Epson looks to shake up the A3 and A4 markets with its unique inkjet technology.
Since May 2014, I have been fortunate to visit Japan three times. Every trip has provided me with a unique perspective on how offshore manufacturers present their products, services, and position their companies. My visit to Epson last October was no different.
An Epson History Lesson
Epson’s vision statement is all about creating a new connected age of people with information, and efficient, compact, and precision technologies. The company has a rich history dating back to 1942 when it was founded as Daiwa Kogyo Ltd., a manufacturer of watch parts. By the mid-1950s, it was making watches based on its micro-mechatronics technologies. You may be familiar with those watches sold under the Seiko brand. Over the years, the company experienced different name changes with one of the most well-known being Seiko Epson. Today, it goes by the name Epson.
The Epson brand name is derived from the EP-101 electric printer that launched the company’s expansion into the information equipment business. The “EP” stands for “Electric Print” and “Son” conveys the message of the desire to follow the original.
Today, Epson is a collection of oriented companies that holds many patents. In Japan and the U.S., Epson is #1 in inkjet printers, projectors, robotics, and quartz crystal devices.
From a revenue perspective, 70% of Epson’s revenue comes from printers, 20% from projectors and visual communication systems, and 10% from watches, robotics, and other areas. Robotics is expected to spur significant future growth.
Epson’s global manufacturing network (with localized R&D) spans the globe with 27.8% based in Asia, 23% in Japan, and 28.5% in the Americas.
Touching Down in Japan
I traveled to Japan for a two-day meeting with a group of fellow analysts and dealers whom had either already signed on with Epson or who Epson was courting. I was pleasantly surprised by the number of dealers who joined us on the trip to Japan. They represented over $1 billion in revenue.
The meeting was well planned and organized– mixing both business with pleasure. The balance between the two was dead on. It was nice to break up the business portion of the trip with some Japanese culture.
Above: Scenic Drive
The group of leading analysts, members of the press and dealers from the U.S on the Epson 2019 Business Inkjet VIP Tour assembled at this scenic overlook after a traditional Japanese lunch before continuing on to the Seiko Epson Hirooka campus.
It was still a whirlwind trip starting with a morning drive from Tokyo to Epson’s headquarters in Suwa-shi, Nagano. Our trip to Epson’s headquarters included a stop for a premium bento box lunch at a restaurant with an amazing view (see photo). That was followed by an afternoon of presentations and a Q&A with Epson executives. The second day included a factory tour (with one of the most pristine environments I’ve ever seen) where we learned how the piezo chips used in the company’s inkjet machines are made and how various configurations of the inkjets are assembled. Later that day we visited a castle (photos of the castle and more of the social aspects of my trip were featured in Click in our December-January issue).
Above: Executive Suite
Joe Contreras, commercial marketing executive, office solutions; Patricia O’Brian, director of commercial sales, (far left at table); and Mark Mathews (3rd from right) VP, NA commercial sales and marketing, of Epson America, led the Epson 2019 Business Inkjet VIP Tour in Japan and assembled a stellar guest list of key senior Epson executives from the company’s headquarters, including Koichi Kubota, representative director, senior managing executive officer (far right).
The Star of the Epson Inkjet Show
Epson is focused on refining its Micro Piezo technology, expanding into high-productivity segments, improving environmental performance, and creating a sustainable printing ecosystem. To accomplish this, the company’s strategy is to employ its PrecisionCore inkjet technology for use in A3 and A4 MFPs, high-speed copiers, digital label presses, and digital textile printing. PrecisionCore technology allows for faster print speeds and enhanced image quality. This high-density PrecisionCore print chip reportedly generates up to 40 million precise dots per second with better ink placement accuracy and fewer distortions and imperfections.
Epson is placing its bets in the inkjet space on its unique inkjet heads which use thin piezo film printhead technology. This is a heat-free technology that doesn’t consume as much power as a laser device and has fewer moving parts, which means there is less of a need to replace parts compared to laser technology. These printheads enable high-density alignment of print nozzles, creating scalable ink droplets as small as one micron (1/100th the size of a human hair).
Above: Innovative Showcase
While touring the expansive Seiko Epson Hirooka campus, meetings were held in the glass office tower (top photo) which included an exhibit of Epson’s noteworthy technologies in the lobby (above).
