No longer inelastic to economic conditions
By Kevin Parker, editorial director -- Manufacturing Business Technology, 10/1/2005 12:00:00 AM
It surprises Michael Terzich, SVP, Zebra Technologies Corp., how many manufacturers embark on multimillion-dollar ERP projects and only think of printing as an afterthought. "Suddenly," he says, "they realize printers must be compatible with the new system, and end up paying a premium for custom integration."
It's a mistake to forget about printers, or even think that printing—as a market—is mundane. After all, printing presses were the paradigmatic technology that launched the Renaissance. Closer to home, Zebra, best known for its bar-code printers, has been a Wall Street success story.
In the early 1990s, printers were expensive. Then technology innovations made it possible to sell quality printers for hundreds instead of thousands of dollars. A small raft of new entrants entered the market.
"After 1991, the market segmented," says Terzich, "and tended to be value- rather than feature-driven. But throughout the early and mid-'90s, the market was expanding such that our business was inelastic to economic conditions."
Bar coding, says Terzich, "began as a compliance application, just as is RFID today. The difference is bar-coding costs were comparatively very little, and the ROI, based on reduced errors and increased efficiency, was easy to quantify. Applications arose in many places."
Zebra owned the market for high-end industrial printers, diversified its product lines to match market trends, and had its initial public offering in 1991, trading on the NASDAQ. In 1998, it merged with Eltron International, a maker of desktop bar-code label and plastic card printers; and in 2000, acquired Comtec Information Systems and its mobile printing solutions.
Today Zebra has an installed base of more than four million printers worldwide. But as a $660-million company, it can feel the economy's pain.
"For example," says Terzich, "there's a trickle-down effect from oil prices. Wal-Mart shoppers have less disposable income, so same-store sales are down. In automotive, SUVs and trucks don't sell as briskly, and automotive suppliers suffer. We've seen some real constraints."
Hoopla over RFID has dampened, giving pause to stock-market speculators who last year placed a premium on vendors of the technology. After 14 straight quarters in which Zebra met or exceeded Wall Street expectations, the last two quarters fell short, despite record sales.
Terzich is confident Zebra will continue to grow based on demand for mobile solutions, RFID, specialty digital printing, and international expansion.
The move from centralized to "on-person" printing uncovered a host of "queue-busting" applications in field service and warehouse management. Compared to bar coding, companies' compliance with RFID mandates "is more begrudging." But RFID physical requirements are being addressed, and Terzich believes 2007 will be the year RFID moves beyond mere compliance.
To meet enterprise integration needs, Zebra has partnerships with the two largest ERP vendors, SAP and Oracle, and is said to be the only provider of XML-based thermal printers. Each printer vendor has had its own proprietary language to format the printed data and tell the printer what to do next.
"Drivers in our Zebra printer language are already built in to the SAP enterprise system. XML is truly open, and allows us to work in legacy operating environments," concludes Terzich. For global companies, Zebra has Unicode-compliant printers for multilanguage support.
Thus, with Zebra doing the thinking for you, it's not catastrophic if you leave printing to last.
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