FOR IMMEDIATE RELEASE

$ Spent on Digital Printing R&D 2002

Hanover, MA…April 2003… In 2002, I. T. Strategies estimates that more than 35 hardware manufacturers derived revenues of more than $102 billion from digital printing. [Estimated revenues include hardware (printers, and analog and digital copiers), and consumables (media and chemistry) for wide and narrow format devices, color and monochrome devices, CAD and Graphics segments and service.] I.T. Strategies estimates that these companies combined invested more than $6 billion in R&D in 2002.

Of that, about 75% or $4.7 billion is invested in EP R&D; 25% in ink jet R&D. R&D estimates are based upon public sources including annual reports, company web sites and I.T. Strategies estimates. Understanding where R&D dollars are invested ­ and by whom ­ provides a glimpse into potential future products and industry direction.

I. T. Strategies estimated R&D spending based on a typical 5% R&D investment. Some companies invest more than the industry standard. Digital printing is a high-tech industry and this is reflected in the (relatively) high R&D investment of the industry.

By comparison, R&D investment by other industries is less. In the paper industry, R&D investment is typically less than 2%. In the food industry, Nestle invests 1.3% of its total sales into R&D. In the auto industry, General Motors invests 4% in R&D.

“What this says,” according to Patti Williams, Consulting Partner at I.T. Strategies, “is that in high tech industries, such as digital printing, it costs a lot of money to participate. That means that it is all about scale: the bigger company revenues, the bigger the R&D budget. We can expect to see more consolidation in the digital printing industry: developing new products and new price point/performance levels will cost more and only the largest companies will have the resources (read: money) to do this.”

Of the more than $6.2 billion spent by digital printer hardware OEMs on R&D in 2002, twenty-three companies invested $4.7 billion in electrophotography, which for the most part is targeted at document printing and office applications.

Six companies invested more than $1 billion in thermal ink jet technology, which for the most part is targeted at home/office printing and photographic-quality output. Twenty-one companies invested just over $400 million in piezo ink jet technology, which for the most part is targeted at wide format graphics and industrial applications.

I.T. Strategies, Inc. is an established research and consultancy firm dedicated to serving companies in emerging digital printing markets. The company delivers intelligent data, analysis, strategy, and implementation practices to vendors in the digital printing industry around the world. From offices in Boston and Tokyo, I.T. Strategies conducts and delivers research data, offers interpretation and advice, identifies specific opportunities, and helps organizations implement these strategies to achieve effective solutions.

I.T. Strategies
51 Mill Street, Suite 2
Hanover, MA 02339
Phone: 781 826-0200
Fax: 781 826-0151
E-Mail: williams@it-strategies.com
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