Strategy Includes Investment in 20-plus HP Color Digital Web Presses, with First Five To Be Installed in 2015
Quad/Graphics, Inc. (NYSE: QUAD) ("Quad/Graphics" or the "Company") today announced a three-year strategy to transform its book platform to give publishers a full range of options for producing and delivering books on demand, bringing zero inventory and just-in-time delivery closer to reality. The plan includes investing in:
20 or more HP high-speed color digital web presses – the widest, most productive technology available in the marketplace today;
Front-end workflow solutions for accepting orders and putting them immediately into production; and
Back-end integrated systems for finishing, distribution and fulfillment, including shipping directly to the end recipient with an auto-generated invoice.
"Our announcement today supports our continued focus on transforming our Company and industry to create lasting value for clients and shareholders," said Joel Quadracci, Quad/Graphics Chairman, President & CEO. "The innovation opportunity in books is enabled by new digital print technologies that are profoundly changing book publishing economics."
Traditionally, book publishers have had to carry large inventories, a significant portion of which may go unsold and become obsolete. "With this investment in digital presses and integrated systems we can support a broad industry transition to a print-on-demand, zero-inventory model," Quadracci said. "Our digital press solution will help redefine the entire book supply chain, giving publishers increased customization and versioning capabilities; faster time-to-market; reduced waste, inventories and obsolescence; and lower fixed costs. Accordingly, publishers will be able to focus more on content and have the ability to redeploy the capital previously tied up in inventory to other initiatives."
Quad/Graphics' three-year strategy to transform its book platform is already underway. The Company will put into production five HP color digital web presses this year, the first of which it will begin installing this month. The other 15-plus presses will be installed in the remaining two-year period. Once all units are installed, Quad/Graphics will have the capacity to produce nearly 3 billion color pages each month.
"HP's innovative technology supports our strategy to transform our book platform to help publishers bring printed content to market faster and more cost effectively," said Quadracci, noting that the overall volume of digitally printed books are forecast to increase 15.2% annually through 2019 according to a recent digital book printing study by Interquest, a market and technology research firm. "Our digital printing transformation strategy will allow us to gain additional market share and grow this segment of our business."
Quadracci also noted that printed consumer trade books are showing surprising strength versus what had been expected to be a dramatic shift to e-books. According to Nielsen BookScan, AAP and other book industry reporting, there was an increase in printed books sold in 2014. According to a recent Bowker study, there continues to be significant annual increases in ISBN-registered book titles being fueled by small publishers and self-publishers who want to see their books in print. Additionally, a new Nielsen Books & Consumer survey shows that printed books are outselling e-books by a healthy 2-1 margin.
"We aim to be the book producer of choice," Quadracci said. "We have a clear vision for the future of this industry and we are taking the bold, necessary steps to realize that vision for the benefit of a $30 billion book publishing industry."
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