Reflecting on EFI’s Milestones and Highlights from Past Connect Conferences
As we prepare to attend EFI Connect 2019, we thought it would be enlightening to look back at past events and past milestones in the company’s history. We believe we are the only publication that has covered every EFI Connect Conference. It all began when EFI acquired Printcafe, a supplier of print supply chain management software, on February 26, 2003.
Printcafe was the first step in a series of acquisitions that has enabled EFI to take their business far beyond digital front-end solutions for the office and commercial print environment. At the time it was announced, then CEO Guy Gecht hailed it as more of a merger than an acquisition.
At that time, Printcafe was hailed as a provider of enterprise solutions specifically designed for printers and buyers in the printing and publishing industries. Printcafe’s enterprise resource planning and collaborative supply chain software solutions were said to enable printers and print buyers to improve productivity and lower costs. Printcafe’s offerings also enabled Web-based collaboration throughout the print supply chain.
“We are excited to join forces with the Printcafe team to bring the most comprehensive procurement to production offerings to the printing industry,” said EFI CEO Guy Gecht at the time of the acquisition. “Our global leadership in printing workflow and Printcafe’s dominance in print supply chain management will offer both printers and their customers powerful end to end solutions to maximize their efficiency and profitability.”
There were many acquisitions to follow, but in our opinion the most important one was Vutek, a provider of super wide format digital inkjet printers, on April 15, 2005. Two months later EFI Connect was held in Miami. We devoted more than four pages to that event in our publication. Never once did we mention the Vutek acquisition. The transaction did not close until the third quarter of the year. We can only guess there was not much the leadership could say about that big acquisition at the time of Connect.
Frankly I don’t think even Gecht realized just how important this acquisition would prove to have on EFI’s future, particularly during the downturn in our economy in 2008-2010. This period was considered by many to have been the worst economic recession since the Great Depression.
Let’s revisit Guys statement at the time of the acquisition. “Vutek will be an excellent addition to EFI’s range of best-of-breed innovative solutions for the commercial print market. There are many natural synergies between EFI’s core expertise in digital-printing innovation and Vutek’s digital inkjet technology?”
With Vutek’s profitable business model, we wrote that we expected this acquisition to provide EFI with new revenue streams in the future.
Afterwards, Gecht told us in confidence, “We would not have been profitable in the two prior years were it not for the sale of ink for the superwide printing segment of the market in which Vutek excelled.”
He added, “Vutek will help EFI expand what it can bring to those commercial customers.” In addition, he pointed out, EFI will also benefit from Vutek’s recurring revenue stream in ink and service (which make up about 40% of all Vutek revenues).
Gecht had learned what dealers had learned a long time before—it is the annuity stream provided by service and supplies that generates the most profitable revenue.
In 2006 we attended Connect 2006 and spent a lot of time talking to Frank Mallozzi, EFI’s vice president of worldwide sales, and now the company’s Chief Revenue Officer. His message was clear and concise, “It is software that creates the differentiation and it is software that will enable dealers to remain very profitable.”
At the Print 15 conference in September 2015, EFI held a press conference and as usual Gecht entertained us all. However, he cut to the essence of the importance of industrial printing when he reminded the audience that 2014 was a very successful year for EFI when it reached $850 million in revenue, half of which came from their inkjet products.
The company had come a long way. Consider that in 2004 EFI was a sub $400 million software company and here Gecht was 10 years stating the company had doubled its revenue. We asked him what percentage of that revenue was generated by their industrial print products? His response was half.
Within 10 years EFI had built a hardware business of $425 million. We kept digging and finally learned that over that same period, EFI and placed 5,700 inkjet devices. In what other segment of the print business could claim less than 6,000 devices could generate that kind of revenue?
What EFI has accomplished is exactly what all hardware manufacturers are attempting to—move from a hardware orientation to a services (software) business model. EFI did it in reverse.
The lesson learned from all of this is that industrial print represents the future for many of our readers and we sincerely hope that they are inclined to learn from this story.
The Cannata Report is committed to bringing the best possible information about industrial print and the EFI Connect conference, and CJ, Scott, Carol and I are all attending this year’s event. No other publication can even approach that kind of commitment to a conference of this type. Look for that coverage in our next issue.
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