New EDSF Study Identifies Current And Future Trends In Print-For-Pay Services Market
Source: Press release issued by the company, unless otherwise noted.
ROLLING HILLS, Calif., U.S.A. (Jan. 18, 2006) --- The Electronic Document Systems Foundation (EDSF), the non-profit organization dedicated to the document management and communications industry, announced the publication of an insightful co-branded research paper on industry trends in the print-for-pay services market. The study was designed to gain an understanding of the current state of business, evaluate future trends, establish perceptions of customer expectations, and to identify and understand any gaps in perception between print providers and the vendors who supply them. “Supplier and Service Provider Priorities: 2005 Survey Results” is a collaboration between InfoTrends/CAP Ventures ( Web Site Executives Related Articles Google) (www.capv.com), the leading worldwide market research and strategic consulting firm for the digital imaging and document solutions industry based in Weymouth, Mass., and the Graphic Communication Program at Clemson University in Clemson, S.C.
"This important study examines the requirements of print-for-pay service providers and the vendors who work with them,” explained Charlie Corr, group director, InfoTrends/CAP Ventures. “It provides critical information on both the current state and future direction of our industry. We are pleased to have worked on this critical study with EDSF and our research partner, Clemson University."
According to the study, print providers and vendors share a common market. Factors that benefit print providers indirectly benefit vendors, as printers will buy more. Print providers also benefit from the technical knowledge and expertise vendors can provide to them. In some cases, providers and vendors have common perceptions of the market; in other cases they do not. In many areas, significant gaps in beliefs are evident between print providers and vendors. To benefit the industry as a whole, vendors should work more closely with print providers to understand the trends and beliefs of print providers in order to provide the advice and counsel expected of them, as well as make more accurate sales forecasts.
Looking to the future, the study suggests that print providers focus on aligning investment plans with strategic intent. Achieving “super efficiency” requires investments in software and services that many print providers are not planning to make. If this gap persists, it will lead to many print providers exiting a competitive landscape, predict the authors.
Highlights of “Supplier and Service Provider Priorities: 2005 Survey Results” include:
---Both groups were optimistic about print revenue moving forward with the strongest growth over the next two years expected to come from variable data printing and digital full color printing.
---Print providers and suppliers have different views of the future. Print providers forecast growth for offset printing, fulfillment and kitting, and facilities management. Suppliers, on the other hand, forecast a decline in offset print revenue and are less optimistic about growth in fulfillment and kitting and facilities.
---Among the print providers surveyed, Adobe (Stock Price Web Site Executives Related Articles Google) has an enviable position. Providers identified PostScript as the most common print language, PDF as the most popular file format, and had a high level of use and interest in a PDF-enabled workflow.
---Vendors and print providers have very different views on technology adoption. Forty-four percent of the print providers described themselves as early adopters of new technology, 40% as mainstream adopters, and 16% as laggards. Vendors had a much different view, believing that 25% of print providers were early adopters of new technology, 45% were mainstream, and 30% were laggards.
“Sponsoring research that has significant value in today’s workplace is very important to EDSF,” said EDSF Vice Chair of Research Kenneth M. Morris, Ph.D., CEO of Lightbulb Press. ”We’re proud to provide on-target information such as this study through the hard work and expertise of InfoTrends/CAP Ventures and Clemson University.”
“Supplier and Service Provider Priorities: 2005 Survey Results” is available as a free download at www.edsf.org.
29 January 2006
Web skeptics, take note: The sky hasn't fallen
Internet doesn't destroy relationships, a new study finds, it strengthens them
By JILL MAHONEY
Thursday, January 26, 2006 Page A8
SOCIAL TRENDS REPORTER
The initial warnings about the Internet's creep into modern lives were dire: Communities would crumble because people would be chained to their computers.
But a new study by Canadian researchers suggests the Web actually expands and strengthens relationships.
"The Internet is adding on to community rather than destroying it," said Barry Wellman, a sociology professor at the University of Toronto who co-wrote the report. "There were a huge number of people running around saying the sky was falling a few years ago. What we found is the sky isn't falling, that life is going on and quite happily."
The study, which was released yesterday, examined Americans' Internet habits and found that computer users have larger social networks than non-users. And, perhaps surprisingly, people who use e-mail actually have more phone and face-to-face contact with their friends, families and associates.
"The current generation of e-mail users is communicating much more often than recent generations and possibly more often than any previous generation since people huddled in caves with only conversation to pass the nights away," says the study, which was funded by the Pew Internet & American Life Project.
Heavy e-mail users have more than twice as much land-line phone contact within their social networks and three times as much cellular phone contact than people who do not use e-mail, according to the report.
"E-mail supplements, rather than replaces, the communication people have with people who are very close to them -- as well as . . . with those not so close," the report says in noting e-mail's key role in maintaining ties between acquaintances.
Prof. Wellman, who was asked by the Pew organization to get involved with the research, said the conclusions are "highly similar to what we'd find with Canadians."
The reason e-mail breeds increased communication, the report suggests, could be because, as the old maxim goes, one thing simply leads to another.
For example, an e-mail exchange between colleagues about a complex issue might spark a phone call to continue the discussion. Or friends could use e-mail to arrange a night at the movies.
"There's an ecology of media and they all fit together," Prof. Wellman said.
E-mail -- which is the Internet's most popular application -- has long been extolled for helping far-flung friends and relatives stay in touch because it is convenient, inexpensive, unobtrusive and fits seamlessly into busy modern lives.
While social networks were once geographically based -- people's lives revolved around local friends, neighbours and co-workers -- they are now much more dispersed. (The report looked at other Internet applications, including instant messaging, weblogs and webcams.)
Take Jeffrey Boase, a University of Toronto doctoral student in sociology who also co-wrote the report. Most mornings, Mr. Boase talks to his girlfriend in Japan by webcam.
The pair, who met three years ago in Kyoto, were initially friends but their romance heated up over e-mail. Their relationship became serious during a fall visit and is now sustained by long webcam conversations.
"It's interesting -- we started with e-mail when we didn't know each other as well and then the more we got to know each other, we moved to the more rich form of communication," he said.
However, the report, which is primarily based on the findings of a telephone survey of 2,200 American adults done in February and March of 2004, also found the "great bulk of ties" nurtured by the Internet were among people living in the same city, Prof. Wellman said.
"That's where our lives are. We still are physical beings, we're not just computer bits. We're still atoms, we still have physical needs," he said.
But despite the Internet's deep reach, the survey found that the most common mode of communication remains the land-line telephone and personal interaction.
The study also found that Internet users are more likely than non-users to get help from their contacts.
As well, nearly one-third of adult Americans said the Internet had played a key role in dealing with at least one recent major life decision.
Internet doesn't destroy relationships, a new study finds, it strengthens them
By JILL MAHONEY
Thursday, January 26, 2006 Page A8
SOCIAL TRENDS REPORTER
The initial warnings about the Internet's creep into modern lives were dire: Communities would crumble because people would be chained to their computers.
But a new study by Canadian researchers suggests the Web actually expands and strengthens relationships.
"The Internet is adding on to community rather than destroying it," said Barry Wellman, a sociology professor at the University of Toronto who co-wrote the report. "There were a huge number of people running around saying the sky was falling a few years ago. What we found is the sky isn't falling, that life is going on and quite happily."
The study, which was released yesterday, examined Americans' Internet habits and found that computer users have larger social networks than non-users. And, perhaps surprisingly, people who use e-mail actually have more phone and face-to-face contact with their friends, families and associates.
"The current generation of e-mail users is communicating much more often than recent generations and possibly more often than any previous generation since people huddled in caves with only conversation to pass the nights away," says the study, which was funded by the Pew Internet & American Life Project.
Heavy e-mail users have more than twice as much land-line phone contact within their social networks and three times as much cellular phone contact than people who do not use e-mail, according to the report.
"E-mail supplements, rather than replaces, the communication people have with people who are very close to them -- as well as . . . with those not so close," the report says in noting e-mail's key role in maintaining ties between acquaintances.
Prof. Wellman, who was asked by the Pew organization to get involved with the research, said the conclusions are "highly similar to what we'd find with Canadians."
