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Wide Format Graphics Research

Hardware, Media, and Ink Revenues Reach $9.3B By 2013

By Mark Hanley

The wide format graphics market generated total manufacturer revenues at the retail level for hardware, media, and ink of $8.7 billion in 2008 and is expected to generate manufacturer revenues of $9.3 billion in 2013, a compound annual growth rate (CAGR) of one percent. Excerpted from analyst firm I.T. Strategies’ 2009 Wide Format Inkjet Graphics Forecast, these statistics were gathered in the first quarter of 2009 and portray the impact of the current economic recession.

There are several differences between the 2008 and 2009 forecasts. Actual revenues are down ten percent or $550 million from the anticipated continuation of the pre-recession historical trend line for 2008. 2009 revenues decline a further 11 percent or $494 million compared to 2008. Revenue for all wide format sectors in aggregate climb one percent by 2012 or $52 million above their 2008 level. The industry suffers a three year recession of its own with 2008 revenue levels not regained by the market until late 2011.

The sustained market loss of revenue over time is driven by the accelerated—though differentiated by sector—decline of some already mature sectors, including aqueous and solvent. It is also affected by the foreseen long delay in three quarters—Q4 2008 through Q2 2009—of dramatic decline in year-over-year terms of between ten and 25 percent each quarter in some cases.

The report is based off of vendor 2008 sales unit data gathered in March 2009, with 90 percent participation. User research was undertaken January through March 2009. 60 print for pay (PFP) shops were contacted, 60 percent based in the U.S. and 40 percent in Europe. Quarter-based projections were made for each market sub-sector from 2008 through 2010 in order to generate an accurate and correctly nuanced annual growth projection.

Market Segmentation
I.T. Strategies segments the wide format inkjet graphics market into three primary segments by technology—aqueous, solvent, and UV. Each segment is further divided by size or price. The forecast is a flexible market model designed to reflect changing dynamics. Some years the forecast changes slightly, other years there are more significant changes based on activity in the market. In 2009, there were no significant structural changes to the forecast, however, the impact of the economic recession is reflected in the projections.

A major assumption of the 2009 forecast is that the second half of 2009 will see a modest pickup. If this does not happen then projections will push out by the length of the pickup’s delay. I.T. Strategies believes it is reasonably likely that the second half of 2009 will pickup in what remains a cyclical market, where users in general renew their print shops in a correctly perceived, strong underlying profit potential situation.

Revenue from Hardware, Media, and Ink by Type of Printer
I.T. Strategies classifies research by three types of printers or technologies—aqueous, solvent, and UV. The only technology segment growing is UV, where revenues are expected to grow from $1.6 billion in 2008 to $3.2 billion by 2013, a CAGR of 15 percent. The following part of this report is divided by these three types of technologies. Each section outlines their install base in units and revenue in U.S. dollars. The corresponding charts are labeled accordingly.

Aqueous Inkjet Printers
Before the recession, aqueous markets matured through an accelerated process. The actual revenues from 2008 depict a decrease of six percent or $135 million from the anticipated continuation of the pre-recession historical trend line for 2008. 2009 revenues decline a further nine percent or $180 million compared to 2008.

Economic pressures make aqueous ink prices look high to many PFP shops. These shops are consolidating demand on fewer, larger capacity systems that run at lower ink costs with fewer staff. The in-house sector is less affected by the decline because more work is brought in-house for cost reasons.

The total install base of wide format aqueous inkjet printers is forecast to decline from 246,868 printers in 2008 to 230,599 printers in 2013, a CAGR of negative one percent. Professional sectors will decline but the in-house sector is expected to grow from 141,803 printers in 2008 to 153,191 by 2013, a CAGR of three percent, reflecting continued increased usage among in-house users of wide format inkjet printers. The in-house market is made up of corporations, schools, hospitals, and others purchasing wide format inkjet printers for internal use and do not sell the output.

Total revenues for hardware, media, and ink for wide format aqueous inkjet printers will decline from $3.6 billion in 2008 to $3.2 billion in 2013, a CAGR of negative two percent. Revenues in the in-house sector are expected to grow from $913 million in 2008 to $1.2 billion in 2013, a CAGR of six percent as advertising agencies, universities, and hospitals purchase wide format inkjet printers for the internal use of presentations and signage.

