All print businesses can learn a lot from the way Esko-Graphics has changed its focus in the last three years, says Andy Tribute. This article should have been written late last year, but was postponed because of all the activities surrounding Creo and its developments, leading up to the planned acquisition of the company by Kodak. This article is about Esko-Graphics, however, the Creo developments are interesting as they show links to recent decisions made within Esko-Graphics. The reason for writing this article is the decision of Esko-Graphics to withdraw from the manufacture and distribution of its PlateDriver line of visible light CTP engines. The PlateDriver line of 4, 6 and 8 page format engines was at the time of the creation of Esko-Graphics one of the cornerstones of the company’s business strategy. Within two years of the merger this major area of the company’s business is being withdrawn. This is the first time I had seen a major player in the industry make such a significant change of strategy without being forced into it, and I wanted to look into this in detail to assess why it was being done.
What I found was that the offset CTP market for commercial printers was changing incredibly quickly. This goes back to my earlier comment about links with Creo. Creo had found that to succeed in selling into commercial and newspaper CTP, it was necessary to be in control of the plate distribution channels. In building up its plate business, Creo changed the business dynamics of the industry by forcing down profit margins for supplying CTP devices. This was brought about by pushing lower plate prices to support selling its CTP engines at a very low profit. Esko-Graphics found without a consumables business to generate ongoing revenues that selling high-performance CTP engines hardly covered the company’s costs. The company saw that this situation was likely to continue, as the distribution of CTP became more and more a totally consumable driven business under the control of Agfa, Fujifilm and Kodak. Recently Esko-Graphics has also announced that it will not be bringing its Espresso conventional plate CTP system to market. This again reflects the market situation. Esko-Graphics sees the window of opportunity for conventional plate imaging has almost closed in the past year. It sees that bringing Espresso to market, and also a follow up family of products, would not be a good business investment. It should invest instead in areas where it can consolidate its market leading positions.
Luckily for Esko-Graphics the major part of its business is as the industry market leader in what it terms the pre-production area of the packaging market. The company is the leading supplier of total industry solutions of hardware and software for this market. In one area of this market the company is also the dominant supplier of CTP devices for flexo plates. It claims that 90 per cent of all digital flexo plates imaged are produced on Esko-Graphics CDI flexo imaging units. The packaging and label printing market is also perhaps the only area of printing that shows significant growth.
What generally is not realised is that Esko-Graphics is a major software company. At drupa last year one of the highlights for many journalists was the Scope workflow. Scope is without doubt the most complete workflow solution for packaging, and is also a major workflow for commercial printing. In packaging what is impressive is the manner in which Scope extends outside the normal area of workflow through the use of a range of interfaces and plug-ins, as well as being fully JDF enabled. It reaches back into the creative areas for both graphic design and structure design of the package. In this the workflow extends back beyond the designer into the hands of the brand owner. This is seen in the way it links downstream into the distribution of the finished packaged product where planning of the delivery pallets, and positioning of the product on the shelves of the retailer is handled. Scope however is not just a workflow for packaging pre-production; it is also a major workflow for all forms of commercial printing. In areas like colour management, trapping, imposition and screening.
What I found to be really impressive is that all the Scope software is very up to date. Despite the fact that its heritage dates back to the Barco Graphics software of the early 1990s, its architecture is PDF based and is still very advanced. The Barco Graphics workflow was to my recollection the first object oriented, vector and layer based workflow. Converting the Barco internal format to a PDF data structure was – conceptually – a relatively simple task. This is unlike many competitors’ systems dating from the same time period, which still retain their internal CT and linework structures. Scope is perhaps the most complete JDF implementation of any workflow. One of the most interesting aspects of Scope is its very tight integration with Adobe’s Creative Suite. It interacts with Creative Suite applications in many ways amongst which is Adobe’s XMP data format.
In the evolving world of print where systems will have to handle all formats of output from a common workflow, Scope is really advanced. Esko-Graphics and HP Indigo partner for labels and flexible packaging, and the system is used at one customer to get exact colour matching between the digital and flexo printing processes. The two printing approaches are driven by a common Scope workflow, Esko-Graphics’ Kaleidoscope colour engine that handles all the colour management, and the FlexRIP. This colour engine is far more sophisticated than systems purely based upon ICC standards working concurrently with both colorimetric and spectral data formats. It handles additional colour requirements like ink opacity and ink printing order that ICC doesn’t handle.
What Esko-Graphics has done in pulling out of high-end commercial CTP hardware is to focus on its core businesses where it has market leadership positions. The base of this is its very strong positions in packaging and label solutions. It is also building up its position, which has largely been misunderstood, as a major player in high-performance and high functionality commercial printing workflows. In addition to this Esko-Graphics is also the dominant supplier in the business of polyester printing plate imaging systems. This is still a growing market. Here it has strong relationships for distribution with Mitsubishi Paper Mills, Presstek/AB Dick and Heidelberg. Following drupa the company has moved back into a more viable business operation. It is now one of the few profitable suppliers in the prepress and pre-production markets. Withdrawal from the loss making market of commercial CTP is proving to be a very good business decision. In the near future the company will move into a new custom-built head office that reflects the company’s role as being a software supplier. It is still in manufacturing but only in Northern Denmark for polyester CTP, Germany for flexo CTP, and Norway for its Kongsberg sample making and short run production cutting tables.
Since the merger Esko-Graphics has stopped trying to compete as a small player in many areas. It has withdrawn from newspaper CTP, VLF format CTP and lately high-performance commercial CtP. It now has a profitable viable business for the future based upon market leading positions in all markets it serves.
Note: In addition to his journalistic work, Andrew Tribute also operates as an industry consultant. Esko-Graphics is among his many clients that are suppliers to the graphics arts industries.