The reason e-mail breeds increased communication, the report suggests, could be because, as the old maxim goes, one thing simply leads to another.
For example, an e-mail exchange between colleagues about a complex issue might spark a phone call to continue the discussion. Or friends could use e-mail to arrange a night at the movies.
"There's an ecology of media and they all fit together," Prof. Wellman said.
E-mail -- which is the Internet's most popular application -- has long been extolled for helping far-flung friends and relatives stay in touch because it is convenient, inexpensive, unobtrusive and fits seamlessly into busy modern lives.
While social networks were once geographically based -- people's lives revolved around local friends, neighbours and co-workers -- they are now much more dispersed. (The report looked at other Internet applications, including instant messaging, weblogs and webcams.)
Take Jeffrey Boase, a University of Toronto doctoral student in sociology who also co-wrote the report. Most mornings, Mr. Boase talks to his girlfriend in Japan by webcam.
The pair, who met three years ago in Kyoto, were initially friends but their romance heated up over e-mail. Their relationship became serious during a fall visit and is now sustained by long webcam conversations.
"It's interesting -- we started with e-mail when we didn't know each other as well and then the more we got to know each other, we moved to the more rich form of communication," he said.
However, the report, which is primarily based on the findings of a telephone survey of 2,200 American adults done in February and March of 2004, also found the "great bulk of ties" nurtured by the Internet were among people living in the same city, Prof. Wellman said.
"That's where our lives are. We still are physical beings, we're not just computer bits. We're still atoms, we still have physical needs," he said.
But despite the Internet's deep reach, the survey found that the most common mode of communication remains the land-line telephone and personal interaction.
The study also found that Internet users are more likely than non-users to get help from their contacts.
As well, nearly one-third of adult Americans said the Internet had played a key role in dealing with at least one recent major life decision.
26 January 2006
Outsourcing Innovation
First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are they going too far?
As the Mediterranean sun bathed the festive cafés and shops of the Côte d'Azur town of Cannes, banners with the logos of Motorola (MOT ), Royal Philips Electronics (PHG ), palmOne (PLMO ), and Samsung fluttered from the masts of plush yachts moored in the harbor. On board, top execs hosted nonstop sales meetings during the day and champagne dinners at night to push their latest wireless gadgets. Outside the city's convention hall, carnival barkers, clowns on stilts, and vivacious models with bright red wigs lured passersby into flashy exhibits. For anyone in the telecom industry wanting to shout their achievements to the world, there was no more glamorous spot than the sprawling 3GSM World Congress in Southern France in February.
Yet many of the most intriguing product launches in Cannes took place far from the limelight. HTC Corp., a red-hot developer of multimedia handsets, didn't even have its own booth. Instead, the Taiwanese company showed off its latest wireless devices alongside partners that sell HTC's models under their own brand names. Flextronics Corp. demonstrated several concept phones exclusively behind closed doors. And Cellon International rented a discrete three-room apartment across from the convention center to unveil its new devices to a steady stream of telecom executives. The new offerings included the C8000, featuring eye-popping software. Cradle the device to your ear and it goes into telephone mode. Peer through the viewfinder and it automatically shifts into camera mode. Hold the end of the device to your eye and it morphs into a videocam.
HTC? Flextronics? Cellon? There's a good reason these are hardly household names. The multimedia devices produced from their prototypes will end up on retail shelves under the brands of companies that don't want you to know who designs their products. Yet these and other little-known companies, with names such as Quanta Computer, Premier Imaging, Wipro Technologies (WIT ), and Compal Electronics, are fast emerging as hidden powers of the technology industry.
They are the vanguard of the next step in outsourcing -- of innovation itself. When Western corporations began selling their factories and farming out manufacturing in the '80s and '90s to boost efficiency and focus their energies, most insisted all the important research and development would remain in-house.
But that pledge is now passé. Today, the likes of Dell (DELL ), Motorola, (MOT ) and Philips are buying complete designs of some digital devices from Asian developers, tweaking them to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houses have become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras. "Customers used to participate in design two or three years back," says Jack Hsieh, vice-president for finance at Taiwan's Premier Imaging Technology Corp., a major supplier of digital cameras to leading U.S. and Japanese brands. "But starting last year, many just take our product. Because of price competition, they have to."
While the electronics sector is furthest down this road, the search for offshore help with innovation is spreading to nearly every corner of the economy. On Feb. 8, Boeing Co. (BA ) said it is working with India's HCL Technologies to co-develop software for everything from the navigation systems and landing gear to the cockpit controls for its upcoming 7E7 Dreamliner jet. Pharmaceutical giants such as GlaxoSmithKline (GSK ) and Eli Lilly (LLY )are teaming up with Asian biotech research companies in a bid to cut the average $500 million cost of bringing a new drug to market. And Procter & Gamble Co. (PG ) says it wants half of its new product ideas to be generated from outside by 2010, compared with 20% now.
Competitive Dangers
Underlying this trend is a growing consensus that more innovation is vital -- but that current R&D spending isn't yielding enough bang for the buck. After spending years squeezing costs out of the factory floor, back office, and warehouse, CEOs are asking tough questions about their once-cloistered R&D operations: Why are so few hit products making it out of the labs into the market? How many of those pricey engineers are really creating game-changing products or technology breakthroughs? "R&D is the biggest single remaining controllable expense to work on," says Allen J. Delattre, head of Accenture Ltd.'s (ACN ) high-tech consulting practice. "Companies either will have to cut costs or increase R&D productivity."
The result is a rethinking of the structure of the modern corporation. What, specifically, has to be done in-house anymore? At a minimum, most leading Western companies are turning toward a new model of innovation, one that employs global networks of partners. These can include U.S. chipmakers, Taiwanese engineers, Indian software developers, and Chinese factories. IBM (IBM ) is even offering the smarts of its famed research labs and a new global team of 1,200 engineers to help customers develop future products using next-generation technologies. When the whole chain works in sync, there can be a dramatic leap in the speed and efficiency of product development.
The downside of getting the balance wrong, however, can be steep. Start with the danger of fostering new competitors. Motorola hired Taiwan's BenQ Corp. to design and manufacture millions of mobile phones. But then BenQ began selling phones last year in the prized China market under its own brand. That prompted Motorola to pull its contract. Another risk is that brand-name companies will lose the incentive to keep investing in new technology. "It is a slippery slope," says Boston Consulting Group Senior Vice-President Jim Andrew. "If the innovation starts residing in the suppliers, you could incrementalize yourself to the point where there isn't much left."
Such perceptions are a big reason even companies that outsource heavily refuse to discuss what hardware designs they buy from whom and impose strict confidentiality on suppliers. "It is still taboo to talk openly about outsourced design," says Forrester Research Inc. (FORR ) consultant Navi Radjou, an expert on corporate innovation.
The concerns also explain why different companies are adopting widely varying approaches to this new paradigm. Dell, for example, does little of its own design for notebook PCs, digital TVs, or other products. Hewlett-Packard Co. (HPQ ) says it contributes key technology and at least some design input to all its products but relies on outside partners to co-develop everything from servers to printers. Motorola buys complete designs for its cheapest phones but controls all of the development of high-end handsets like its hot-selling Razr. The key, execs say, is to guard some sustainable competitive advantage, whether it's control over the latest technologies, the look and feel of new products, or the customer relationship. "You have to draw a line," says Motorola CEO Edward J. Zander. At Motorola, "core intellectual property is above it, and commodity technology is below."
Wherever companies draw the line, there's no question that the demarcation between mission-critical R&D and commodity work is sliding year by year. The implications for the global economy are immense. Countries such as India and China, where wages remain low and new engineering graduates are abundant, likely will continue to be the biggest gainers in tech employment and become increasingly important suppliers of intellectual property. Some analysts even see a new global division of labor emerging: The rich West will focus on the highest levels of product creation, and all the jobs of turning concepts into actual products or services can be shipped out. Consultant Daniel H. Pink, author of the new book A Whole New Mind, argues that the "left brain" intellectual tasks that "are routine, computer-like, and can be boiled down to a spec sheet are migrating to where it is cheaper, thanks to Asia's rising economies and the miracle of cyberspace." The U.S. will remain strong in "right brain" work that entails "artistry, creativity, and empathy with the customer that requires being physically close to the market."
