The background to the debate on ‘open’ versus ‘closed’ ink business models relates to the technology needed for digital printing applications, as well as the business that supports the development and exploitation of this technology. Firstly, some definitions: by a ‘closed’ ink model we mean that the printing system vendor sells the system together with an ink set designed to work in that printing system for the intended printing application. The system vendor may not manufacture the ink itself, and it may not even be branded with the system vendor’s brand, but the purchaser is given no choice of ink brand when purchasing the printing system. Conversely, an ‘open’ ink model means that when a vendor sells a printing system, the ink is not included in the sale, and the purchaser is left free to choose a compatible ink for the desired application from those available on the market. In some cases the system vendor may recommend one or more ink manufacturers as ‘approved’ for that system, which gives a limited open ink model, or ‘semi-open’. The system vendor enforces the restriction on ink type by limiting its warranty and service to systems that use its own ink (for the closed system) or an approved ink (for the semi-open system).
Advocates of both ink models would agree that it is vital that the ink used in an application has been designed specifically to work with the printing system in question. Usually the key factor is the printheads used in the system, and it is fundamental that the physical property requirements of that printhead are met. However, as discussed in a previous article, a true digital printing solution includes all aspects of the technology that leads to a satisfactory printed result. This includes the ink, the printheads, the motion system that moves the printheads and/or the substrate and finally, the substrate itself. All four of these key components need to work together as a seamless solution, which makes it imperative to understand how the components interact, including the behaviour of the ink on the surface; the ejection of the ink from the printheads; and the hardware and software ensuring that the printheads and substrate are moved correctly. The particular relevance here is that even though an ink may have been designed to work with a particular printhead, in industrial printing that may not be enough – the details of the ink supply system, filtration, software, printhead motion, printhead maintenance and other aspects of system design may mean that an ink that performs well in one printing system using a particular printhead, may not work nearly as well in another system even though it uses the same printheads!
The clear learning point here is that any ‘approval’ of an ink set is incomplete if it merely approves the use in a printhead type. While such an approval is of significant value, since it covers material compatibility with the printhead and basic jetting performance, it cannot be expected to cover materials compatibility with the printer ink path and detailed jetting performance when that printhead is included in a configuration including multiple heads, printhead motion, maintenance stations etc. And yet for many users, approval by the printhead manufacturer in question is what is sought.
Integrated solution or open source – pros and cons
The integrated solution model is similar to the model used in desktop printing solutions that have been on sale since the late 1980s. Typically in these cases the printer itself is sold at a price that is minimally profitable, while the ink price is relatively high. This model relies on a large installed base – the vendor seeds the market with low cost printers and then reaps the rewards on ink sales, ideally for several years or more after the printer is sold. The business model then looks something like Figure 1, where the sale of large numbers of printers at or below cost is offset by highly profitable ink sales. Competition from third party ‘refillers’ impacts the profitability of this model, and is fought by legal and technological protective measures. Moving outside the desktop arena, the market power of the printer vendors is not as strong relative to that of the buyers, and the value of each printer is significantly higher, so such an extreme model tends not to be possible or desirable. In industrial applications both the printer and ink tend to be sold at a ‘normally profitable’ price, whether or not they come from a single vendor (Figure 2). Despite this restriction, clearly the single source vendor has the flexibility to adjust the price and payment terms of a solution (printer plus ink) sales contract which is not the case for a separate printer and ink sale, where the price has to be set for each component separately and without reference to the other.
From a buyer perspective, both models have pros and cons. The single source model has the advantages that it simplifies negotiation, often means that initial capital investment can be lower and gives surety that the ink and printer were designed and tested together. Perhaps the most significant advantage is that the single source buyer has a single point of contact for any problems associated with the system in the field. They can expect prompt and knowledgeable service as the vendor is in control of all of the solution components and will be expected to take responsibility for solving any issues. Of course this will mean that the buyer is tied to a multi-year contract for ink and service, which tends to look increasingly onerous once the printer has been in service for a period, especially if the market ink price has dropped while the contract ink price has not.
Open sourcing of course gives the buyer the flexibility to look for the best price for ink at any time, both on initial purchase and afterwards. The headline costs in this case may well be significantly lower, even if initial investment is higher, which can be attractive. This comes with several risks that do not show up in a simple financial analysis. The first risk is increased downtime from any problem: if there is disagreement between the system vendor and ink supplier as to the cause of any issues, this can delay the implementation of a solution very significantly. The second risk is to valuable printer components, especially printheads, which can arise when attempting to save costs by using low cost inks. A lower cost ink may well work extremely well, but some assurance should be sought that the ink has been extensively tested in the printhead model and system model in question, and that a warranty against damage can be provided. The other risk more likely to arise in an open system situation is that when changing inks to a new set, chemical incompatibility between the old ink and the new can cause precipitation of ink components within the system. This can be a very expensive mistake, and also difficult to attribute to one ink vendor rather than the other if compensation needs to be claimed.
