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Source: http://www.doksinet What is the Future of Industrial Digital Printing? May 2015 Market Review This is a review of the status of industrial digital print markets as of May 2015. This review is intended to define, size, project and provide examples of the development of markets for digital print technology beyond the office and consumer sectors. Definition of Industrial Digital Print Industrial digital print can be defined in two distinct ways: 1. Industrial-Scale Print Industrial can mean any markets which have scaled up significantly beyond the small-scale technology we are used to seeing in the office and consumer sector, including communications print or ‘print media’ as the analog print industry calls it, as well as the true ‘industrial’ markets defined under (2) below. 2. Manufactured Products which are Printed Industrial more usually means a specific set of markets and applications for print and patterning of manufactured products like corrugated packaging,

folding carton, wide format display graphics, flexible packaging, 3D objects (print-to-shape), architectural surfaces, ceramics, textiles, electronic circuits, creation of 3D rapid prototypes & custom parts to name some of the better known. Mostly people are interested in the specific industrial markets under (2) above, but it is important at least at first to consider (1) and its print communication or document printing markets as well because for one thing the new digital document/communications print markets are creating a new kind of user and value that is well-insured against the decline of print media, and for another thing, because they are technology platforms for the development of systems which are already being adapted to true industrial markets like packaging whose print specifications build on those of the document market. Digital Print Vendors’ Stake in Industrial Print The digital print industry is supplied by less than 100 vendors globally, many of which are in

Japan, with total revenues for systems, technology and imaging chemistry of something just north of $110B. They are very large investors in very costly hi-tech imaging science in basically two core technologies – Electrophotography (EP) (laser printing) and Inkjet, but by the same token they also make very handsome profits from the chemistry consumables they mostly quasi-captively sell to their customers after first selling the print system. These vendors all have a problem, however, and that is that they are all heavily invested in office and I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 1 Source: http://www.doksinet consumer markets which, while still very profitable, are mature and in decline. In fact more than 85% of their revenues fall into this classification. This is driving these mostly public companies to seek new and scalable markets with great urgency. In their search for new markets the digital vendors are evolving

what they already do very naturally from ‘office-scale’ to ‘industrial-scale’ communications or document print markets. They are also in some cases getting into the early development of true industrial print markets for ‘manufactured products which are printed’ with their own products. Beyond that they are providing technology directly and indirectly for third parties to develop on their own behalf into true industrial print systems – printheads, print engines and integration support. Those third parties can be independent system integrators who re-sell systems to the market based on technology the obtain from digital print technology vendors or their distributors, or else single companies developing systems for internal use (‘closed loop’ developers). Integrators sometimes also assist closed loop developers under contract This is a schematic and simple quantification of the supply flow: Digital Print’s Industrial Value Propositions Digital print in true industrial

markets is not called on to do a better job of what analog print already does. Analog print does a great job in terms of product quality and cost against a huge variety of specifications. But there are some things only digital can do well, and those are the building blocks of parallel and new markets in the industrial segment. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 2 Source: http://www.doksinet This is a simplified table of what are already today perceived as unique digital print value propositions in the industrial segment and we have ranked them in descending order of importance according to our own user research in early industrial implementations: To give a couple of examples of what this can mean in real life, in the case of cost reduction, this has meant so much to the ceramics tile printing industry that they have already gone substantially towards full substitution of analog with digital systems. In their case this

has to do with a very expensive and cumbersome imaging system in analog print, and one which required an integrated kiln line to be interrupted in its normal production rhythm. That can cause substantial damage to the line if not closely managed. Digital removed these issues at a stroke Fast response in turn is a massive advantage to the fashion printed apparel industry where under normal conditions analog print can involve a six month lag between design presentation and arrival of saleable product at the retailer – and that in an industry where fashion is the driver and timely response is directly measured in higher prices and volumes. Digital production apparel print can bring that lag down to two weeks. 3D creation of manufactured objects using digital printing in its turn allows customized and small volume manufacturing of functional objects previously out of economic reach for the new users 3D printing is drawing in. That is nothing less than a new and potentially very large

