Smithers Pira Report: Three Key Trends in the Future of Digital Versus Analog Printing
In 2015, digital print accounts for 13.9 percent of all print and printed packaging in value terms, but just 2.5 percent of total world volume. Not only that, but the analog to digital transition is accelerating however; in 2020 digital will be 17.4 percent of value and 3.4 percent of all print and printed packaging volume.
Digital is growing because it can offer advantages that analog print cannot provide. Variable data in transactional and direct mail was introduced in the 1970s. As color digital presses came to market, the initial drivers were for low cost, short runs and quick turnaround. As more companies used the technology, new applications and business models developed for print-on-demand, short-run books, and for inkjet printed signage, where digital technology replaced analog.
There are also new markets opening up—such as photobooks and photo products—where digital print linked to online ordering has enabled a multi-billion dollar market to flourish.
Based on a new market study on "The Future of Digital versus Analogue Printing to 2020," Smithers Pira outlines below three key factors that will determine the futures of these two approaches.
Economics
Printing technology is continuing to develop for analog processes, but the major developments are taking place in digital printing—and particularly inkjet, which is enjoying major investments in R&D on printheads, inks, and finishing systems. There are also significant developments in enabling workflow technology—for all processes and substrates, with much emphasis on paper to improve the quality of water-based inkjet printing.
The developments are changing the relative cost positions of digital and analog printing. Generally the economic crossover point is getting higher and this will fuel further adoption of digital technology, at the expense of the established litho, flexo and gravure alternatives.
Smithers Pira has developed a costing model that compares digital and analog printing. This builds up the real production costs including capital cost, depreciation period, maintenance, shift pattern, labor rates, energy, make-ready time, plate costs, setup and running waste, print speed and press utilization, and paper and ink or click cost at variable coverages. The final product can be varied and the model calculates the comparative cost as run lengths change, to show the economic crossover where one process becomes cheaper than another.
As technology and prices change, this model is a useful tool for companies to select the most appropriate technology for their particular markets. It is also useful for equipment suppliers to determine how their technology fits in to the supply market.
Applications
Digital printing will continue to grow in most print sectors across the world. Mono webfed electrophotography is being superseded by full-color inkjet; but despite this competition, the volume and value of electrophotography will continue to rise as color applications grow. Innovative users will find more applications and niches to exploit the advantages of digital—some at the expense of analog printing, but also by opening totally new opportunities.
Digital print can incorporate variability that makes it more effective than the static alternative. Users of digital print are innovating, and exploring new ways to offer novel functions and features to print buyers that are valued and sell at a premium. Smithers Pira ran a market research program in June-July 2015 for "The Future of Digital versus Analogue Printing to 2020," to determine the status and to identify the key drivers and barriers to the adoption of digital printing—including factors such as run lengths, improvements in technology, setup costs and environmental benefits.
Business models
Based on changing application requirements, print firms’ approaches to digital and analog will change in the coming years.
The choice between digital and analog is not always an either-or decision. As many print suppliers employ both analog and digital as part of their production capacity the two technologies can be complementary. There is greater flexibility for planners to put short runs and quick turnaround on the digital presses, with longer runs staying on their analog equipment. This can improve the overall efficiency of the print shop greatly.
End-use customer preferences and demands are changing and fragmenting. Having both digital and analog solutions means a print service provider can offer the most appropriate solution to the customer.
The case of one company that has achieved success with a new digital press business model is highlighted in the Smithers report. This medium-sized print service provider explains how its litho capacity has previously been producing a lot of the volume for a particular customer in a very competitive, cost-conscious market.
It was the innovative value added to these jobs by its new digital equipment that is allowing the print service provider to differentiate itself, becoming a valued supplier to the customer, rather than one that is simply competing with rivals on price. The digital work commands high margins meaning that overall the account is very profitable.
These and other key trends are covered in more detail in Smithers Pira’s "The Future of Digital versus Analogue Printing to 2020" report.