You can see this great divide already taking shape in global electronics. The process started in the 1990s when Taiwan emerged as the capital of PC design, largely because the critical technology was standardized, on Microsoft Corp.'s (MSFT ) operating system software and Intel Corp.'s (INTC ) microprocessor. Today, Taiwanese "original-design manufacturers" (ODMS), so named because they both design and assemble products for others, supply some 65% of the world's notebook PCs. Quanta Computer Inc. alone expects to churn out 16 million notebook PCs this year in 50 different models for buyers that include Dell, Apple Computer (AAPL ), and Sony (SNE ).
Now, Taiwanese ODMs and other outside designers are forces in nearly every digital device on the market. Of the 700 million mobile phones expected to be sold worldwide this year, up to 20% will be the work of ODMs, estimates senior analyst Adam Pick of the El Segundo (Calif.) market research firm iSuppli Corp. About 30% of digital cameras are produced by ODMs, 65% of MP3 players, and roughly 70% of personal digital assistants (PDAs). Building on their experience with PCs, they're increasingly creating recipes for their own gizmos, blending the latest advances in custom chips, specialized software, and state-of-the-art digital components. "There is a lot of great capability that has grown in Asia to develop complete products," says Doug Rasor, worldwide strategic marketing manager at chipmaker Texas Instruments Inc. TI often supplies core chips, along with rudimentary designs, and the ODMs take it from there. "They can do the system integration, the plastics, the industrial design, and the low-cost manufacturing, and they are happy to put Dell's name on it. That is a megatrend in the industry," says Rasor.
Taiwan's ODMs clearly don't regard themselves as mere job shops. Just ask the top brass at HTC, which creates and manufactures smart phones for such wireless service providers as Vodafone and Cingular as well as equipment makers it doesn't identify. "We know this kind of product category a lot better than our customers do," says HTC President Peter Chou. "We have the capability to integrate all the latest technologies. We do everything except the Microsoft operating system."
Or stop in to Quanta's headquarters in the Huaya Technology Park outside Taipei. Workers are finishing a dazzling structure the size of several football fields, with a series of wide steps leading past white columns supporting a towering Teflon-and-glass canopy. It will serve as Quanta's R&D headquarters, with thousands of engineers working on next-generation displays, digital home networking appliances, and multimedia players. This year, Quanta is doubling its engineering staff, to 7,000, and its R&D spending, to $200 million.
Why? To improve its shrinking profit margins -- and because foreign clients are demanding it. "What has changed is that more customers need us to design the whole product," says Chairman Barry Lam. For future products, in fact, "it's now difficult to get good ideas from our customers. We have to innovate ourselves."
Sweeping Overhaul
India is emerging as a heavyweight in design, too. The top players in making the country world-class in software development, including HCL and Wipro, are expected to help India boost its contract R&D revenues from $1 billion a year now to $8 billion in three years. One of Wipro's many labs is in a modest office off dusty, congested Hosur Road in Bangalore. There, 1,000 young engineers partitioned into brightly lit pods jammed with circuit boards, chips, and steel housings hunch over 26 development projects. Among them is a hands-free telephone system that attaches to the visor of a European sports car. At another pod, designers tinker with a full dashboard embedded with a satellite navigation system. Inside other Wipro labs in Bangalore, engineers are designing prototypes for everything from high-definition TVs to satellite set-top boxes.
Perhaps the most ambitious new entrant in design is Flextronics. The manufacturing behemoth already builds networking gear, printers, game consoles, and other hardware for the likes of Nortel Networks (NT ), Xerox (XRX ), HP, Motorola, and Casio Computer. But three years ago, it started losing big cell-phone and PDA orders to Taiwanese ODMs. Since then, CEO Michael E. Marks has shelled out more than $800 million on acquisitions to build a 7,000-engineer force of software, chip, telecom, and mechanical designers scattered from India and Singapore to France and Ukraine. Marks's splashiest move was to pay an estimated $30 million for frog design Inc., the pioneering Sunnyvale (Calif.) firm that helped design such Information Age icons as Apple Computer Inc.'s original Mac in 1984. So far, Flextronics has developed its own basic platforms for cell phones, routers, digital cameras, and imaging devices. His goal is to make Flextronics a low-cost, soup-to-nuts developer of consumer-electronics and tech gear.
Marks has an especially radical take on where all this is headed: He believes Western tech conglomerates are on the cusp of a sweeping overhaul of R&D that will rival the offshore shift of manufacturing. In the 1990s, companies like Flextronics "completely restructured the world's electronics manufacturing," says Marks. "Now we will completely restructure design." When you get down to it, he argues, some 80% of engineers in product development do tasks that can easily be outsourced -- like translating prototypes into workable designs, upgrading mature products, testing quality, writing user manuals, and qualifying parts vendors. What's more, most of the core technologies in today's digital gadgets are available to anyone. And circuit boards for everything from cameras to network switches are becoming simpler because more functions are embedded on semiconductors. The "really hard technology work" is migrating to chipmakers such as Texas Instruments, Qualcomm (QCOM ), Philips, Intel, and Broadcom (BRCM ), Marks says. "All electronics are on the same trajectory of becoming silicon surrounded by plastic."
Why then, Marks asks, should Nokia (NOK ), Motorola, Sony-Ericsson, Alcatel (ALA ), Siemens (SI ), Samsung, and other brand-name companies all largely duplicate one another's efforts? Why should each spend $30 million to develop a new smartphone or $200 million on a cellular base station when they can just buy the hardware designs? The ultimate result, he says: Some electronics giants will shrink their R&D forces from several thousand to a few hundred, concentrating on proprietary architecture, setting key specifications, and managing global R&D teams. "There is no doubt the product companies are going to have fewer people design stuff," Marks predicts. "It's going to get ugly."
Granted, Marks's vision is more than a tad extreme. True, despite the tech recovery, many corporate R&D budgets have been tightening. HP's R&D spending long hovered around 6% of sales, but it's down to 4.4% now. Cisco Systems' (CSCO ) R&D budget has dropped from its old average of 17% to 14.5%. The numbers also are falling at Motorola, Lucent Technologies (LU ), and Ericsson. In November, Nokia Corp. said it aims to trim R&D spending from 12.8% of sales in 2004 to under 10% by the end of 2006.
Close to the Heart
Still, most companies insist they will continue to do most of the critical design work -- and have no plans to take a meat ax to R&D. A Motorola spokesman says it plans to keep R&D spending at around 10% for the long term. Lucent says its R&D staff should remain at about 9,000, after several years of deep cuts. And while many Western companies are downsizing at home, they are boosting hiring at their own labs in India, China, and Eastern Europe. "Companies realize if they want a sustainable competitive advantage, they will not get it from outsourcing," says President Frank M. Armbrecht of the Industrial Research Institute, which tracks corporate R&D spending.
Companies also worry about the message they send investors. Outsourcing manufacturing, tech support, and back-office work makes clear financial sense. But ownership of design strikes close to the heart of a corporation's intrinsic value. If a company depends on outsiders for design, investors might ask, how much intellectual property does it really own, and how much of the profit from a hit product flows back into its own coffers, rather than being paid out in licensing fees? That's one reason Apple Computer lets the world know it develops its hit products in-house, to the point of etching "Designed by Apple in California" on the back of each iPod.
Yet some outsourcing holdouts are changing their tune. Nokia long prided itself on developing almost everything itself -- to the point of designing its own chips. No longer. Given the complexities of today's technologies and supply chains, "nobody can master it all," says Chief Technology Officer Pertti Korhonen. "You have to figure out what is core and what is context." Lucent says outsourcing some development makes sense so that its engineers can concentrate on next-generation technologies. "This frees up talent to work on new product lines," says Dave Ayers, vice-president for platforms and engineering. "Outsourcing isn't about moving jobs. It's about the flexibility to put resources in the right places at the right time."