user group leveraging what are in effect new products. The same is true of the digital photo album which is unobtainable except via digital printing and which has in some ways supplanted the old 4x6 photo market, and at very high consumer pricing values. In a similar way display graphics available to the local retailer in minimal quantities is also a new product and market among people who did not buy graphics before – in this case a new market that grew to exceed $45B in retail revenues for print after only 20 years from scratch. But perhaps the biggest long-term value proposition for digital industrial printing is in the packaging sector. The ability over time for digital printing to provide custom content in the brand identity communications market, which is what packaging really is, is to bring the massive packaging conversion market into synchronization with increasingly fragmented demand patterns. While the packaging conversion industry worldwide has spent 30 years perfecting

higher and higher integrated print/manufacturing volumes at lower and lower costs, the pattern of demand has been going in the opposite fragmenting direction. The meaning of this for consumer goods brand owners is incalculable I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 3 Source: http://www.doksinet over the long term. That is actually going to take a long time for a variety of fundamental reasons relating to technology and supply chain bottlenecks, but it is the biggest industrial digital printing target of all, and will likely be its most profitable field. Market Size & Projection by Industrial Application We have split out digital revenues for hardware and chemistry by individual industrial applications, and we have also included 3 document ‘industrial-scale’ sectors. We have projected these forward to 2020 Additionally we have estimated revenues for print providers’ who use this digital technology derived from

selling the printed output to final users. These print provider revenues also include revenues for conversion and manufacturing. Against that we have set our estimates of expenditures by final users in the same sectors for analog-printed output. That allowed us to compare digital final user revenues against analog final user revenues and derive a comparative share for digital. We are in reality understating revenues for digital because we have no way of allocating accurately by application closed loop companies expenditures ($2.2B est) and independent integrators’ revenues ($4.5B) True industrial markets are marked in red It will be noticed that by enduser revenues digital print already has a 7% ‘penetration rate’ in 2014 rising to 9% by 2020, for an overall growth 2014-2020 of 36%. If we were to calculate the share digital has of area printed compared to analog the shares would be a lot lower – quite small in fact. That tells you that the pricing for digital output is high

That is because of course digital print is more expensive than analog, but above all it is because digital value propositions bear a high price among users because they offer very significant economic benefit of some kind beyond the simple print cost. This kind of pricing will inevitably suffer some degree of attrition as volumes go up and as digital print becomes mainstream next to the low-cost analog world, so therefore print costs themselves for print providers will have to be reduced. That does not however mean that digital print should or must follow the commoditization practices of many analog markets. Digital does offer the opportunity to re-cast the value and pricing model even over the long term. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 4 Source: http://www.doksinet Digital Print Technology Development Status EP The major available digital print technologies are Inkjet and EP. EP is mostly available in dry toner

format, but HP Indigo is liquid format ‘Electroink’. Liquid EP is said to be and by many believed to be potentially faster and higher quality due to the technology’s capability to develop an ink film close in its characteristics to analog ink films. Inkjet On the Inkjet side most available Inkjet deploys aqueous inks with very high water content and low viscosity mostly dictated by head construction and design. There is some UV-curable Inkjet technology, but it has not been developed to the print quality levels of EP or aqueous Inkjet yet and is available from few sources. Inkjet in general is perceived correctly to be simpler than EP and more easily capable of deploying extended widths and attaining higher speeds (with the implications of lower costs). But given that most industrial markets are very new and capacity utilization of digital systems is minimal, that speed disadvantage of EP may take a while to assert itself. Aqueous Inkjet The most pressing issue for the perceived

technology-of-the-future, as aqueous inkjet in particular might be described, is its ability to print at high speeds at high coverages (40%+) on closed-surface substrates like film and coated paper if it is to make serious progress in document and industrial markets. We could be looking at 4-5 years until the issue is behind us This will not stop aqueous inkjet for industrial markets, but it will cause a slow level of adoption in any markets not using simple uncoated paper (which is where it is successful now on an industrial scale in books and transactional markets). LANDA An exciting but hard-to-assess alternative to EP and Inkjet is Nanotechnology from LANDA. Without getting into too much detail here, this technology is essentially a form of inkjet with highly specialized integration and chemistry which claims to be capable of mid-range speeds by analog standards and eliminates the water issues of Inkjet while still using aqueous inks. It is a kind of ‘ink lamination’ system and

