1. © 2008 InfoTrends, Inc.www.infotrends.com Print and the Future of Integrated Graphic Communications Jeff Hayes President

2. 2 © 2010 InfoTrends, Inc.www.infotrends.com InfoTrends Focus Marking engines Feeding/finishing DFEs Workflow Consumables Substrates Outsourcing Managed Services Cross Media Analytics Founded 1991 70 employees Boston, London, Tokyo Serving vendors & PSPs Strategy & planning Market development

3. 3 © 2010 InfoTrends, Inc.www.infotrends.com Agenda Print … forever changed Avoiding marketing myopia Innovation … finding your white space

4. 4 © 2010 InfoTrends, Inc.www.infotrends.com

5. 5 © 2010 InfoTrends, Inc.www.infotrends.com Source: U.S. Bureau of Labor Statistics 2,708 jobs lost 30 months 8,330 jobs created 52 months Cumulative change in US employment (1999-2010) 8,425 jobs lost 27 months 17 month recovery US Economic recessions Net jobs since January 1999 (000)

6. 6 © 2010 InfoTrends, Inc.www.infotrends.com Source: U.S. Bureau of Labor Statistics 112,000 jobs lost 63,000 jobs lost 30 months 52 months Cumulative change in US Printing employment (1999-2010) 112,000 jobs lost 27 months ? US Economic recessions Net jobs since January 1999 (000) 825,000 employees 40% of printing industry jobs eliminated over last 10 years 500,000 employees

7. 7 © 2010 InfoTrends, Inc.www.infotrends.com

8. 8 © 2010 InfoTrends, Inc.www.infotrends.com Old and New – Perspectives of a 10-year old

9. 9 © 2010 InfoTrends, Inc.www.infotrends.com US Households with Internet Access Percentage of households Sources: US Department of Commerce/NTIA, InfoTrends Households with Internet Access Households with Broadband 38% - No need 26% - Too expensive 18% - Inadequate/no computer 18% - Other Why not? 39% - Too expensive 17% - Inadequate/no computer 17% - No need 15% - Can use elsewhere 12% - Other Why no Internet at home?

10. 10 © 2010 InfoTrends, Inc.www.infotrends.com US Broadband Usage by Income and Age US Persons Using Broadband Internet by Family Income ($000) US Persons Using Broadband Internet by Age Source: US Department of Commerce/NTIA

11. 11 © 2010 InfoTrends, Inc.www.infotrends.com US Mobile Phone Penetration Percentage of US population Sources: ComScore, Chetan Sharma, InfoTrends, FCC, CTIA Mobile subscribers 3G Subscribers 3G 14 Mbps 4G 100 Mbps 2G digital 1G analog

12. 12 © 2010 InfoTrends, Inc.www.infotrends.com Facebook Statistics 400 million active users 3 billion photos uploaded each month 5 billion pieces of content shared each week 3 million active Pages on Facebook 500,000 active applications on Facebook Platform Source: Facebook

13. 13 © 2010 InfoTrends, Inc.www.infotrends.com U.S. Photo Print Volume, 1990-2010 (Billions) (4” x 6” equivalent) Sources: InfoTrends, Photo Marketing Association Photo prints (4x6 in billions) Photo prints 2000 Peak = 30.9 B pieces Digital prints 2008 Peak = 19.5 B pieces

14. 14 © 2010 InfoTrends, Inc.www.infotrends.com US Newspaper Circulation, 1945-2008 (Millions) Sunday 1990 Peak Year = 62.6 M circulation Circulation (M) Source: American Newspaper Association Daily - Evening 1973 Peak Year = 36.3 M circulation Daily - Morning 2004 Peak Year = 46.9 M circulation

15. 15 © 2010 InfoTrends, Inc.www.infotrends.com USPS Periodicals Pieces, 1983-2009 (Billions) Periodicals 1990 Peak = 10.7 B pieces 26% decline since peak (-2.7 B pieces) Pieces (B) Source: US Postal Service US Economic recessions

16. 16 © 2010 InfoTrends, Inc.www.infotrends.com USPS Domestic Mail Pieces, 1983-2009 (Billions) First Class 2001 Peak = 103.7 B pieces 20% decline since peak (-40.7 B pieces) Pieces (B) Sources: US Postal Service, InfoTrends US Economic recessions Standard 2007 Peak = 103.5 B pieces Inter-recession CAGR First Class = 4.8% Standard = 6.6% Inter-recession CAGR First Class = 1.7% Standard = 4.7% Inter-recession CAGR First Class = -1.3% Standard = 3.5%

17. 17 © 2010 InfoTrends, Inc.www.infotrends.com US Printing Industry Value of Shipments, 1992-2008 (Current $B) Source: US Department of Commerce US Economic recessions Total Printing (NAICS 323) Commercial Offset 2000 Peak Year = $100.2 B 2000 Peak Year = $53.1B

18. 18 © 2010 InfoTrends, Inc.www.infotrends.com US Printing Industry Value of Shipments, 1992-2008 (Current $B) Source: US Department of Commerce US Economic recessions Manifold Forms 1997 Peak = $8.3B Book Printing 2000 Peak = $6.2B Prepress Services 1993 Peak = $5.4B Gravure 1998 Peak = $4.1B Trade binding 2005 Peak = $2.5B