It's also about brutal economics and the relentless demands of consumers. To get shelf space at a Best Buy (BBY ) or Circuit City often means brand-name companies need a full range of models, from a $100 point-and-shoot digital camera with 2 megapixels, say, to a $700 8-megapixel model that doubles as a videocam and is equipped with a powerful zoom lens. On top of this, superheated competition can reduce hit products to cheap commodities within months. So they must get out the door fast to earn a decent margin. "Consumer electronics have become almost like produce," says Michael E. Fawkes, senior vice-president of HP's Imaging Products Div. "They always have to be fresh."
Such pressures explain outsourcing's growing allure. Take cell phones, which are becoming akin to fashion items. Using a predesigned platform can shave 70% of development costs off a new model, estimates William S. Wong, a senior vice-president for marketing at Cellon. That can be a huge savings. As a rule of thumb, it takes around $10 million and up to 150 engineers to develop a new cell phone from scratch. If Motorola or Nokia guess wrong about the market trends a year into the future, they can lose big. So they must develop several versions.
With most of its 800 engineers in China and France, Cellon creates several basic designs each year and spreads the costs among many buyers. It also has the technical expertise to morph that basic phone into a bewildering array of models. Want a 2-megapixel camera module instead of 1-megapixel? Want to include a music player, or change the style from a gray clamshell to a flaming-red candy-bar shape? No problem: Cellon engineers can whip up a prototype, run all the tests, and get it into mass production in a Chinese factory in months.
Moving Up the Food Chain
Companies are still figuring out exactly what to outsource. PalmOne Inc.'s collaboration with Taiwan's HTC on its popular Treo 650 smart phone illustrates one approach. Palm has long hired contractors to assemble hardware from its own industrial designs. But in 2001, it decided to focus on software and shifted hardware production to Taiwanese ODMs. PalmOne designers still determine the look and feel of the product, pick key components like the display and core chips, and specify performance requirements. But HTC does much of the mechanical and electrical design. "Without a doubt, they've become a part of the innovation process," says Angel L. Mendez, senior global operations vice-president at palmOne. "It's less about outsourcing and more about the collaborative way in which design comes together." The result: PalmOne has cut months off of development times, reduced defects by 50%, and boosted gross margins by around 20%.
Hewlett-Packard, a company with such a proud history of innovation that its advertising tag line is simply "invent," also works with design partners on all the hardware it outsources. "Our strategy is now to work with global networks to leverage the best technologies on the planet," says Dick Conrad, HP's senior vice-president for global operations. According to iSuppli, HP is getting design help from Taiwan's Quanta and Hon Hai Precision for PCs, Lite-On for printers, Inventec for servers and MP3 players, and Altek for digital cameras. HP won't identify specific suppliers, but it says the strategy has brought benefits. Conrad says it now takes 60% less time to get a new concept to market. Plus, the company can "redeploy our assets and resources to higher value-added products" such as advanced printer inks and sophisticated corporate software, he says.
How far can outsourced design go? When does it get to the point where ODMs start driving truly breakthrough concepts and core technologies? It's not here yet. Distance is one barrier. "To be a successful product company requires intimacy with the customer," says Azim H. Premji, chairman of India's Wipro. "That is very hard to offshore in fast-changing markets." Another hurdle is that R&D spending by ODMs remains relatively low. Even though Premier develops most of its own cameras and video projectors, "the really core technology," such as the digital signal processors, is invented in the U.S., says vice-president Hsieh. Premier's latest wallet-size video projector, for example, was based on a rough design by Texas Instruments, developer of the core chip. With margins shrinking fast in the ODM business, however, Premier and other Taiwanese companies know they need to move up the innovation food chain to reap higher profits.
That's where Flextronics and its design acquisitions could get interesting. Inside frog's hip Sunnyvale office, designers are working to create a radically new multimedia device, for an unnamed corporate client, that won't hit the market until 2007. The plan, says Patricia Roller, frog's co-CEO, is to use Flextronics software engineers in Ukraine or India to develop innovative applications, and for Flextronics engineers to design the working prototype. Flextronics then would mass-produce the gadgets, probably in China.
Who will ultimately profit most from the outsourcing of innovation isn't clear. The early evidence suggests that today's Western titans can remain leaders by orchestrating global innovation networks. Yet if they lose their technology edge and their touch with customers, they could be tomorrow's great shrinking conglomerates. Contractors like Quanta and Flextronics that are moving up the innovation ladder, meanwhile, have a shot at joining the world's leading industrial players. What is clear is that an army of in-house engineers no longer means a company can control its fate. Instead, the winners will be those most adept at marshaling the creativity and skills of workers around the world.
By Pete Engardio and Bruce Einhorn
With Manjeet Kripalani in Bangalore, Andy Reinhardt in Cannes, Bruce Nussbaum in Somers, N.Y., and Peter Burrows in San Mateo, Calif.
First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are they going too far?
As the Mediterranean sun bathed the festive cafés and shops of the Côte d'Azur town of Cannes, banners with the logos of Motorola (MOT ), Royal Philips Electronics (PHG ), palmOne (PLMO ), and Samsung fluttered from the masts of plush yachts moored in the harbor. On board, top execs hosted nonstop sales meetings during the day and champagne dinners at night to push their latest wireless gadgets. Outside the city's convention hall, carnival barkers, clowns on stilts, and vivacious models with bright red wigs lured passersby into flashy exhibits. For anyone in the telecom industry wanting to shout their achievements to the world, there was no more glamorous spot than the sprawling 3GSM World Congress in Southern France in February.
Yet many of the most intriguing product launches in Cannes took place far from the limelight. HTC Corp., a red-hot developer of multimedia handsets, didn't even have its own booth. Instead, the Taiwanese company showed off its latest wireless devices alongside partners that sell HTC's models under their own brand names. Flextronics Corp. demonstrated several concept phones exclusively behind closed doors. And Cellon International rented a discrete three-room apartment across from the convention center to unveil its new devices to a steady stream of telecom executives. The new offerings included the C8000, featuring eye-popping software. Cradle the device to your ear and it goes into telephone mode. Peer through the viewfinder and it automatically shifts into camera mode. Hold the end of the device to your eye and it morphs into a videocam.
HTC? Flextronics? Cellon? There's a good reason these are hardly household names. The multimedia devices produced from their prototypes will end up on retail shelves under the brands of companies that don't want you to know who designs their products. Yet these and other little-known companies, with names such as Quanta Computer, Premier Imaging, Wipro Technologies (WIT ), and Compal Electronics, are fast emerging as hidden powers of the technology industry.
They are the vanguard of the next step in outsourcing -- of innovation itself. When Western corporations began selling their factories and farming out manufacturing in the '80s and '90s to boost efficiency and focus their energies, most insisted all the important research and development would remain in-house.
But that pledge is now passé. Today, the likes of Dell (DELL ), Motorola, (MOT ) and Philips are buying complete designs of some digital devices from Asian developers, tweaking them to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houses have become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras. "Customers used to participate in design two or three years back," says Jack Hsieh, vice-president for finance at Taiwan's Premier Imaging Technology Corp., a major supplier of digital cameras to leading U.S. and Japanese brands. "But starting last year, many just take our product. Because of price competition, they have to."
While the electronics sector is furthest down this road, the search for offshore help with innovation is spreading to nearly every corner of the economy. On Feb. 8, Boeing Co. (BA ) said it is working with India's HCL Technologies to co-develop software for everything from the navigation systems and landing gear to the cockpit controls for its upcoming 7E7 Dreamliner jet. Pharmaceutical giants such as GlaxoSmithKline (GSK ) and Eli Lilly (LLY )are teaming up with Asian biotech research companies in a bid to cut the average $500 million cost of bringing a new drug to market. And Procter & Gamble Co. (PG ) says it wants half of its new product ideas to be generated from outside by 2010, compared with 20% now.
Competitive Dangers
Underlying this trend is a growing consensus that more innovation is vital -- but that current R&D spending isn't yielding enough bang for the buck. After spending years squeezing costs out of the factory floor, back office, and warehouse, CEOs are asking tough questions about their once-cloistered R&D operations: Why are so few hit products making it out of the labs into the market? How many of those pricey engineers are really creating game-changing products or technology breakthroughs? "R&D is the biggest single remaining controllable expense to work on," says Allen J. Delattre, head of Accenture Ltd.'s (ACN ) high-tech consulting practice. "Companies either will have to cut costs or increase R&D productivity."