it is from Benny Landa, and anyone who wants to underestimate his capabilities to realize revolutionary change is taking a risk. If this technology works it could be a serious challenge to aqueous Inkjet. This is a quick comparison of average median specs for different technologies available today for industrial markets: I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 5 Source: http://www.doksinet Digital Acceptance in Industrial Markets In many industrial markets it will be essential for digital print technology to gain the technical and economic acceptance of the existing analog-oriented market because where, as in all true industrial markets, the printed product is also manufactured, with print really being a stage of manufacturing, the print part will be technically and economically subordinated to the manufacturing part. In many cases – as in most packaging for example – that will mean the closest possible approach to an

in-line system to fit with existing manufacturing plant. That in itself will be a tough goal to achieve But it is worse than that. Experience says that the existing industry will start out by refusing anything that disturbs in any way the finely balanced mechanism that their present in-line print/manufacturing system represents. Essentially a refusal to compromise and experiment, let alone invest. That negative attitude fails to serve the brand owner customer of the packaging conversion industry as his fragmenting demand patterns get more and more out of sync. with packaging manufacturing economics. But the brand owner is in most cases not in a position to have any different expectation of the converting industry due to a lack of perspective on the potential of digital print. This all represents a Gordian knot of difficulty in getting digital’s foot into the packaging door. Similar situations pertain in other industrial markets. The situation is capable of remedy as the label market

has shown Basically it I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 6 Source: http://www.doksinet is a matter of time and resources in the big picture, and that tends to hand advantage to larger vendors. Again, we cite the label market as an early precursor of this development pattern It is a market which has been nearly twenty years in the making and it is only in its early acceleration phase. This situation of channel block on top of the need for digital print technology to up its technical game for many industrial markets unavoidably will slow market development in the early years to a large extent. This is a graphical representation of the channel issues which we have described: I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 7 Source: http://www.doksinet Industrial Digital Print Field Reports We offer some selected analysis of early implementation of industrial digital

print in illustration of real experience in this now established segment. Corrugated Packaging Printing of Corrugated There are three print quality levels deployed in the printing of corrugated board: • Basic Flexo Quality 1-4 colors for line work with some tone gradation. Good Enough accounting overall for something like 70%-80% of corrugated board print. This is printed mostly in-line on conversion presses (slot, slit, diecut, fold, glue). Sometimes there is offline printing In the case of preprint, where the topliner is printed in a roll prior to lamination to the singe face corrugated construct the print is always offline yielding a two-stage process. • High Flexo Quality 1-9 colors printed on enhanced flexo presses generating a high print quality standard somewhere approaching offset standards, but not achieving them fully (nor needing to). This accounts overall for up to 20% of all printed corrugated. This is printed mostly in-line on conversion presses (slot, slit,

diecut, fold, glue). High flexo quality is driven by the expanding use of corrugated packaging in the retail environment. • Highest Litho Quality For exceptional and specialized cases driven by design or brand image highest quality offset print is contracted out on white liner paper for subsequent lamination in sheets to corrugated sheets (litho lam), Part of this is also undertaken in the form of pressure-sensitive labels. Litho lam yields a two-stage process and accounts for up to 10% of all corrugated printing. For most high quality retail corrugated flexo high quality is good enough and offset quality is not required. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 8 Source: http://www.doksinet Print Processes used in corrugated are explained diagrammatically below. There are three basic processes: • Flexo Pre-Print pre-printing top sheets with continuous web flexo presses after which the top sheet is laminated to single

wall corrugated construct in reel or sheet format prior to the secondary conversion process (slit, slot, glue, fold). This process is used to provide high print quality in larger volume. There is also a small amount of web offset pre-print done, though this is most common in Asia. Pre-print was the first major initiative to permit high quality corrugated print in reasonable volumes (ie: at a good economic cost point) • Flexo Post Print Post-print (meaning print after (post = latin after) the manufacture of the final corrugated laminate construct) of the 2 wall corrugated construct is deployed for basic quality printing of the large part of all corrugated. But it is also deployed for high quality print using specialist flexo presses optimized to be able to print at specific sustained high quality on the full construct without crushing it or generating washboard print variations from varied pressure on underlying flutes and voids. This process is undertaken in sheet format and is a

lower cost system relative to high quality from pre-print, as it cuts out the lamination stage of pre-print. It is usually done in-line with conversion on a single system. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 9 Source: http://www.doksinet • Litho Lam/Label Litho Lam/Label has been deployed historically where very high offset-type standards of print have been required on corrugated packaging. It was not in the past physically possible to print at such high quality levels inline onto a final 2-wall corrugated construct, and that necessitated printing a white sheet or label offline, and then laminating the print to final 2-wall corrugated constructs. Litho Lam refers to the printing of a white sheet laminated over the full area of the corrugated sheet, and Litho Label refers to the lamination of a printed white label to part of the area of the corrugated sheet. Litho Lam is often out-sourced to general commercial printers

