CreoScitex--Inside the Creo Momentum
Dozens of strategic meetings, several industry-wide rumors and (give or take) $537 million later, Vancouver-based Creo buys the worldwide digital prepress business of Scitex. How will this change the computer-to-plate market? What does this mean for Scitex digital prepress devices? Creo Vice President David Brown is the answer man.
BY MARIE RANOIA ALONSO
There are times in the commercial printing industry, specifically in the area of digital prepress, when breaking news tends to be slow. Manufacturers are quiet; there is nothing notable to report...business as usual. Then, Creo buys Scitex. Not completely out of left field but, still, in its own right, a bit of a shocker.
In a deal valued at approximately $537 million, Creo and Scitex announced in late January that the two companies would merge their digital prepress businesses worldwide—with Creo acquiring the assets of Scitex's digital prepress business in exchange for 13.25 million Creo shares, giving Scitex roughly 27 percent of the outstanding shares of Creo.
Overnight, or so it seems, the industry now has Creo/Scitex. But what of Heidelberg/Creo? What about Scitex and its relationship with Komori? And are the two companies (Creo/Scitex, that is) eventually going to play under the Creo banner? How will this technological merger impact the distribution channel, or is it too early to forecast? What will be Creo's greatest challenge in absorbing the digital prepress components of Scitex—Brisque, EverSmart, Lotem and all?
David Brown, vice president of business strategy for Creo Products, can address these questions. He joined Creo in 1990, as employee No. 47, working as a project manager for the development of imagesetter engines and later heading up Creo's R&D group before moving into his current position. He has a degree in automation engineering from Simon Fraser University.
Evidently, he must also hold a degree in the art of marketing a technology company. If anyone can fill in some of these very early blanks regarding Creo's takeover of the Scitex prepress operation, it is Brown, who kindly agreed to talk with Printing Impressions on this very hot topic.
Phoning Printing Impressions from his hotel room at Seybold Boston, Brown, just back from a one-week meeting in Israel (of an obvious Scitex nature), is ready to address Creo's absorption of the Brisque, EverSmart, Dolev and Lotem manufacturer, as well as Creo's new, serious persona for DRUPA 2000. Though Seybold Boston early last month was not a joint showing of Creo/Scitex, it was the first public appearance for the two since the announcement was made.
At Seybold Boston, however, the two were still competitors—although perhaps a bit more friendly than usual. Regulatory reviews of the Creo takeover are still in process, but Brown is hopeful that DRUPA 2000 will mark the first official showing of Creo/Scitex as a combined prepress entity.
PI: When Creo exhibited at DRUPA 1995, the company was approximately 350 employees strong and a strategic ally of Kodak. At that time, Creo's attitude was zealous, invigorating, kind of a David and Goliath feel, with your company, obviously, being the thermal CTP version of the heroic biblical figure, David. Entering DRUPA 2000 in May, Creo is roughly 1,600 employees strong and the owner of the digital prepress division of Scitex—which adds another 2,600 employees to Creo's worldwide entity. You're no longer the small player and, in fact, are truly formidable. How did this happen?
Brown: Planning, it's all in the planning. We mapped this out with meticulous detail from day one, I can assure you. (Brown laughs slightly, then targets the question.) Seriously, it has been an exciting time; Creo has been an exciting company. From the beginning, our focus has been on our customers, on helping them employ the right prepress technologies to enable them to make money.
Creo, from the beginning, was all about efficient, effective technologies, which, in turn, make printers more efficient and more effective manufacturers. Our synergy with Scitex will expand upon this vision, this early theme of Creo's. Scitex certainly has a history of being a capable, competent and innovative organization, much like Creo. It will be a good match—good for the commercial printer and, through the printer, the print buyer.
PI: In a deal valued at about $537 million, Creo acquired the assets of Scitex's digital prepress business. What does this mean for Scitex technologies and for the commercial printer that's a Scitex loyalist? What does this mean for the Brisque workflow and Scitex's thermal platesetter, Lotem?