The result is a rethinking of the structure of the modern corporation. What, specifically, has to be done in-house anymore? At a minimum, most leading Western companies are turning toward a new model of innovation, one that employs global networks of partners. These can include U.S. chipmakers, Taiwanese engineers, Indian software developers, and Chinese factories. IBM (IBM ) is even offering the smarts of its famed research labs and a new global team of 1,200 engineers to help customers develop future products using next-generation technologies. When the whole chain works in sync, there can be a dramatic leap in the speed and efficiency of product development.
The downside of getting the balance wrong, however, can be steep. Start with the danger of fostering new competitors. Motorola hired Taiwan's BenQ Corp. to design and manufacture millions of mobile phones. But then BenQ began selling phones last year in the prized China market under its own brand. That prompted Motorola to pull its contract. Another risk is that brand-name companies will lose the incentive to keep investing in new technology. "It is a slippery slope," says Boston Consulting Group Senior Vice-President Jim Andrew. "If the innovation starts residing in the suppliers, you could incrementalize yourself to the point where there isn't much left."
Such perceptions are a big reason even companies that outsource heavily refuse to discuss what hardware designs they buy from whom and impose strict confidentiality on suppliers. "It is still taboo to talk openly about outsourced design," says Forrester Research Inc. (FORR ) consultant Navi Radjou, an expert on corporate innovation.
The concerns also explain why different companies are adopting widely varying approaches to this new paradigm. Dell, for example, does little of its own design for notebook PCs, digital TVs, or other products. Hewlett-Packard Co. (HPQ ) says it contributes key technology and at least some design input to all its products but relies on outside partners to co-develop everything from servers to printers. Motorola buys complete designs for its cheapest phones but controls all of the development of high-end handsets like its hot-selling Razr. The key, execs say, is to guard some sustainable competitive advantage, whether it's control over the latest technologies, the look and feel of new products, or the customer relationship. "You have to draw a line," says Motorola CEO Edward J. Zander. At Motorola, "core intellectual property is above it, and commodity technology is below."
Wherever companies draw the line, there's no question that the demarcation between mission-critical R&D and commodity work is sliding year by year. The implications for the global economy are immense. Countries such as India and China, where wages remain low and new engineering graduates are abundant, likely will continue to be the biggest gainers in tech employment and become increasingly important suppliers of intellectual property. Some analysts even see a new global division of labor emerging: The rich West will focus on the highest levels of product creation, and all the jobs of turning concepts into actual products or services can be shipped out. Consultant Daniel H. Pink, author of the new book A Whole New Mind, argues that the "left brain" intellectual tasks that "are routine, computer-like, and can be boiled down to a spec sheet are migrating to where it is cheaper, thanks to Asia's rising economies and the miracle of cyberspace." The U.S. will remain strong in "right brain" work that entails "artistry, creativity, and empathy with the customer that requires being physically close to the market."
You can see this great divide already taking shape in global electronics. The process started in the 1990s when Taiwan emerged as the capital of PC design, largely because the critical technology was standardized, on Microsoft Corp.'s (MSFT ) operating system software and Intel Corp.'s (INTC ) microprocessor. Today, Taiwanese "original-design manufacturers" (ODMS), so named because they both design and assemble products for others, supply some 65% of the world's notebook PCs. Quanta Computer Inc. alone expects to churn out 16 million notebook PCs this year in 50 different models for buyers that include Dell, Apple Computer (AAPL ), and Sony (SNE ).
Now, Taiwanese ODMs and other outside designers are forces in nearly every digital device on the market. Of the 700 million mobile phones expected to be sold worldwide this year, up to 20% will be the work of ODMs, estimates senior analyst Adam Pick of the El Segundo (Calif.) market research firm iSuppli Corp. About 30% of digital cameras are produced by ODMs, 65% of MP3 players, and roughly 70% of personal digital assistants (PDAs). Building on their experience with PCs, they're increasingly creating recipes for their own gizmos, blending the latest advances in custom chips, specialized software, and state-of-the-art digital components. "There is a lot of great capability that has grown in Asia to develop complete products," says Doug Rasor, worldwide strategic marketing manager at chipmaker Texas Instruments Inc. TI often supplies core chips, along with rudimentary designs, and the ODMs take it from there. "They can do the system integration, the plastics, the industrial design, and the low-cost manufacturing, and they are happy to put Dell's name on it. That is a megatrend in the industry," says Rasor.
Taiwan's ODMs clearly don't regard themselves as mere job shops. Just ask the top brass at HTC, which creates and manufactures smart phones for such wireless service providers as Vodafone and Cingular as well as equipment makers it doesn't identify. "We know this kind of product category a lot better than our customers do," says HTC President Peter Chou. "We have the capability to integrate all the latest technologies. We do everything except the Microsoft operating system."
Or stop in to Quanta's headquarters in the Huaya Technology Park outside Taipei. Workers are finishing a dazzling structure the size of several football fields, with a series of wide steps leading past white columns supporting a towering Teflon-and-glass canopy. It will serve as Quanta's R&D headquarters, with thousands of engineers working on next-generation displays, digital home networking appliances, and multimedia players. This year, Quanta is doubling its engineering staff, to 7,000, and its R&D spending, to $200 million.
Why? To improve its shrinking profit margins -- and because foreign clients are demanding it. "What has changed is that more customers need us to design the whole product," says Chairman Barry Lam. For future products, in fact, "it's now difficult to get good ideas from our customers. We have to innovate ourselves."
Sweeping Overhaul
India is emerging as a heavyweight in design, too. The top players in making the country world-class in software development, including HCL and Wipro, are expected to help India boost its contract R&D revenues from $1 billion a year now to $8 billion in three years. One of Wipro's many labs is in a modest office off dusty, congested Hosur Road in Bangalore. There, 1,000 young engineers partitioned into brightly lit pods jammed with circuit boards, chips, and steel housings hunch over 26 development projects. Among them is a hands-free telephone system that attaches to the visor of a European sports car. At another pod, designers tinker with a full dashboard embedded with a satellite navigation system. Inside other Wipro labs in Bangalore, engineers are designing prototypes for everything from high-definition TVs to satellite set-top boxes.
Perhaps the most ambitious new entrant in design is Flextronics. The manufacturing behemoth already builds networking gear, printers, game consoles, and other hardware for the likes of Nortel Networks (NT ), Xerox (XRX ), HP, Motorola, and Casio Computer. But three years ago, it started losing big cell-phone and PDA orders to Taiwanese ODMs. Since then, CEO Michael E. Marks has shelled out more than $800 million on acquisitions to build a 7,000-engineer force of software, chip, telecom, and mechanical designers scattered from India and Singapore to France and Ukraine. Marks's splashiest move was to pay an estimated $30 million for frog design Inc., the pioneering Sunnyvale (Calif.) firm that helped design such Information Age icons as Apple Computer Inc.'s original Mac in 1984. So far, Flextronics has developed its own basic platforms for cell phones, routers, digital cameras, and imaging devices. His goal is to make Flextronics a low-cost, soup-to-nuts developer of consumer-electronics and tech gear.
Marks has an especially radical take on where all this is headed: He believes Western tech conglomerates are on the cusp of a sweeping overhaul of R&D that will rival the offshore shift of manufacturing. In the 1990s, companies like Flextronics "completely restructured the world's electronics manufacturing," says Marks. "Now we will completely restructure design." When you get down to it, he argues, some 80% of engineers in product development do tasks that can easily be outsourced -- like translating prototypes into workable designs, upgrading mature products, testing quality, writing user manuals, and qualifying parts vendors. What's more, most of the core technologies in today's digital gadgets are available to anyone. And circuit boards for everything from cameras to network switches are becoming simpler because more functions are embedded on semiconductors. The "really hard technology work" is migrating to chipmakers such as Texas Instruments, Qualcomm (QCOM ), Philips, Intel, and Broadcom (BRCM ), Marks says. "All electronics are on the same trajectory of becoming silicon surrounded by plastic."
