Monopoly Below the Radar?
Sunday, 12. July 2009, 21:31:21
My 20 year old daughter recently asked what "cc" meant on the email. Today, to many people, carbon paper is a relic of the the days when printing was done on a press. Typewriters whacked keys, creating ink impressions which, with carbon paper, could create multiple simultaneous copies. Later, NCR (No Carbon Required) paper even made carbon paper itself obsolete.
25 years ago, the most reliable way to get ink on paper was primarily based on mechanical machines: first as modified typewriters and later as simply impact printers (Dot-matrix, dot-band, band, print train, etc.). There was simply no less expensive way to get ink onto paper than the dumb old impact printer. Continuous forms, multipart printers behemoths were the backbone of printed output for countless firms. Today, many vital industries and enterprises still depend on multipart forms and continuous forms printers. Many people might see them as primitive. I, for one, am awed by the engineering and beauty of these mechanical wonders.
When I turned 14 my mother bought me a wristwatch as a birthday gift. Just the touch of a button on this digital device would display the time and date in glowing red LED's. Today the little LCD watch works are very accurate, very inexpensive, but very boring. But my fascination for mechanical devices with intricate gears, and precision movements has endured. Many find near-magic in the spectacular mechanical clockwork. The degree of engineering, refinement, and detail is surely impressive. There is just something special about an automatic mechanical wristwatch.
A new set of technologies converged in the invention and development of laser printers, LED, ink jets, etc., all of which enhanced the speed and versatility of printed output. These new devices introduced a new paradigm which has endured ever since. The cost of these laser printers, then as now, were but a tiny fraction of the total cost of printing, the manufacturers saw dollar signs based on the concept of "give them the razor, sell them the blades". Make the printers cheap and the toner cartridges expensive. Ongoing revenue streams from supplies has allowed manufacturers to continuously reduce prices of their hardware, even while increasing their total revenue.
The introduction of these new machines caused a sea change in demand for the existing impact printer market. (We economist-types differentiate between a change in demand on the one hand, and the demand curve itself on the other.) To adjust to this new technology, a new group of companies met the market demand. Hewlett-Packard introduced a line of tabletop laser printers (sourced through Canon, of copier reknown). HP's expertise, software, and ubiquity, led the market for these new business laser printer products in the United States. They were a huge hit, with HP now dependent on their prized LaserJet brand.
The lesson was not lost on the rest of the world's technology companies. New plants were tooled, and worldwide transition away from impact printers left old-line companies like IBM, Genicom, Digital Equipment, Burroughs, Sperry, DecisionData, et al. back-peddling to adapt their production and manufacturing base to a significant change in demand away from their mechanical-based impact printers. One by one as the marketplace has changed over the years, most firms spun off, closed, or severely curtailed impact printer development and production.
HP divested its impact printer division to Genicom, thereby orphaning Printer Systems International (PSI). Genicom next bought Digital Equipment Corporation's printer division as part of DEC's implosion. That purchase mortally wounded Genicom's balance sheet, forcing it into bankruptcy. Genicom eventually regained its footing. The acquisition consolidated the market to three major impact printer engine manufacturers: Genicom, Mannesmann Tally, and Printronix. Together they accounted for the vast majority of the market in high speed industrial impact printers. Genicom eventually regained its footing.
Genicom eventually regained its footing, and the reorganized Genicom, with new capital backing, merged with Mannesmann Tally to become TallyGenicom. Ultimately, even the combined companies could not avoid collapse. Printronix purchased the assets of TallyGenicom and now is the ONLY manufacturer of high speed line printers in the market. How will Printronix define its role and how does this change the balance of power between Printronix and their clients? Will Printronix raise prices across the board or only around the edges so as to not stir the Justice Department?
One source of potential moderation of pricing power is the relationship of Printronix with IBM Infoprint Systems Company. Infoprint has been using the Printronix engines in its high end impact printer market for many years. I hope that Printronix and its important customers can come to terms which respect the importance of their vital technology without succumbing to monopoly price manipulation. I have my doubts.