Epson is the largest thin piezo film printhead vendor in the world, producing 17 million per year, a 98% market share. Leading competitors such as HP and Canon produce less than 50,000. Epson is wagering that piezo is better than other inkjet technology such as thermal, the process used by HP and Canon. To the best of our knowledge, no other manufacturer of inkjet products employs this form of printing.
The company is currently working on an even more advanced micro piezo technology slated to be brought to market in 2025. This inkjet technology is being designed to improve every area of the performance of inkjet printing from color quality to speed.
Above: Guided Tour
A tour of of this factory spotlighted Epson’s Micro Piezo printhead technology.
Epson believes its inkjet technology will enable the company to differentiate itself in the office printing products market and dominate the A3 MFP market. By offering unique value via inkjet, Epson believes this will enable them to capture the market share position they always strive for, number one.
Epson entered the A3 inkjet market in 2017, and that means they are starting from zero and expect to succeed by expanding their product lineup, competing against direct sales of copier vendors with an all inkjet proposal. The company’s WorkForce Enterprise line of MFPs represents its approach to win the deals.
On the printer side, Epson offers the Workforce Pro, a single-function printer first introduced in 2015. The company installed 1,000 units in 2019 with vertical markets such as passport services in the lead.
A4 inkjet MFPs are also in development, which should further extend Epson’s reach into the channel.
We Believe and Dealers Believe
While we are firm believers in what Epson is doing, we wondered if dealers might find it a challenge to take on an inkjet MFP with a service staff that’s used to servicing laser equipment. Conversations with five different dealers who were on that trip told me they weren’t concerned at all. That said, we still wonder if the enhanced reliability of Epson inkjet MFPs over laser MFPs might create an issue when writing a service contract since inkjet machines theoretically wouldn’t require as much service.
However, a more pressing concern expressed by dealers during the Q&A centered around finishing options, which dealers felt were needed for these A3 products.
From our perspective at The Cannata Report, Epson has created a user-friendly product that offers a distinct advantage over laser products based on our knowledge of traditional MFPs and statements by Epson America Vice President Mark Mathews, whom we consider a reliable source.
“We believe that where inkjet goes inkjet wins,” said Mathews. “In addition to the huge investment we have made in R & D, we’ve made a huge investment in U.S. infrastructure.”
The three areas the company is focusing on are people, product, and marketing. The trip to Japan was a marketing coup as far as getting its message out there.
An equally important message from Mathews was Epson’s focus on the dealer channel. As he noted, “We have no direct operation and no plans to build or acquire one in the future. So, you won’t be running into us in the streets. That is differentiation in and of itself.”
Back in the U.S.A.
Frank and I followed up on my trip to Japan with a visit to Epson America’s headquarters in Long Beach, CA, in early December for a meeting with Mathews and Joe Contreras, commercial marketing executive, office solutions.
Mathews and Contreras emphasized many of the same points discussed in Japan but also expressed how each is genuinely excited by the opportunity to work for this company. More emphatically, they underscored Epson’s desire to rule the inkjet space.
“We will not be in a business that we are not indispensable and be a market leader,” said Mathews. “Epson aims to be number one in every segment of the market we participate in.”
He also provided an update on how Epson is doing signing up dealers. As of early December, 196 dealers had signed with Epson and Mathews predicts the company will exceed its goal of 200 by the time it reaches the end of its fiscal year in March.
Our Take
Every time a new player enters the A3 MFP market there are lots of questions. For a business that is in decline, there are still companies who believe A3 remains a viable market. Epson is banking on its inkjet approach backed by major investments in ink to gain a foothold in this space. Time will tell how successful they will be.
However, we believe Epson is here to stay and that the company offers dealers something new and different with its PrecisionCore inkjet technology. Frank has known Mark Mathews for close to 20 years and considers him a pragmatic and astute executive with a deep understanding of the industry and the dealer channel. Both of us could sense Mathews’ excitement about what Epson is bringing to market, and his comments show he understands what it will take to be successful.
Access Related Content
Visit the www.thecannatareport.com. To become a subscriber, visit www.thecannatareport.com/register or contact cjcannata@cannatareport.com directly. Bulk subscription rates are also available.