Solvent Inkjet Printers
I.T. Strategies divides the solvent sector into four main sub-sectors—Chinese; Korean; Taiwanese Internal Sales—Chinese and Korean; and Taiwanese External Sales—Western original equipment manufacturers (OEMs) of aggressive solvent greater than or equal to $50,000 and Western OEMs of eco-solvent less than $50,000.

Low-level or eco-solvent trends include the following. Eco-solvent markets matured before the recession and that process accelerated. 2008 actual revenues are down by 29 percent or $486 million from the anticipated continuation of the pre-recession historical trend line for 2008. 2009 revenues decline a further 18 percent or $201 million compared to 2008.

Economic pressures make eco-solvent ink prices look high to many PFP shops compared to UV. These types of shops are consolidating demand on fewer large-capacity systems that can be run at lower ink costs with fewer staff.

There may be a buying delay combined with the recession in anticipation of the widespread availability of Hewlett-Packard’s latex technology. Latex technology is believed to be an upcoming strategic challenge to eco-solvent. I.T. Strategies’ projection does not fully account for this potential phenomenon in the second half of 2009.

The core high-level or aggressive solvent trends include the following. Aggressive solvent markets were mature before the recession, but the recession drives them into rapid decline. 2008 actual revenues were down by 14 percent or $49 million from the anticipated continuation of the pre-recession historical trend line for 2008. 2009 revenues decline a further 19 percent or $70 million compared to 2008.

Although aggressive solvent would appear to be a very cost-effective economic solution to external graphics in a recession, the issue of cutting plant and staff combined with an immediate and especially strong decline in external graphics demand trump those economics. These factors are meeting the irrationally but realistically declining desire to use perceived environmentally unfriendly solvent inks. However, aggressive solvent continues due to a strong ink aftermarket and its relative popularity in developing markets.

The install base of wide format solvent printers is forecast to grow from 106,693 printers in 2008 to 116,916 printers by 2013, a CAGR of two percent. Western manufacturers made up more than 80 percent of the install base in 2008 and are expected to maintain that share through 2013. Not surprisingly, low-level solvent printers make up the largest segment of the solvent install base, growing from 74 percent in 2008 to 79 percent in 2013, a CAGR of 13 percent. Although low-level solvent printers cost more than aqueous printers, the output is used for both indoor and outdoor applications, making them a good investment for smaller shops looking to enter the market with the ability to offer customers a broad range of products.

Solvent printers generated hardware, media, and ink revenues of $3.6 billion in 2008. Solvent is forecast to decline to $2.9 billion by 2013, a CAGR of negative four percent. The largest share of revenue continues to come from low-level or eco-solvent printers. However, these revenues are expected to decline from $1.9 billion in 2008 to $1.7 billion in 2013, a CAGR of negative one percent. The Western OEMs aggressive or high-level solvent segment is forecast to decline from $900 million in 2008 to $420 million in 2013, a CAGR of -14 percent. This decline in revenues reflects the continued competition from UV flatbed and roll-to-roll printers, as well as a focus by print shops on “greener” UV technology.

UV Inkjet Printers
UV entered the recession accelerating towards full growth. 2008 actual revenues were down by six percent or $55 million from the anticipated continuation of the pre-recession historical trend line for 2008. 2009 revenues decline a further five percent or $43 million compared to 2008. The recession has accelerated many PFPs’ enthusiasm for UV technology because it represents more volume on fewer machines.

The install base of UV inkjet printers is forecast to grow from 8,328 printers in 2008 to 17,445 printers by 2013, a CAGR of 16 percent. Low-end flatbed UV inkjet printers continue to be the largest segments of the UV inkjet printer install base, growing from 5,048 printers in 2008 to about 9,637 by 2013, a CAGR of 14 percent.

In total, UV inkjet printers generated hardware, media, and ink revenues of $1.6 billion in 2008 growing to $3.2 billion by 2013, a CAGR of 15 percent. High-end flatbed printers are expected to grow from revenues of $756 million in 2008 to $1.5 billion by 2013, a CAGR of 14 percent.