Why then, Marks asks, should Nokia (NOK ), Motorola, Sony-Ericsson, Alcatel (ALA ), Siemens (SI ), Samsung, and other brand-name companies all largely duplicate one another's efforts? Why should each spend $30 million to develop a new smartphone or $200 million on a cellular base station when they can just buy the hardware designs? The ultimate result, he says: Some electronics giants will shrink their R&D forces from several thousand to a few hundred, concentrating on proprietary architecture, setting key specifications, and managing global R&D teams. "There is no doubt the product companies are going to have fewer people design stuff," Marks predicts. "It's going to get ugly."
Granted, Marks's vision is more than a tad extreme. True, despite the tech recovery, many corporate R&D budgets have been tightening. HP's R&D spending long hovered around 6% of sales, but it's down to 4.4% now. Cisco Systems' (CSCO ) R&D budget has dropped from its old average of 17% to 14.5%. The numbers also are falling at Motorola, Lucent Technologies (LU ), and Ericsson. In November, Nokia Corp. said it aims to trim R&D spending from 12.8% of sales in 2004 to under 10% by the end of 2006.
Close to the Heart
Still, most companies insist they will continue to do most of the critical design work -- and have no plans to take a meat ax to R&D. A Motorola spokesman says it plans to keep R&D spending at around 10% for the long term. Lucent says its R&D staff should remain at about 9,000, after several years of deep cuts. And while many Western companies are downsizing at home, they are boosting hiring at their own labs in India, China, and Eastern Europe. "Companies realize if they want a sustainable competitive advantage, they will not get it from outsourcing," says President Frank M. Armbrecht of the Industrial Research Institute, which tracks corporate R&D spending.
Companies also worry about the message they send investors. Outsourcing manufacturing, tech support, and back-office work makes clear financial sense. But ownership of design strikes close to the heart of a corporation's intrinsic value. If a company depends on outsiders for design, investors might ask, how much intellectual property does it really own, and how much of the profit from a hit product flows back into its own coffers, rather than being paid out in licensing fees? That's one reason Apple Computer lets the world know it develops its hit products in-house, to the point of etching "Designed by Apple in California" on the back of each iPod.
Yet some outsourcing holdouts are changing their tune. Nokia long prided itself on developing almost everything itself -- to the point of designing its own chips. No longer. Given the complexities of today's technologies and supply chains, "nobody can master it all," says Chief Technology Officer Pertti Korhonen. "You have to figure out what is core and what is context." Lucent says outsourcing some development makes sense so that its engineers can concentrate on next-generation technologies. "This frees up talent to work on new product lines," says Dave Ayers, vice-president for platforms and engineering. "Outsourcing isn't about moving jobs. It's about the flexibility to put resources in the right places at the right time."
It's also about brutal economics and the relentless demands of consumers. To get shelf space at a Best Buy (BBY ) or Circuit City often means brand-name companies need a full range of models, from a $100 point-and-shoot digital camera with 2 megapixels, say, to a $700 8-megapixel model that doubles as a videocam and is equipped with a powerful zoom lens. On top of this, superheated competition can reduce hit products to cheap commodities within months. So they must get out the door fast to earn a decent margin. "Consumer electronics have become almost like produce," says Michael E. Fawkes, senior vice-president of HP's Imaging Products Div. "They always have to be fresh."
Such pressures explain outsourcing's growing allure. Take cell phones, which are becoming akin to fashion items. Using a predesigned platform can shave 70% of development costs off a new model, estimates William S. Wong, a senior vice-president for marketing at Cellon. That can be a huge savings. As a rule of thumb, it takes around $10 million and up to 150 engineers to develop a new cell phone from scratch. If Motorola or Nokia guess wrong about the market trends a year into the future, they can lose big. So they must develop several versions.
With most of its 800 engineers in China and France, Cellon creates several basic designs each year and spreads the costs among many buyers. It also has the technical expertise to morph that basic phone into a bewildering array of models. Want a 2-megapixel camera module instead of 1-megapixel? Want to include a music player, or change the style from a gray clamshell to a flaming-red candy-bar shape? No problem: Cellon engineers can whip up a prototype, run all the tests, and get it into mass production in a Chinese factory in months.
Moving Up the Food Chain
Companies are still figuring out exactly what to outsource. PalmOne Inc.'s collaboration with Taiwan's HTC on its popular Treo 650 smart phone illustrates one approach. Palm has long hired contractors to assemble hardware from its own industrial designs. But in 2001, it decided to focus on software and shifted hardware production to Taiwanese ODMs. PalmOne designers still determine the look and feel of the product, pick key components like the display and core chips, and specify performance requirements. But HTC does much of the mechanical and electrical design. "Without a doubt, they've become a part of the innovation process," says Angel L. Mendez, senior global operations vice-president at palmOne. "It's less about outsourcing and more about the collaborative way in which design comes together." The result: PalmOne has cut months off of development times, reduced defects by 50%, and boosted gross margins by around 20%.
Hewlett-Packard, a company with such a proud history of innovation that its advertising tag line is simply "invent," also works with design partners on all the hardware it outsources. "Our strategy is now to work with global networks to leverage the best technologies on the planet," says Dick Conrad, HP's senior vice-president for global operations. According to iSuppli, HP is getting design help from Taiwan's Quanta and Hon Hai Precision for PCs, Lite-On for printers, Inventec for servers and MP3 players, and Altek for digital cameras. HP won't identify specific suppliers, but it says the strategy has brought benefits. Conrad says it now takes 60% less time to get a new concept to market. Plus, the company can "redeploy our assets and resources to higher value-added products" such as advanced printer inks and sophisticated corporate software, he says.
How far can outsourced design go? When does it get to the point where ODMs start driving truly breakthrough concepts and core technologies? It's not here yet. Distance is one barrier. "To be a successful product company requires intimacy with the customer," says Azim H. Premji, chairman of India's Wipro. "That is very hard to offshore in fast-changing markets." Another hurdle is that R&D spending by ODMs remains relatively low. Even though Premier develops most of its own cameras and video projectors, "the really core technology," such as the digital signal processors, is invented in the U.S., says vice-president Hsieh. Premier's latest wallet-size video projector, for example, was based on a rough design by Texas Instruments, developer of the core chip. With margins shrinking fast in the ODM business, however, Premier and other Taiwanese companies know they need to move up the innovation food chain to reap higher profits.
That's where Flextronics and its design acquisitions could get interesting. Inside frog's hip Sunnyvale office, designers are working to create a radically new multimedia device, for an unnamed corporate client, that won't hit the market until 2007. The plan, says Patricia Roller, frog's co-CEO, is to use Flextronics software engineers in Ukraine or India to develop innovative applications, and for Flextronics engineers to design the working prototype. Flextronics then would mass-produce the gadgets, probably in China.
Who will ultimately profit most from the outsourcing of innovation isn't clear. The early evidence suggests that today's Western titans can remain leaders by orchestrating global innovation networks. Yet if they lose their technology edge and their touch with customers, they could be tomorrow's great shrinking conglomerates. Contractors like Quanta and Flextronics that are moving up the innovation ladder, meanwhile, have a shot at joining the world's leading industrial players. What is clear is that an army of in-house engineers no longer means a company can control its fate. Instead, the winners will be those most adept at marshaling the creativity and skills of workers around the world.
By Pete Engardio and Bruce Einhorn
With Manjeet Kripalani in Bangalore, Andy Reinhardt in Cannes, Bruce Nussbaum in Somers, N.Y., and Peter Burrows in San Mateo, Calif.
21 January 2006
Lexmark Study Reveals Internet's Impact on Paper Use and Future Printing Environments
Despite the immense popularity of "paperless" media such as e-mail and the Internet, a new study by Lexmark International, Inc. reveals that the need for printing remains strong and is growing. Results of the study also offer details on home and office printing and the future of printing technologies and applications, including public preferences for wireless printing, while dispelling a number of popular misconceptions about printing trends.