Brown: The most important thing people have to understand about this move is that it was not a merger driven by cost cutting. There will not be a mass cutting of people or products. Instead, there will be exploration and implementation of the synergies that exist between the two companies. We, Creo, will be able to do more for our customers, in some ways at a substantial cost savings. We can grow our tech support area more effectively with the Scitex team aboard.
As for R&D, we now have a collective 900-plus people from Creo and Scitex working on developing new systems and enhancing existing technologies. With Scitex linked to Creo, we will offer a broader product range. Our menu has expanded; there is more choice and variety—a good thing for today's commercial printing organizations. We will not have a lock or a control over pricing in the prepress market; we will bring to the market more alternatives, more variety, more technologies.
PI: What about system duplication between Creo and Scitex? How and when will this be addressed? And what about Heidelberg—your joint-venture partner with the PDF-based Prinergy workflow, and Creo's strategic partner in the sales and marketing of various output devices, including Creo's Spectrum digital halftone proofer?
Brown: There is actually less duplication and overlap than people might think between Creo and Scitex. In time, during the next year, we will address any considerable technology duplication that exists. This will impact devices that are pretty much feature-for-feature identical. Clearly, Creo will be committed to preserving and supporting both Creo and Scitex product lines, as well as developing a combination of systems that will provide the commercial printer with even more variety.
As for Creo's relationship with Heidelberg Prepress, obviously, our intent is to preserve our existing relationship with Heidelberg and to nurture that relationship. To date, early reports show that Heidelberg officials have reacted favorably to our news. We will continue to maximize our existing relationship with Heidelberg, and plan to remain competitive and aligned with Heidelberg.
PI: As if the Scitex move wasn't enough, recently Creo and Prograph Systems reached an agreement on the principal business terms for the creation of a new Internet company—printCafe—that will offer an Internet-based, business-to-business communication solution tailored specifically for the graphic arts industry. Reportedly, it will be dedicated to and focused on becoming the leading provider of e-commerce and Internet solutions for the printing and publishing industries. Why this move—and why now?
Brown: For a while now, Creo, in all, has been looking very seriously at e-commerce and what it promises for the graphic arts industry. After researching what direction was best for Creo, we found ourselves talking with Prograph. We found that the two companies shared comparable business models and e-commerce objectives; actually, our customers told us this during our research. We wanted to create an alternative for commercial printers. We did not want to be just a glorified e-mail service between printer and print buyer.
Under the terms of the agreement, Creo and Prograph will combine e-commerce initiatives into the new business entity. Creo will also contribute $25 million in capital as part of a larger venture capital round led by Mellon Ventures and a number of other financial institutions. In exchange, Creo will acquire an equity position in printCafe Inc. and Amos Michelson, CEO of Creo Products, will join the board of directors of printCafe. printCafe will operate in a close business relationship with Creo, but will maintain its own business structure and identity.
printCafe will be geared toward enhancing existing print relationships, improving communications and adding maximum value at all points in the production process. Advanced software and Internet-based solutions will enable printers, trade shops and print buyers to specify virtually any type of print project, obtain estimates, manage business-to-business transactions, plan all stages of the production process, track the status of a project in real-time, manage invoicing and process payments, and generate a broad range of performance reports.
printCafe's e-commerce services will be offered free to print buyers and on a subscription or transaction basis to printers and suppliers through custom-branded sites and Internet portals. A transaction-based business model will lower costs significantly for printers and eliminate planning software costs for print buyers. Creo is excited to be teaming up with Prograph, a company that has pioneered e-commerce for printing and publishing. The cooperation between our two companies will produce a customized, e-commerce and Internet solution designed to address the complexities of this industry.
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It seems almost poetic that the once small, Vancouver, Canada-based company that upset the CTP world by trumpeting thermal technology and has marketed itself with fervor since DRUPA 1995, would be poised to walk into DRUPA 2000 as an industry giant. Creo's alliance with Kodak early on set the stage for its accent, punctuated by one strategic move after the next—culminating, for now, in its year 2000 synergies: Scitex and Prograph. (Also, at Seybold Boston there were announcements that several more computer management system vendors were joining the printCafe alliance. See our Seybold post-show coverage beginning on page 58 for more information.)
What will Creo do next? As Creo said in its early marketing campaigns: One can only imagine, create, believe . . .