Hardware Install Base and Revenue
The total install base of wide format printers is expected to remain relatively flat throughout the forecast period growing from 361,887 printers in 2008 to 364,960 by 2013. Hardware revenues from wide format inkjet graphics printers are forecast to grow from $1.8 billion in 2008 to $2.2 billion in 2013, a CAGR of four percent. Hardware revenues are primarily driven by growing sales of UV flatbed and roll-to-roll printers, which are expected to grow from $607 million in 2008 to $991 million in 2013, a CAGR of ten percent. This reflects the productivity gains they offer to print shops. The slight increase in aqueous revenues from $354 million in 2008 to $387 million in 2013 is driven by in-house sector growth at the expense of PFP shops for cost reasons.

Media Square Feet and Revenue
In terms of square feet, wide format graphics printers produced 17 billion square feet of output in 2008 and this is forecast to grow to 18.6 billion by 2013, a CAGR of two percent. In 2008, solvent printers made up 72 percent of the total square feet; by 2013, the share of output produced on solvent printers is expected to decline to 65 percent. UV printers in 2008 made up nine percent of the total output and are expected to grow to 20 percent of the total square feet by 2013, a CAGR of 19 percent, reflecting the high productivity of UV systems.

Worldwide revenues from wide format inkjet printers were $4 billion in 2008 and are forecast to grow to $4.3 billion by 2013, a CAGR of two percent. Media revenue from UV printers is expected to grow from $740 million in 2008 to $1.8 billion by 2013, a CAGR of 19 percent, driven by demand for highly productive UV printers.

Ink Liters and Revenue
In 2008, wide format inkjet printers consumed 29.6 million liters of ink. This is forecast to increase to 32 million liters by 2013, a CAGR of two percent. Throughout the forecast period, solvent printers consume the majority of inkjet ink—22.3 million in 2008 growing to 23.2 million liters in 2013, a CAGR of one percent. UV inkjet ink will grow from 1.6 million liters in 2008 to 3.6 million liters by 2013, a CAGR of 17 percent.

In 2008, worldwide wide format graphics inkjet ink revenues were $3 billion and are forecast to decline to $2.9 billion by 2013, a CAGR of negative one percent. Over the forecast period, decreasing ink revenues reflect the continued shift in the market from more expensive aqueous inks to lower cost UV inks. The biggest decline is expected in solvent inkjet ink revenues, which are forecast to decline from $946 billion in 2008 to $738 million by 2013, a CAGR of negative five percent. Wide format aqueous inkjet ink revenues are expected to decline from $1.8 billion in 2008 to $1.7 billion in 2013, a CAGR of negative one percent. UV inkjet ink revenues are forecast to grow from $248 million in 2008 to $406 million by 2013, a CAGR of ten percent. D

Mark Hanley is president of analyst firm I.T. Strategies. With over 21 years of experience, he specializes in researching digital color printing technologies. He travels around the world, facilitating partnerships and strategic alliances between manufacturers in Europe, Japan, and the U.S.

Editor’s Note: 2009 Total Worldwide Graphics Forecast
Total wide format inkjet graphics revenue for hardware, media, and ink is forecast to grow from $8.7 billion in 2008 to $9.3 billion in 2013, a CAGR of one percent. This is down from last year, when I.T. Strategies forecasted total wide format inkjet graphics revenue for hardware, media, and ink to grow from $9.8 billion in 2007 to $12.7 billion in 2012, a CAGR of five percent.

Despite a downturn due to an economic recession in many of the segments mentioned, a common thread throughout the firm’s research is the increasing profitability of UV technologies. Hardware revenues are driven by growing sales of UV flatbed and roll-to-roll printers, which are expected to grow from $607 million in 2008 to $991 million in 2013, CAGR of ten percent. Media revenue is forecast to grow from $3.9 billion in 2008 to $4.3 billion in 2013, a CAGR of two percent, driven by increasingly productive UV printers.

Although ink revenues in general are forecast to decline from $3 billion in 2008 to $2.8 billion in 2013, a CAGR of negative one percent, UV inkjet revenues have a CAGR of ten percent between 2008 and 2013. Decreasing ink revenues as a whole reflect the continued shift in the market from expensive aqueous inks to lower cost UV inks.

Manufacturers continue to cater to customer demand. In a shrinking economy, print service providers look for technologies that save time and money by minimizing footprint, creating environmentally friendly solutions, and increasing volumes at a lower price. UV is able to do all of that, and as this report forecasts, it will continue to do so.

Aug2009, Digital Output

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