and is relatively costly beyond short runs. Today Specialist Flexo systems (so-called ‘postprint’ systems) have managed to achieve near-offset print quality in an inline/near-line format on final 2-wall corrugated construct, and the share of post-print in the high quality 4c+ sector is growing. Digital Opportunity Existing Systems Printing Corrugated At this time the only real digital presence in the corrugated market is flatbed UV Inkjet from wide format graphics vendors. These systems are used largely for packaging sister (and much, much smaller) market corrugated display at retail. Such systems have become very productive with near-fixed arrays allowing speeds well over 4,000 square feet per hour at maximum rate and in one case as high as 13,000 square feet per hour. These systems from companies like INCA, EFI-Vutek, HP and Durst and some others are successful, but they are not yet having a major impact among the mainstream corrugated packaging converters. They are often to be

found in non-corrugated digital print provider channels with their own access to brand owners and retailers. But there also some systems at independent sheet plants in particular within the corrugated channels. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 10 Source: http://www.doksinet At least 4 systems have been proposed for production digital printing of corrugated at high quality, which are listed in the table below. They included enhanced super-productive flatbed UV IJ systems (HP FB15000), aqueous IJ systems for pre-print/litholam substitution of substrates for subsequent lamination to corrugated (HP T410), aqueous systems for direct print of corrugated (Sun Corrprint), and a UV IJ flatbed system for rigid materials production print (Barberan Jetmaster). There are also other systems known to be in the works significantly including a system believed to be a modular aqueous IJ system from Kodak for integration into a

corrugated converting press. Mainstream Corrugated Packaging In the mainstream corrugated packaging industry there is a sense among brand owners as well as manufacturers of all kinds that digital has a future as a means of providing fast response and responding to fragmenting demand in shorter runs. But having said that, this sense clearly does not translate in all our researches to an understanding of the pathway to ROI. That is to say, no one is yet prepared to contemplate any system, which is not at parity with analog print in costs. This is problematic in many cases as the definition of costs is often narrowly stated without taking account of true overall process costs benefits from a digital system (the real and often disputatious ROI). This translates to a large and diverse community of market participants who cannot contemplate introducing any system to their workflow which could not instantly synchronize to their manufacturing processes and economics - a lack of willingness to

believe that digital could scale to their industry. This is a true but shortsighted perception. The concrete expression of this concern is the very commonly stated fear that any new digital system is not going to sync to what is for the most part a synchronized analog print/conversion process. Any print process which could slow a conversion process down by being even a little out of sync with it generates an automatic pre-refusal. This is hard for digital to answer and not an illusory fear in mainstream production unless someone can modularize digital to existing conversion plant and unfailingly keep up with production. Some forward thinkers see the need and potential to initiate digital into the industry by setting up separate and parallel digital operations, but this is exceptional thinking. At the same time Georgia Pacific themselves are an example of an early pioneer in doing this, though they hold their cards close their chest. Only the independent sheet plants have a really open

attitude at this time to digital and want to move forward, but they command relatively little volume. Digital may quite possibly also have major issues with corrugated which may only exhibit themselves as systems come to market - issues with the suitability of UV IJ inks for different corrugated surfaces, issues with UV ink recycling, issues with head strikes from the uneven corrugated substrate, and issues in aqueous IJ systems of being able to dry the ink at conversion process speeds in higher coverages. The takeaway here about opportunity is that despite the underlying and growing logic of digital, the mainstream corrugated packaging industry needs education and intensive ROI training to help them understand the necessity of initiative in digital. The problem is aggravated by the sense and actuality of only about 20% of the whole industry being in a high quality (digital-qualifying) market quadrant, and the sense also that that is pretty well taken care of in most cases by flexo

high quality post-print. And then there is that issue of synchronization to punishing conversion economics. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 11 Source: http://www.doksinet Digital Offerings A number of digital vendors have proposed systems for the corrugated market in recent months. This is a summary of offerings which are public and which are dedicated specifically to the corrugated packaging market. None of these systems has created a commercial presence in corrugated packaging to date. Their target in general is to be able to provide very high quality levels on finished corrugated construct and thus bring enhanced quality to a simplified workflow not requiring lamination while able to address market fragmentation and versioning at the touch of a button with minimal waste. But the challenge is to persuade converters to adopt, as it would in their eyes disrupt their existing workflows and economies. That would not