19. 19 © 2010 InfoTrends, Inc.www.infotrends.com US Printing Industry Value of Shipments, 1992-2008 (Current $B) US Economic recessions Source: US Department of Commerce Screen printing 2006 Peak = $7.8B Quick printing 1999 Peak = $4.6B Digital = $7.5B Flexo = $7.4B

20. 20 © 2010 InfoTrends, Inc.www.infotrends.com Digital and conventional label jobs by run length What percentage of your jobs printed with digital and conventional label presses are in the following run lengths? By run length, we mean total number of labels printed in one job. N =15839 *for conventional presses figure includes all responses under 1,000 **for digital presses includes all responses 100K and higher Percentage of jobs Digital run length trend Conventional run length trend

21. 21 © 2010 InfoTrends, Inc.www.infotrends.com US Uncoated Freesheet Paper Consumption Per Household (8.5x11 equivalent sheets) 1999 Peak Year = 29,717 sheets per household Sources: American Forest & Paper Association, US Department of Commerce, InfoTrends Uncoated freesheet per US household 16,510 sheets per household UFS Tonnage X 200,000 sheets per ton divided by households Households with Internet Households with Internet Access Households with Broadband 44% decline 40% increase 21,185 sheets per household

22. 22 © 2010 InfoTrends, Inc.www.infotrends.com Peak Year for Print Percentage of households with Internet Access Sources: US Department of Commerce/NTIA, InfoTrends Internet Access Broadband Sunday newspaper Prepress services Manifold forms Gravure Quick Photo Offset Book printing 1 st Class mail Morning daily newspaper Trade binding Screen Direct Mail Flexo Digital printing US Economic recessions 3G

23. 23 © 2010 InfoTrends, Inc.www.infotrends.com Reality Check Recession has severely impacted the printing industry Fundamental changes in consumer and business behavior PSPs cannot hope go back to business as usual Acknowledge structural changes and look for new ways to grow

24. 24 © 2010 InfoTrends, Inc.www.infotrends.com Are you suffering from Marketing Myopia? Source: CartoonStock.com

25. 25 © 2010 InfoTrends, Inc.www.infotrends.com Attributes of marketing myopia Focused on products, not customers needs and desires Believe growth is assured from growing/more affluent population Cannot see any competitive substitutes Place too much faith in mass production Preoccupied with enhancements & cost reduction Theodore Levitt (1925-2006) Economist & Professor Harvard University

26. 26 © 2010 InfoTrends, Inc.www.infotrends.com What business are we really in? Railroad Transportation & Logistics OR

27. 27 © 2010 InfoTrends, Inc.www.infotrends.com What business are you really in? Printing Integrated Graphic Communications OR Social Print Web Mobile

28. 28 © 2010 InfoTrends, Inc.www.infotrends.com Integrated graphic communications providers Your Logo Here

29. 29 © 2010 InfoTrends, Inc.www.infotrends.com Core competencies – Old and New QualityServicePriceSales Web & mobile Programming Data & content Analytics Strategy Creative/layout Color management Printing Binding Workflow

30. 30 © 2010 InfoTrends, Inc.www.infotrends.com Innovation discovery skills Harvard Business Review – December 2009 1.Associating 2.Questioning 3.Observing 4.Experimenting 5.Networking

31. 31 © 2010 InfoTrends, Inc.www.infotrends.com “Creativity is just connecting things.” Steve Jobs, Wired Magazine, February 1996

32. 32 © 2010 InfoTrends, Inc.www.infotrends.com Apple vs. Sony (ADR) 10-year share price performance Source: Wall Street Journal iPod iTunes 4.1 Nano iPhone iPhone 3G iPad Steve Jobs illness rumors iPod Photo

33. 33 © 2010 InfoTrends, Inc.www.infotrends.com

34. 34 © 2010 InfoTrends, Inc.www.infotrends.com Graphic communications innovation = new opportunities Design Materials Manufacturing Workflow Information Integration Business model Sales & marketing

35. 35 © 2010 InfoTrends, Inc.www.infotrends.com Building the graphic communications value proposition Supply Chain/ Operations Brand Management/ Marketing To support an interactive multi-channel world

36. 36 © 2010 InfoTrends, Inc.www.infotrends.com Recommendations – Service Providers Embrace digital technology in all facets of your business Deeply engage your customers Re-invent your sales & marketing Participate in an interactive world Think like an innovator

37. 37 © 2010 InfoTrends, Inc.www.infotrends.com Recommendations – Technology Vendors Understand your customers’ (and their customers’) needs & desires Provide enabling technology and services Develop and grow partnerships Re-visit how you sell & market Think like an innovator

38. 38 © 2010 InfoTrends, Inc.www.infotrends.com “What companies lack is not opportunity, but some of the managerial imaginative and audacity that made them great.” Theodore Levitt (1925-2006) Economist & Professor, Harvard University

39. 39 © 2010 InfoTrends, Inc.www.infotrends.com jhayes@infotrends.com