History lessons, part 2

April 1, 2007

Johnson’s World by Steve Johnson

Last month, I examined the state of digital printing 20 years ago and found it to be nonexistent. It would have been a very short column, had I not chronicled my experiences with Xerox and Kodak two decades ago. Both were preparing to unveil really cool digital products, though neither company had a clear idea of exactly who would use their new inventions.

After I submitted last month's story, the Wall Street Journal ran an article headlined, “When Neighbors Become Rivals,” about Kodak and Xerox, the dominant corporate citizens of Rochester, NY.

The theme of the story was that Kodak and Xerox always have been friends, but in 2007, both have discovered that “digital convergence” might force them to compete as they sell “highend” digital presses to commercial printers.

I'm sure the Wall Street Journal expects a Pulitzer prize for breaking this redhot story to the public.

Digital takes on litho

My first conversation with Kodak's digital folks (then lumped with the Ektaprint copier group) was in 1986. Xerox was talking to the commercial printer for whom I worked about replacing smaller offset presses with big copiers. Xerox had a slick pitch newly targeted to the graphic arts market, but smoke and mirrors couldn't hide the fact that the numbers didn't work.

Our diligent plant superintendent tallied the cost of ink plus direct-image plates and was surprised to find the Xerox “click” charge was exponentially higher. He added the cost of fountain solution and blanket wash. Xerox was still higher. So he threw in negatives, stripping, metal plates, lacquer, gum and even rags. Same result. Xerox's digital press was still much, much more expensive than offset.

Xerox had valiantly modified its pricing to better suit the needs of commercial printers, but a pricing scheme developed in the 1960s for copy machines still was at the heart of its proposal. Guess what? To this day, Xerox still uses the same pricing methodology. So does Kodak and every other digital press manufacturer. Nobody wants to spoil the party.

If digital press makers want more market share, they'll have to lower profit margins, which are pretty thin to begin with. It's the very same dilemma we all face as commercial printers.

Because Kodak was beating the pants off Xerox in the eighties, I thought perhaps Kodak could be more competitive. In hindsight, I should have known better.

Kodak's copier salesman didn't know what printing was; he gave me a sales presentation that might have been crafted for pitching to U.S. Steel or American Motors. Book printing? Huh? Why would you do that on our copiers?

Kodak had the quality, reputation and momentum to crack a market its archrival Xerox couldn't. Too bad Kodak didn't make the effort to identify the potential markets for its machinery.

I left my meeting appalled by the salesmanship but intrigued by the print engine. There would, however, be no more speculation about toner-based imaging in my employer's printshop. Why would we switch to a process that was more expensive, and was not even “real printing”?

Why, indeed?

A short year later, I was back visiting Kodak, this time as the soon-to-be founder of my own company. I was convinced that toner and lasers could fill a need for ondemand printing. My new Kodak sales rep, George, agreed.

Meeting George lifted my spirits. He was the first industry insider I'd met who seemed to grasp the concepts I espoused. George practically drooled when I unveiled my plans for shortrun, fast turnaround book production from “desktop” digital files, using laser printing technology. He clearly had a similar vision. At the time, I felt we might be the only two people on Earth who were thinking that way.

The gleam in George's eyes grew brighter as I unfolded my plans. “What about typesetting?” he asked. I explained my theory that as “desktop publishing” on personal computers caught on, clients would set their own type and layouts. George frowned.

“Sorry, Steve, the only way you'll make money is by selling composition, then offering to handle the printing, as well.” So much for sharing my vision.

By the time I launched my digital printing business, George was gone. He left Kodak, I was told, to move to Kentucky, where he opened a storefront copy franchise.

George's vision was very different than mine, but at least he had a vision, which was more than could be said for the digital press manufacturers, back then. Shortly thereafter, Kodak sold its various digital printing business units, firmly deciding to focus on its core film business.

Even Xerox thought this was a solid move. At the time, Xerox was spending millions to enter the film business with a product called Verde film.

Funny, I can't seem to recall what the Wall Street Journal said about those moves.