justify their not becoming involved in digital, but it may act to do so: Linear Speed Throughput Width Resolution Technology Feed type Target Market Application Focus HP Scitex 15000 N/A Barberan Jetmaster 1260 N/A HP Web Press T410 200M/m Sun Automation Corrpress 70M/m 120 full sheets (63” x 126”)/hr; 600 M2/h 1.6m (63”) 4100 M2/h 12,000 M2/h. 4,500M2/h 1.2m (49”) 1m (42”) 1.6M HDR (High Dynamic Range) technology 450 to 750 dpi Fixed Array UV Inkjet Flatbed Direct-to-board mainstream applications, also smaller runs, test marketing and displays. Preprint and Postprint replacement 360 dpi, with three grey scales- 1200 optical resolution 1200 DPI 600DPI Fixed Array UV Inkjet Flatbed Partially dedicated corrugated offering, but also offers a complete printing & finishing solution for a variety of substrates including plastic, wood, glass, etc. Fixed Array Aqueous Inkjet Web Preprint, Postprint and litholam/label supplement/repla cement, focusing on short

runs, versioning, etc. Media range 40 to 200gsm, with option up to 350gsm. Fixed Array Aqueous Inkjet Sheet All box plants with 2+ color work regularly going through their plant in batch sizes of less than 4,000 sheets (Sun statement) There are other flatbed UV Inkjet systems from Durst and INCA and EFI-Vutek which are active in corrugated display print and which would propose themselves for corrugated packaging, but which are not presented as dedicated to that market. There are also cooperations underway for modular systems with Kodak in Inkjet. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 12 Source: http://www.doksinet Analog Specifications The following chart illustrates diagrammatically roughly where digital production systems proposed for the corrugated market fit against UV Inkjet flatbed systems and analog system used in the market: It should be remembered in reviewing this comparison that the attractiveness of a digital

system is only partially related to its fit in this matrix. It is just as important to be able to fit a digital system seamlessly into the overall manufacturing flow and tempo. In some ways existing converters, right or wrong, have a vested interest in their volume-orientation and are not necessarily friends of technology, which addresses market fragmentation. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 13 Source: http://www.doksinet Glass Printing Total Glass Industry The Glass Industry worldwide has a value in enduser revenues for suppliers of finished products of about $264B according to our best estimates sourced from within the glass industry. Only a small part relates to a print opportunity. This is our estimate of the structure of enduser revenues across the glass industry against the broadest possible definition: While specialty decoration with some potential for a modern digital component takes place in specialty,

tableware and containers (jars and bottles), our focus for digital printing in this analysis is flat glass as it is used principally in the construction industry and the automotive industry, usually for windows. Flat Glass Industry The flat glass industry has a value as sold in its final converted format of around $72B globally. This is how flat glass can itself be analyzed into tonnages and meters squared, including an estimate of how much is decorated in some way (related to print, though not exclusively). The major opportunity for decoration now and in the future is in the construction industry quantitatively and functionally, with the automotive industry offering fewer functional opportunities within an extremely-cost-driven semicaptive supply environment. Having said that, where digital printing offers a very small scale customization capability, ranking markets in that context by size and growth/flexibility parameters is not necessary the best way of looking for early digital

customers. Thus a given vendor of dedicated glass digital printers might see custom printing of publicity-functioning automotive windows on a fleet of buses as just as good an opportunity as a strategic plan to get involved with a flat construction glass leader over the longer term. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 14 Source: http://www.doksinet It will be seen that in M2 terms the industry is relatively small compared to other print sectors at about 6.9B M2, of which only about 114 M M2 is decorated It should also be remembered that something less than half of all constructional glass is double glaze (see below), so that the real surface area even available for decoration is actually about 25% less than the 6.9B M2 figure would indicate at about 5.2B M2 Just for interest’s sake, not all flat glass is equal either. Float glass is the highest quality and highest value type of glass with a significant proportion of