I just don't see any company making the capital investments necessary to pose any imminent threat to Printronix.
25 years ago, the most reliable way to get ink on paper was primarily based on mechanical machines: first as modified typewriters and later as simply impact printers (Dot-matrix, dot-band, band, print train, etc.). There was simply no less expensive way to get ink onto paper than the dumb old impact printer. Continuous forms, multipart printers behemoths were the backbone of printed output for countless firms. Today, many vital industries and enterprises still depend on multipart forms and continuous forms printers. Many people might see them as primitive. I, for one, am awed by the engineering and beauty of these mechanical wonders.
When I turned 14 my mother bought me a wristwatch as a birthday gift. Just the touch of a button on this digital device would display the time and date in glowing red LED's. Today the little LCD watch works are very accurate, very inexpensive, but very boring. But my fascination for mechanical devices with intricate gears, and precision movements has endured. Many find near-magic in the spectacular mechanical clockwork. The degree of engineering, refinement, and detail is surely impressive. There is just something special about an automatic mechanical wristwatch.
A new set of technologies converged in the invention and development of laser printers, LED, ink jets, etc., all of which enhanced the speed and versatility of printed output. These new devices introduced a new paradigm which has endured ever since. The cost of these laser printers, then as now, were but a tiny fraction of the total cost of printing, the manufacturers saw dollar signs based on the concept of "give them the razor, sell them the blades". Make the printers cheap and the toner cartridges expensive. Ongoing revenue streams from supplies has allowed manufacturers to continuously reduce prices of their hardware, even while increasing their total revenue.
The introduction of these new machines caused a sea change in demand for the existing impact printer market. (We economist-types differentiate between a change in demand on the one hand, and the demand curve itself on the other.) To adjust to this new technology, a new group of companies met the market demand. Hewlett-Packard introduced a line of tabletop laser printers (sourced through Canon, of copier reknown). HP's expertise, software, and ubiquity, led the market for these new business laser printer products in the United States. They were a huge hit, with HP now dependent on their prized LaserJet brand.
The lesson was not lost on the rest of the world's technology companies. New plants were tooled, and worldwide transition away from impact printers left old-line companies like IBM, Genicom, Digital Equipment, Burroughs, Sperry, DecisionData, et al. back-peddling to adapt their production and manufacturing base to a significant change in demand away from their mechanical-based impact printers. One by one as the marketplace has changed over the years, most firms spun off, closed, or severely curtailed impact printer development and production.
HP divested its impact printer division to Genicom, thereby orphaning Printer Systems International (PSI). Genicom next bought Digital Equipment Corporation's printer division as part of DEC's implosion. That purchase mortally wounded Genicom's balance sheet, forcing it into bankruptcy. Genicom eventually regained its footing. The acquisition consolidated the market to three major impact printer engine manufacturers: Genicom, Mannesmann Tally, and Printronix. Together they accounted for the vast majority of the market in high speed industrial impact printers. Genicom eventually regained its footing.
Genicom eventually regained its footing, and the reorganized Genicom, with new capital backing, merged with Mannesmann Tally to become TallyGenicom. Ultimately, even the combined companies could not avoid collapse. Printronix purchased the assets of TallyGenicom and now is the ONLY manufacturer of high speed line printers in the market. How will Printronix define its role and how does this change the balance of power between Printronix and their clients? Will Printronix raise prices across the board or only around the edges so as to not stir the Justice Department?
One source of potential moderation of pricing power is the relationship of Printronix with IBM Infoprint Systems Company. Infoprint has been using the Printronix engines in its high end impact printer market for many years. I hope that Printronix and its important customers can come to terms which respect the importance of their vital technology without succumbing to monopoly price manipulation. I have my doubts.
I just don't see any company making the capital investments necessary to pose any imminent threat to Printronix.
WIDGETIZE