The survey helped further dispel the myth of the "paperless office." On the contrary, the Internet and its seemingly boundless information sites have led to an increase in pages printed at home as well as in the office, with ever higher numbers of pages being printed closer to the end user. This is a phenomenon known as "distributed printing." According to Lexmark's study, over 90% of respondents with a printer at home print Internet content, and three out of four respondents print from the Internet while at the office. Moreover, while nearly all respondents were printing Internet content, one in ten respondents report printing from the Internet at home every day. Nearly twice that percentage prints out Internet content at the office on a daily basis. Additionally, more than 40% of respondents print from the Internet at home at least on a weekly basis.
According to the Lexmark survey, the most commonly printed Internet content is e-mail, followed by research, news, children's activities, and entertainment.
The Lexmark survey also revealed age differences in the content printed from the Internet:
- Respondents over 55 are printing e-mail at twice the rate of those aged 18-44.
- 18-34 year-olds are three times as likely to print entertainment-related content compared to those over 45.
Futurists have speculated that computer users will eventually print less and rely more heavily on the computer screen to view content. When Lexmark asked why people print from the Internet, however, answers suggested that dependence on hardcopy output will continue despite the evolution of screen technologies:
- Almost one out of three cited a need for hard copy to archive information.
- The need to share information with friends, family, and co-workers compels a significant number to print.
- Others said they print from the Internet simply because they "prefer reading hard copies."
The Lexmark survey also found that younger respondents tended to report less of a need to archive hard copies of material. 56% of 45-54 year-olds reported that they print pages off of the Internet due to the need for hard copies for their archives, as compared to 42% of those 35-44 and only 33% of those 18-34 who print off of the Internet for the same purpose.
When it comes to the business environment, enterprise printing is taking on a new "hue" with the rise of multifunction products and the popularity of color output. Lexmark asked which single feature users would most like to see from their office printer. Dazzling color, increased speed, and document scanning were the features users coveted most. The preference for color output mirrors global trends that indicate increasing use of color in the workplace as color printers become faster and more affordable
Printing is not limited to the home or office. The Lexmark survey hints that markets exist for public access to standalone wireless printers, which would allow users to print from PDAs, laptop computers, and other portable devices. Preferred sites for such printers are libraries, airports, shopping malls, and grocery stores.
In the home, more than one third of respondents would be interested in a standalone printer that would allow constant, PC-free access to the Internet. Almost 70% of respondents would place such a device in the study or den, followed by the family room and the master bedroom.
The survey included 500 respondents who use computer printers at home and in the workplace on a regular basis. The survey's margin of error was plus or minus 4.4 percentage points at the 95% confidence level.
13 January 2006
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Is there an information explosion coming? Yes, and it's based on two major factors. First, there's all this sensor and RFID information that's starting to flow into corporations, and it will only accelerate; Wal-Mart is looking at 5TB to 7TB a day. The other factor is that unstructured information makes up 80% to 90% of the average corporation's information content. It's not in a form computers can readily use, such as e-mail. We are using context-sensitive text mining as a tool for structuring that content. When you do that, all that information becomes a corporate asset.
How might that new asset be used? Most of the new information that allows you to predict the future is nontraditional corporate information -- what we call indicator information. You have transactions, which are past; you have events, which are current; and you have indicators, which are not traditionally used in business. You can put that information in a data mine and after the fact try to figure out what you should have done. Or you can feed it into a cause-and-effect model ... and use pattern-recognition technology. [That gives you] the ability to understand patterns of business activity that are going to repeat and say, "What do I want the outcome to be?"
Can you give a couple of examples? Weather predictions for a warmer-than-usual winter in New England change the model's probability of selling x fruitcakes to y. That, coupled with a colder-than-normal forecast for the mid-Atlantic states, drives a directive to channel the fruitcake to those states.
What are some opportunities for IT in the mobile world? Mobile workers are the orphans of the information revolution, because IT has basically ensconced itself in a stationary environment. Mobile workers work asynchronously with their IT. The office worker works the problem with the computer, but the mobile workers for the most part get their information, go out and do their work, come back and report their information. The IT is not overlaid directly on top of their work.
We have built a testbed called process mentor. It's the ability for you to deliver just-in-time information to the mobile worker. Information flows, unprompted in some cases, as you need it.
Can you give an example? In the petroleum industry, 70% of workers are in the field. The average age of a field worker is 55, and 50% of them will retire in the next five years. That's a hell of a lot of expertise not easily replaced. So if I'm out at the wellhead and I ask, "How do I take this thing apart?" all of a sudden I have just-in-time training that tells me exactly how to do it. It says, "Here's Step 1 -- now do it. Now here's Step 2 -- do it," and so on. It's the opportunity to put IT into the business process rather than work around the business process.
Where will we see sensors deployed? That airplane that's flying has sensors that tell me that a certain part is going to go out, so I can fly the part to the destination before the plane gets there. That's the kind of model that's going to be deployed throughout all of business. All the items coming into my supply chain, all the items going through manufacturing, all items going out to the customer and all the people in my organization are going to be sending me information.
All that extra data must have huge implications for storage systems. When we start sending petabytes of information from one company to another, it's cheaper to have a petabyte storage cube put on an airplane and fly it to the other coast. That will be a constraint in the future, because petabytes of information don't work well on our communications infrastructure.
What's the solution to that problem? The amount of information that can be stored on a hard drive doubles every year ... and fiber-optic capacity is doubling every nine months. While it will take some time, this will overcome the problem. Also, you can break the file into many pieces, transmit the pieces and put it all together on the other end. The problem here is the infamous last mile. Most companies do not have [networks] to allow them to send the data through multiple pipes from a single source and to a single destination. This is an infrastructure design problem that never contemplated needing many T3s to the same point of origination/delivery.
Profile Name: Jeff Wacker Title: EDS fellow and futurist Company: Electronic Data Systems Corp. Background: Wacker is chief technology officer for EDS's Global Industry groups. He earned a bachelor's degree in computer science and an MBA from the University of Nebraska. He is a member of MIT's Society of Learning. |
06 January 2006
The New BrandScape: Six Future Trends Changing Marketing| MarketingProfs.com:
"The New BrandScape: Six Future Trends Changing Marketing"
by Mary Brown
May 17, 2005
Someday in the not-so-distant future, branding as we know it will be thought of as so 20th century. With societal, cultural and technological changes occurring at increasingly accelerated rates, keeping your eye on the horizon of future trends in branding gives your company the advantage.
Peter Bishop, executive director of the Institute for Futures Research, points out that you can't predict the future but you can arrive there less surprised and more prepared by telling stories, thinking the unthinkable and creating alternate futures through scenarios. Nine out of the 10 scenarios you imagine won't come true. But you'll be ready when that one vision does become reality.
What trends are already reshaping our ideas of branding?
1. Consumers Are the New Creative Directors
Brands that create a process of discovery drive passion and ownership of the brand. Consumers like being the creative director and feeling in control of shaping the products and brand. Born from consumers' desire to differentiate themselves from the mass market, this trend toward customization will continue to grow with the flexibility and efficiencies offered by technology at home and in manufacturing.
Consider Timberland's BOOTSTUDIO, where you can 'build a boot as original as you are,' including adding your own monogram. Nike ID also allows customers to control the look of 27 footwear styles and view their final creation from five different angles.
Lab21 takes customization to new heights by creating individually formulated skin-care products based on your DNA. Customers take an at-home DNA test and answer a questionnaire about the health of their skin. LAB21's Skin Profiler System then creates a custom formula (with your name on the label) to treat specific conditions.
As diamond promoters encourage women to buy their own diamonds (why wait for a marriage proposal?), technology that allows a gal to design her own diamond ring in three easy steps is sure to increase sales. Diamond.com not only builds your custom ring but also clearly educates on the four Cs, grading reports, setting styles and how to find your ring size.
"The New BrandScape: Six Future Trends Changing Marketing"
by Mary Brown
May 17, 2005
Someday in the not-so-distant future, branding as we know it will be thought of as so 20th century. With societal, cultural and technological changes occurring at increasingly accelerated rates, keeping your eye on the horizon of future trends in branding gives your company the advantage.
Peter Bishop, executive director of the Institute for Futures Research, points out that you can't predict the future but you can arrive there less surprised and more prepared by telling stories, thinking the unthinkable and creating alternate futures through scenarios. Nine out of the 10 scenarios you imagine won't come true. But you'll be ready when that one vision does become reality.