world production being however of a secondary quality out of China as illustrated here: This is a brief review of a functionality categorization of flat glass within the construction industry: There is not an obvious correlation between these categorizations and any print/decoration function. Low-E is an important categorization referring to Low-Emission or insulating/environmentally-functional I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 15 Source: http://www.doksinet glass. Such glass is increasingly important in growth markets and as a high value-yield product for suppliers (40%+ value pricing). Coatings are applied to glass to create a Low-E functionality, and these are capable of being done (most economically) in-line during glass production or during lamination in some cases, so Low-E does not by any means correlate to decoration processes: in fact it generally does not do so. Nevertheless we color the Low-E cell light

green indicating digital opportunity. There are important cases right now of digitally-printed Low-E glass and it may be that digital economics and functionality are suitable against in-line manufacturing techniques for a market whose demand may be more fragmented and better-managed on the basis of custom offerings than has been assumed. Decoration is usually a post-manufacture extra process, though it often does involve re-firing glass to fix decorative ‘frit’ (ceramic-based) chemistries. But decorating glass involves much more than just using inks. You can sand-blast, etch, back-coat (which is not printing) and tint during manufacture You can also laminate/transfer digitally imaged film & vinyl wrap allowing a translucent/transparent functionality, and many WFG PSPs do just that. This is our best estimate of processes used today for direct print of flat glass: Decoration is said by the industry to be growing well, but concrete statistics are hard to find, and the aggregate

volumes are small indeed compared to other print markets. Additionally the construction industry is very cost-driven and cyclical, and the room for printed glass to add its value is circumscribed. There are even unusual threats For example, digital glass printing used to be widely used in the casino industry for frequently changed slots panels. Go into a casino today and all you will see however is LCD panels. Despite all this digital has found its early small way through flatbed offerings to UV-cured decoration as well as to frit-chemistry applications for post-firing. Most digital systems are non-dedicated glass systems, but companies like DipTech (Israel) and maybe Wifag (Switzerland) do offer such dedicated systems. Dedicated Digital Glass Printing Systems The best-known company offering dedicated glass digital printing systems is Dip-tech of Israel. Dip tech stands for Digital Ceramic In-Glass Printing. They produce 3 scaled heavyweight systems which are essentially flatbed

graphics printers using serial piezo printheads to image glass plates at up to 2.8x4M at up to 18mm thick The printers use ‘frit’ ceramic inks which are oil-based ‘Frit’ means they need to be post-print fired in a kiln to fix them permanently through a ceramic bond of the ceramic pigments themselves to the surface of the glass. This is an illustration of DipTech’s imaging and curing process courtesy of Dip Tech company: I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 16 Source: http://www.doksinet I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 17 Source: http://www.doksinet This is what DipTech’s largest AR system looks like: DipTech claim to have an installed base worldwide of 100 dedicated glass frit printers. If so, and if they accounted for all the glass frit print we estimate that is done globally, then that would say each system would print about 425 M2 per

month. In reality there are a few other specialized glass printing frit systems, some of which are in China, as well as DipTech, though the numbers are small and hard to corroborate. There is a range of other vendors who constitute the family of high end UV flatbed systems vendors (HP, EFI, Durst, INCA) in the WFG market who also produce some heavyweight systems capable of handling the enormous weight of glass (only 125M2 weigh one Tonne!!) but mostly only able to print standard non-frit UV-curable pigment inks. Such systems would not find a large enough market if dedicated alone to glass today, but some of them – perhaps 200+ such systems - print glass occasionally. Conclusion The flat glass printing market is a true niche, and one which already has a major supplier in the form of DipTech. The technical learning curve is significant and there is much competition from existing methods of decorating transparent glass and from digital methods (printed vinyl wrap) in creating a

semi-transparent overlay. The price of entry will be very high and the rewards not obviously impressive. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 18 Source: http://www.doksinet Flooring Market Which Flooring Products Are Printed Today? If flooring is printed today, it is likely printed using Rotogravure however, inkjet technology is relatively new to this market and has been well received by major flooring manufacturers. Although today, inkjet is used in very small volumes or may still be working out challenges in R&D, some manufacturers do see digital printing as a means for customization, smaller volume/specialty applications like limited edition designer prints that could sell at a much larger cost per sq. ft However, the biggest driver for inkjet may be the ability to test the market before a larger run and the ability to produce product closer to market demanddigital printing allows manufacturers to shorten the supply

