Both.
Hi Sam.
RasterGraphics is going for the Print-for-Pay segment, which is growing at a phenominal rate with good margins. Encad has a strong presnece there with the ProE and that segement is extremely sensitive to speed and plot size. RGFX needs a $10K printer to get into graphic arts and CAD, but that's not where all the growth and margins are. I believe the Encad Chroma24 is a mistake and won't survive.
RGFX has technology much more appropriate to this sector than Encad because of the durability of their printhead, speed potential of their engine and their ability to print signs suitable for up-close viewing... something no encad can do. Piezo technology is much more robust than ink-jet because it doesn't heat the ink, just "pushes" it. This gives much more freedom in selecting inks and media, which can be seen in the vastly superior print quality and ink dry time of the RGFX machines. Also, drop size can be more tightly controlled and firing frequency can be boosted. Everything is just easier with Piezo. This technology will replace electrostatics soon.
RGFX does not own Piezo printing and it is available from several sources for lisencing. I would characterize RGFX's IP position as weak, but then I don't believe there is such a thing as a strong IP position in this business so it doesn't worry me. This business is not about invention it's about execution. Who does it best from acquiring technology to integration, marketing and distribution. Encad has it all except technology aquisition, where they suck greatly. RGFX shines here. It's also the hardest thing to be good at so I believe RGFX will get the rest nailed right away and we will make a lot of money. If Encad shows it can move its technology to match RGFX in the next 6 months, I will probably sell RGFX and buy back ENCD. I'm not expecting it.
The PP5000 is well positioned to take market share from electrostatics and high-end inkJets (ProE) but, in my view, is priced a little too high given that its print speed is only a little better than the ProE, though the quality, reliability and usability are much better. They need to either boost the print speed by 30% or reduce the price by $8K.
-David |