What trends are already reshaping our ideas of branding?
1. Consumers Are the New Creative Directors
Brands that create a process of discovery drive passion and ownership of the brand. Consumers like being the creative director and feeling in control of shaping the products and brand. Born from consumers' desire to differentiate themselves from the mass market, this trend toward customization will continue to grow with the flexibility and efficiencies offered by technology at home and in manufacturing.
Consider Timberland's BOOTSTUDIO, where you can 'build a boot as original as you are,' including adding your own monogram. Nike ID also allows customers to control the look of 27 footwear styles and view their final creation from five different angles.
Lab21 takes customization to new heights by creating individually formulated skin-care products based on your DNA. Customers take an at-home DNA test and answer a questionnaire about the health of their skin. LAB21's Skin Profiler System then creates a custom formula (with your name on the label) to treat specific conditions.
As diamond promoters encourage women to buy their own diamonds (why wait for a marriage proposal?), technology that allows a gal to design her own diamond ring in three easy steps is sure to increase sales. Diamond.com not only builds your custom ring but also clearly educates on the four Cs, grading reports, setting styles and how to find your ring size.
2. Cynicism Raises the Bar for Authenticity
With consumer cynicism about marketing at an all-time high, brands must cultivate authenticity on a level never demanded before. Consumers are smart, resourceful and savvy. If your brand doesn't deliver on all its promises, or fails to speak to a consumer's specific, personal needs, your brand will become irrelevant, or worse: a pariah.
Furthermore, the companies behind a brand will be expected to behave authentically and demonstrate an active alignment with consumers' values. Simply slapping a pink ribbon on your Web site will no longer cut it, especially in building brand relationships with the influential woman consumer.
This demand for authenticity will shift marketers' preference for communicating via advertising and direct mail. The overt sales focus inherent in these channels makes them more suspect in consumers' minds.
Conveying brand messages via third parties, especially if they are a trusted, impartial source, will be better received. We'll see an increase in brands using the more transparent channels of public relations, sponsorships, niche interaction, word-of-mouth/buzz and blogs to deliver seemingly unbiased brand communications.
3. Multitasking and Info Overload: Don't Waste My Time
In a 2004 Redbook magazine poll of 1,000 women, a majority actually preferred time to money. In our info-saturated, multitasking lives, time is the new currency.
Barraged by more information than we can ever hope to absorb, we have what Paco Underhill, author of Why We Buy, refers to as a process crisi —how do we get the wisdom out of all the data with the least amount of time investment?
Consumers look to companies, media and marketers to provide information filters—tools to edit the mass amount of data available. As Robyn Waters, trends guru and former VP of Trend, Design and Product Development for Target, points out, "too much information without editing is toxic."
To effectively filter and communicate relevant data to a specific consumer, brands will need to be well versed in the art and science of interpreting, translating and delivering information. This requires cultural, ethnic, gender and generational expertise as well as sophisticated global knowledge of word associations and linguistics.
Amazon.com's highly developed preferences filtering keeps track of your interests, making recommendations based on your ever-growing profile, providing product reviews, updating daily a customized list of the newest and coolest products customers are buying—essentially creating a personal shopper to save you time. And it does all this in six languages with the appropriate cultural insights for each.
4. Humanization of Technology
The mind-bending advancements of the Web and computer technology have thrown life into warp speed. From an evolutionary standpoint, technology has infiltrated every aspect of our lives faster than we can assimilate the changes. Programming the clock on your old VCR seems effortless compared to the overwhelming, and often intimidating, technological knowledge now required to efficiently get through a day.
Successful brands will "humanize" technology by delivering a brand experience where the technology is transparent to the consumer. Products, services and communications fashioned around innate human behavior, instead of the ideals of a programmer, will win consumers.
Hewlett-Packard leads the pack with its "you + HP" consumer brand campaign focused on taking the hassle out of digital photography. Visually fun, full of creative energy and real life scenarios, HP's ads devote minimal space to showing actual product. Instead, they go to the heart of image-making—documenting, sharing and making memories. HP touts its digital cameras and printers as "radically simple picture-making technology, which lets you be in control of the entire picture-making process." It back ups its claim with easy-to-navigate, thorough product support via hp.com.
5. From Multi-Channel to Uni-Channel
Donald Libey, considered the leading direct marketing and catalog industry futurist, predicts that we will see even more evolved information systems than the World Wide Web. Any aspect of communications in our lives—cell and landline phones, libraries and research, bill paying, satellite TV, GPS navigation, entertainment, travel, financial transactions, shopping, fitness and health monitoring—will be available from anywhere at any time.
Increasingly, consumers will be less aware of separate marketing channels. Instead, all experiences of brand communications will be perceived as one all-encompassing, 360-degree, 3-D channel. Brands can prepare now by investing in creating a consistent and integrated customer experience across today's communications channels.
Catalog and retail giant JC Penney understands how to fully leverage multiple-channel synergy. Its stores, catalog, Web site and advertising interrelate across all channels: enter your zip code on jcpenney.com and browse your local JC Penney store's sales flyer or download coupons; order a printed catalog or flip through one online; items purchased through any channel can be returned or exchanged via any channel. At any touchpoint of the brand, the consumer finds a consistent experience.
6. Trends in Trending
While attending the 9th Annual Future Trends Conference, I was struck that one scenario in particular was not addressed more fully—the phenomenon that the mature market, AKA aging baby boomers, will completely redefine what "old" and "aging" means.
With the average American now living about 30 years longer than 100 years ago, what's considered old? What's considered middle-aged, for that matter? If the brands in these consumers' lives rely on the stereotypical notions of older as an uncool, has-been demographic, they'll perish.
Marketers have historically looked to the 18-to-24 year-old crowd for inspiration and indicators of future trends. I'd challenge the next conference, and brand stewards in general, to explore the dynamic, trendsetting potential of the baby boomer powerhouse.
MarketingProfs.com Mary Brown is president of Imago Creative. For more information, visit www.imagocreative.com.
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02 January 2006
Chip Industry Sets a Plan for Life After Silicon - New York Times: "Chip Industry Sets a Plan for Life After Silicon
By JOHN MARKOFF
Nanotechnology is officially on the road map.
A handful of futuristic chip-making technologies at the atomic scale have been added to an industry planning effort that charts the future of the semiconductor manufacturing industry every two years.
The transition to a post-silicon era is forecast in a report called the International Technology Roadmap for Semiconductors, to be issued Saturday. The report, which is produced cooperatively by semiconductor industry associations from Europe, Japan, Korea, Taiwan and the United States, is used by the semiconductor industry as a planning tool to determine how best to spend research and development money for new technology.
The shift away from conventional silicon transistors has become an important part of the industry's thinking, though the use of nanotechnology is not expected to replace current chip-making processes for another decade.
The urgency in moving to molecular electronics is propelled in part by a recognition that conventional technologies, despite significant advances, will not be able to sustain indefinitely the chip industry dictum, known as Moore's Law, that projects a doubling of computing power roughly every two years.
In recent years, the semiconductor industry has repeatedly found ways to make convent"
By JOHN MARKOFF
Nanotechnology is officially on the road map.
A handful of futuristic chip-making technologies at the atomic scale have been added to an industry planning effort that charts the future of the semiconductor manufacturing industry every two years.
The transition to a post-silicon era is forecast in a report called the International Technology Roadmap for Semiconductors, to be issued Saturday. The report, which is produced cooperatively by semiconductor industry associations from Europe, Japan, Korea, Taiwan and the United States, is used by the semiconductor industry as a planning tool to determine how best to spend research and development money for new technology.
The shift away from conventional silicon transistors has become an important part of the industry's thinking, though the use of nanotechnology is not expected to replace current chip-making processes for another decade.
The urgency in moving to molecular electronics is propelled in part by a recognition that conventional technologies, despite significant advances, will not be able to sustain indefinitely the chip industry dictum, known as Moore's Law, that projects a doubling of computing power roughly every two years.
In recent years, the semiconductor industry has repeatedly found ways to make convent"
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