chain and lead times of traditional practices. Traditionally, it may take months for a manufacturer to produce product (planning design, securing large volumes of material/substrate, reserving manufacturer space given for large volume, logistics, etc). Digital printing allows a manufacturer to first test the market with smaller volume and then produce on-demand as the market responds to product; eliminating over-production/waste. Product Type, Average Cost Uninstalled, Print Process Product Type Ave $, Uninstalled, Per Sq Ft. How is it printed? Est. % that is printed? Carpet & Area Rugs $1.-$5 Inkjet 5% Hardwood $4.-$12 Not Printed NA Ceramic Tile $3.-$8 Rotogravure & Inkjet 75% Stone $15.-$30 Not Printed NA Laminate $2.-$4 Rotogravure & Inkjet 100% Vinyl Sheet $1.-$5 95% $2.-$6 Rotogravure & Inkjet Rotogravure & embossed $4.-$7 Not Printed NA LVP/LVT Other: Linoleum I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH:

781 826 0200 FX: 781 826 0151 19 Source: http://www.doksinet 2014 Global Flooring Market, Estimated Printed Flooring Output *Assuming same printed % splits as US 2014 US Flooring Market, Estimated Printed Flooring Output I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 20 Source: http://www.doksinet US Flooring Market Size: US Flooring Market The 2014 US flooring market is valued at $20 Billion dollars (wholesale sales dollars: shipments minus exports plus imports) and it is divided by product type. The US industry leader is today and has historically been carpet, however other product types are gaining market share. Consumers’ behavior and growing preference along with innovation in technology, which has improved the product performance and appearance of products like vinyl, are reasons we expect market share to continue to decline from the carpet category. 2014 Total US Flooring Market by Product Category, Revenue Share,

Total= $20B Other, 1% Laminate, 5% Vinyl Sheet & LVP/LVT, 12% Stone, 6% Ceramic Tile, 13% Carpet & Area Rugs, 51% Hardwood, 12% US Flooring Market, By Product, By Square Footage Sold An estimated 19.4 Billion square foot of flooring was sold in 2014 The two largest manufacturers in the US are Mohawk and Shaw (owned by Berkshire Hathaway). These two control 45% of the total US Flooring Market and also sell into global markets. The remaining 55% of the market consists of small manufacturers and importsnone represents more than 5% market share. Carpet and area rugs account for more than 50% of the total US flooring market (80% of which is controlled by Mohawk and Shaw). In the past, carpet has had a large replacement market, as its lifespan is less than tile or wood and for new builds (which is slowly starting to resume after the I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 21 Source: http://www.doksinet recession

stall). Carpet is trying to hold market share by offering new options like eco-friendly and square tiles; which have become a popular choice for commercial applications. Total Sq ft Sold 2014 US Flooring Market Total= 19.4B sq ft Other, 1% Vinyl Sheet & LVP/LVT, 16% Laminate, 5% Stone, 2% Ceramic Tile, 13% Carpet & Area Rugs, 57% Hardwood, 6% Conclusion The flooring market is experiencing steady growth and expected to continue to grow at 4-5% over the next five years. Innovations in product aesthetic and performance will continue to be drivers in this market. The consumers’ behavior will be an important factor in the growth of products. The consumer will continue to demand beautiful, affordable products that are easy to install and maintain. For these reasons, Luxury Vinyl is expected to see the highest growth rates. LVP/LVT is easy to install and maintain, has many high performance attributes like scratch and water resistant, it is affordable, maintains a premium look

and is warmer, softer and reduces noise compared to tile. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 22 Source: http://www.doksinet Residential carpet installation could be in decline over the next few years as a result of a weak housing market and chances in consumer behavior. However, modular carpet and carpet tile installation will still remain a popular choice for commercial applications and will see growth. Although today, digital printing occurs in a very small percentage of the global flooring market, it has been accepted by many major brands already (although at small volumes, test situations and/or still in the R&D stages). Manufacturers do see advantages in customization; appreciate the print detail and ability to produce advanced designs (random designs with no repeats). Similar to what digital printing has accomplished in the books market, digital printing would allow flooring manufacturers to reduce inventory

and processing time, eliminate waste/set-up, allow shorter print run lengths, ability to print trial products and premium-limited edition designer runsand most important: react to the customer’s demands and get to market faster. I. T Strategies, Inc 51 Mill Street Suite 2 Hanover, MA 02339 PH: 781 826 0200 FX: 781 826 0151 23