all three. It will also help Océ to capitalize on a number of strengths and capabilities in research & development, manufacturing & logistics, purchasing and distribution. In addition, it will facilitate the leveraging of Océ’s own strengths: a professional direct sales and service organization, leading market positions in key segments, and strong technology and distribution partnerships.
Changes in the sector
Economy The new economic reality resulting from the global crisis has a major impact on a number of markets in which Océ operates. Particularly the markets for financial services and wide format technical drawing have experienced a strong decline. Recovery to pre-crisis levels is expected to be slow, especially in the construction industry. Mainly the stagnation of construction projects in the United States and in Europe caused a substantial decline.
Key players in the segments in which Océ operates have reacted to the economic crisis by consolidating services and solutions, integrating print needs within a total ICT offering. This results in a continuous increase in competitive pressure.
Commoditization Océ supplies highly innovative products to markets in which innovation is essential. The lifecycle of new products is becoming constantly shorter. This calls for a regular flow of new models and types, which have to be attractively priced. Océ is striving to achieve this by making effective use of its own and Canon’s core technologies, by developing joint product platforms that serve as a basis for bringing new versions to market fast. In response to the price pressure that results from commoditization, Océ invests in developing value-added services. Océ also seeks sustained competitive cost levels. One of the ways of achieving this objective is by outsourcing manufacturing activities to countries that have high technical standards and lower wage structures. Through its various partnerships, for example with Miyakoshi, Océ is also able to put more new and updated systems onto the market within a shorter timeframe. Another way is by leveraging the scale and capabilities of Canon.
Growth of outsourcing In the corporate environment, printing processes and departments that require high investments and personnel costs are increasingly being outsourced to external professional service providers. As a rule, the latter can concentrate more volume on their systems, allowing them to calculate a more favorable price. At the same time, these service providers can continue to differentiate themselves from the competition by investing in the latest equipment. The high production continuous feed printing systems (primarily the Océ JetStream series and the Océ ColorStream 10000 Flex printers) are for an important part used by these service providers, and the potential for the recently launched Océ ColorStream 3500 printing system is considerable.
In display graphics, outsourcing is the standard. Production in this segment is largely in the hands of professionals. With the exception of a number of large retail chains, little printing is done in-house. In addition, more volume is being concentrated on the systems of professional service providers in the technical document and production printing markets. Outsourcing of complete document processes, including mailroom activities, printing and archiving, has led to the emergence of these specialists.
Changes in applications
Increased digitization A rapidly developing trend in digitization of document workflows is evidenced by the increasing use of e-statements and e-marketing. This offers new opportunities in workflow solutions, and Océ is closely monitoring this trend to identify which applications continue to be most suitable for digital document management.
Graphic arts market goes digital The development and use of electronic devices such as computers, tablets and e-book readers compete with digital printing for the transferred offset volume. Until recently, the graphic arts market was not eager to embrace the opportunities offered by digital printing. The main reason for this was the higher cost per print. Over the past few years, however, digital printing has captured a significant part of the book production market related to the printing-on-demand of existing book titles and the production of small print runs of new books. In that area, digital printing has become a high quality and often a better priced alternative to offset. In the wide format part of the graphic arts market, digital printing of smaller printruns is an excellent alternative for techniques such as screen and offset printing.
Océ is well positioned in both segments of the graphic arts market, thanks to its powerful cutsheet and continuous feed systems, flexible roll-to-roll and flatbed systems as well as its workflow software. Océ’s thorough knowledge of the market and the technology, as well as its specialized sales organization familiar with the specific needs and characteristics of this market, offer a range of interesting opportunities. Through its partnership with manroland, Océ is even better positioned to benefit from the trend towards digital; manroland brings experience in high-speed paper handling and provides access to the graphic arts market, while Océ shares its knowledge of very high volume digital printing.
More individualization The importance of individual communication between organizations and their target groups has grown substantially over the last decade. Software applications have made farreaching personalization possible both in marketing and in commercial communications. Digital printing provides a direct link-up with this and facilitates individualization of the contacts, still largely channeled via print. Though direct mail is the most obvious application, other forms of communication, such as personalized letters, insurance policies and bank statements, are also given added value if they contain a message targeting the individual. Personalization is one of the principal drivers of the very high volume segment of Océ. Through the development of specific software, Océ can continue to meet the demand of customers for personalized products ranging from books and manuals to individualized newspapers.
Color replaces black & white The costs of digital color printing formed an obstacle to its widespread use. As the costs per color print decrease and as quality and productivity improve strongly, that obstacle is becoming smaller. However, because of stringent customer cost constraints in the current economic climate, the replacement of black & white by color has temporarily slowed down. In wide format, the benefits of color printing are being used in (in-store) marketing, whilst in small format the applications of digital color printing include brochure printing, direct mail, transaction documents, TransPromo - a combination of transaction documents and advertisements - and business presentations. Together with Canon, Océ offers its customers a complete portfolio of color printers in all segments.
Industrial printing Another opportunity is presented by leveraging printing technology to industrial printing applications. An increasing number of industrial applications is coming within reach of the digital printing domain. These include packaging, diecutting, printed electronics such as the imaging of printed circuit boards, and decorative printing of objects ranging from tiles to mobile phones.
Speed to market is crucial The ability to respond quickly to developments is an essential condition for doing business effectively for many of Océ’s customers. That means that all their development and production processes are subject to tight deadlines with numerous last-minute changes. The great flexibility of digital printing makes it eminently suitable for supporting these processes, most of which take place fully in electronic form. Digital printing allows formerly central processes such as printing at one location and distributing the output to many locations to be decentralized (distribute-andprint), thereby generating substantial logistical benefits and time reduction.
A good example is the production of user manuals which can, if desired, be made completely country-specific and customer-specific on the spot. Editorial changes are possible even in the seconds prior to production. Another area in which decentralized printing is becoming popular is in-store marketing. Retail chains are increasingly printing a larger proportion of their advertising matter in-house.
Changes in our scope
Geographical expansion Océ is an internationally operating company. With a strong presence of its own in the main European countries and the United States, Océ is well represented in a large part of the western world. Elsewhere, sales are generated by distributors working together with Océ. Océ, with its own sales companies in Malaysia, Singapore, Thailand, Japan and China, intends to boost its sales capability in Asia by leveraging the power of the Canon brandname and combining its distribution channels where beneficial. Combining offices and stimulating joint sales processes will create many opportunities for Océ products and services.
Sustainability Globally, concerns are increasing about the future of the earth, the climate and the availability of natural raw materials. This has resulted in increasing attention or prerequisites in tenders for sustainability. Businesses are expected to produce in a sustainable way and to supply products that are increasingly of a sustainable nature. Océ has an excellent track record in this field, offering a product portfolio with a high focus on sustainability. Océ machines are manufactured in a highly sustainable way, have only a limited environmental impact, are very user-friendly and can be made ready for reuse or can be recycled at the end of their product lifecycle.
Océ: well positioned Océ’s position in the marketplace is being strengthened by the combination with Canon. By leveraging the trend from analogue to digital, the shift from black & white to color and its ability to access the required investment capacity for innovative products and services, Océ is even better poised to help its customers build their business.