In other markets that have adopted digital inkjet technology in a significant way, the usage of the two main ink business models varies markedly. In graphic arts most solutions sold are in some way closed. Perhaps the origin of this is because many of the customers in this market had no previous printing experience, so the single source solution was preferred. In stark contrast to this, the ceramics market swiftly adopted an open model but with the ink suppliers using designs as their added value, while ink prices have dropped very rapidly to an extremely low level.
In digital textiles, many of the early solutions on the market were closed. This allowed early vendors to invest in the necessary technology without waiting for a consumables ecosystem to arise, and meant application solutions were possible earlier than they otherwise might have been. Over time as new entrants arose and ink prices dropped from the very high early prices, people who were still using the early systems began to feel aggrieved that they were missing out on the gains from these reductions. The reputation of closed systems in the textiles market has suffered because of this, and, especially for the larger users used to buying, or even manufacturing, their own inks for conventional textile printing, some form of open system is preferred. The closed system may still have its place, however, in new and niche applications and for smaller users that have more in common with the fast turnaround digital print shops for graphics than the large textile mills.
View from major vendors
For MS Printing Solutions, generally an advocate of an open or semi-open system, there is potentially a place for both models in the market. Paolo Milini, VP Sales and Business Development, states that ‘customers select the best and cheapest products’ and that the industry is starting to consider ink as a commodity because of the large volumes involved. Because of this he believes that ‘closed systems are not really able to satisfy industrial customers’. In smaller niche markets however, he feels that the closed system can be a better fit with customer expectations. He believes that customers will always choose the model with the best return on investment (ROI) (with the proviso that the risks mentioned above are notoriously difficult to include in an ROI calculation). Milini believes the two models will continue to coexist in digital textiles because ‘we are still far from the commodity business model’ in many cases and that ‘most of the applications [within digital textiles] are still considered niche markets’.
EFI Reggiani gives a somewhat contrasting view, having previously been a semi-open system vendor but more recently moving to supplying its own inks in some cases. Business Development Director, Antonino Tricomi, states that ‘the closed ink model offers a “turn-key” solution, providing a complete package that helps the customer along the overall printing process and performance (printer and ink with related warranties, technological support and after-sales service). This wide-ranging support is not immediately available in the event of an open model’.Conversely, the open model allows the customer to ‘choose (and negotiate) inks with several suppliers. The compromise of the greater freedom of choice are the risks associated with warranties and service’. Asked which is best for producers, Tricomi believes the closed model is superior as ‘the printer manufacturer knows the applications and can best guide the customer in the choice and use of inks. Tricomi believes that both models will continue to co-exist in the market, because ‘some customers are not willing to recognise the value added by having a unique partner supplying both printer and inks’.
As an ink and system supplier, SPG Prints has an unusual position in the digital textiles market. Jos Notermans, Commercial Manager Digital Textiles, recognises the advantage of a single contact point in the closed model, but also understands that customers fear a situation where they have ‘no choice of where to buy the inks, and consequently always have the feeling that [they] pay too much’. SPG Prints favours an open ink system for its digital textile solutions with the view that ‘we should give our customers no reason to buy anywhere else’ by giving ‘competitive pricing and first class service’. He feels that SPG Prints encounters circumstances where other system vendors discourage their customers from using SPG Prints inks, which has ‘nothing to do with the quality of our inks, but they simply see us as competition for their machines’. He also feels that approval certificates from printhead vendors that also require agreement from machine manufacturers can limit competition. Notermans believes that the customer should always ‘be in the position to buy the best inks for his machine, [and get] the support and warranty that he deserves. Therefore I am in favour of open systems with honest, open market positions’. He expects that ‘both models will co-exist in the future because some customers will always want to have the safety and security of “one-stop shopping” where others want to make maximum use of freedom of choice’.
Simon Daplyn, Product Manager Textile Inks for Sensient, believes both ink models have their place. The ink manufacturer needs to work with the printer vendor to ‘ensure the chemistry fit to give the optimum performance for the given application. This includes understanding the costs of processing and any regulatory compliance requirements. Ink suppliers will validate the application and the use in a printing system’. The closed system offers ‘security to the user in terms of warranty on the hardware’. As to which model is best for producers, this ‘depends on the individual and the degree of flexibility they like. Typically in textile printing users prefer to have a greater control of the application and process as there are so many variables. Getting access to the chemistry authority can be advantageous where there are key specification requirements for different applications’. Daplyn believes there should be ’room for both models to allow users to get the most benefit for what is important to them’, and that ‘there will always be value [from] a highly skilled ink developer as well as [from] a closed protected system’.
This article was recently published in Digital Textile Magazine, where Tim is Consulting Editor. Tim will also be presenting part of a course on Digital Textile Printing at the IMI Europe Inkjet Summer School in Ghent, Belgium, 12-16 June 2017.