Frank Mallozzi
Earlier this week I had an opportunity to chat with Frank Mallozzi, EFI’s senior vice president of worldwide sales & marketing about the company’s consistent growth, recent acquisitions, relevance to the independent dealer channel, and about some of the introductions planned for this year. If you’re a dealer doing business with EFI, and even if you’re not, it’s worth hearing what’s happening from this industry leader. A little background before we begin, back when I was doing public relations for Canon in the early 1990s, Frank was working for Canon on the color side.
EFI just enjoyed its eighth consecutive quarter of growth, what are you doing right?
Mallozzi: The great thing about our company is we focus on the growth area of print. With the shift and changes from analog to digital we’re in it at every stage. Our mission hasn’t changed over the 20+ years we’ve been in business—we’ve helped customers make the successful transformation from desktop analog to digital back in the day all through high quality output. Now with our business solutions software, our apps products, and the high quality enables customers to increase efficiency and productivity, and deliver their jobs in the most efficient manner. We’re helping businesses worldwide bring their visions and goals to life with a scalable product portfolio. What’s made us successful is our commitment to innovation and execution.
You’ve made some acquisitions globally during the last couple of years, what made those companies attractive acquisition targets?
Mallozzi: PrintStream had a number of features and technologies, including direct mail and warehouse management fulfillment tools that are good add-ons to our existing portfolio. We broaden the strength of our products by having that technology. The second was Prism and they are strong in Australia, New Zealand, the UK, and South Africa. That acquisition enables us to invest in these markets that we didn’t have a footprint in before. We bought into a wonderful base of customers and are now enabling those customers an opportunity to have a look at the EFI portfolio so we now have customers in those geographic regions we didn’t have before.
The third acquisition was Alphagraph in Germany. We had a fairly good presence in the UK and a smattering of customers in Germany, but we didn’t have a large base and Alphagraph has a tremendous base of customers. Again, this allows us to leverage the portfolio of products and sell those customers other technologies. The fourth acquisition was a company in Canada called Entrac Technologies. They are in the self-service market with point-of-sale terminals so you walk into a Staples or Fedex office and swipe your credit card and you can use whatever devices—printers and copiers—that are on there. That’s now an EFI technology.
The most recent is Cretaprint, a company based in Spain in the industrial inkjet market. They have a technology that prints on ceramic tiles. That’s a big growth opportunity because what’s happening in that industrial market, particularly the ceramic side is a big shift from analog to digital and a lot of that transition that took place on the desktop many years ago is starting in that space. We thought they would fit well into our portfolio and that’s another area of significant growth.
Each one of these acquisitions goes back to our overall strategy, focusing on different areas of growth—geographically and by product segment.
What areas of your business are particularly strong of late and what do you attribute that to?
Mallozzi: When you and I were working on the start of digital color in the office with Canon, EFI focused on RIPs. There was one business unit. Today, we have three business units. We have our Fiery unit, our application software business, and our inkjet group. In 2011 we saw growth in all three business units. We had a record year in our apps business with 41 percent growth. That’s attributed to stronger organic growth with the acquisitions I mentioned earlier. We had roughly a 70 percent market share in the U.S. and are expanding that into the international markets with Prism and Alphagraph.
The Fiery business saw some solid growth in 2011. Revenues exceeded our plan by 13 percent over 2010. We had a record year for our Fiery option and our option sales typically focused on digital production. We saw a huge improvement and also a huge improvement in customer satisfaction on the Fiery controllers. They remain strong in their targeted areas.
Inkjet sales were up 17 percent over 2010. That continues to be a big growth engine for us. We also saw growth in UV ink volume. What we’re seeing is customers who are buying our printers are selling the output. We saw 34 percent growth in ink volume and that’s also contributed to our ninth consecutive quarter of more than 20 percent growth. It was a nice year and all three business units contributed to it.
Your customers are buying more integrated solutions, what do you attribute that to, are you doing anything differently from a marketing perspective to enhance awareness? But first, can you define ‘integrated solutions’ for those who don’t know what you’re talking about?
Mallozzi: When you talk about integrated solutions it’s the submission of that job online to a production house, then capturing the content of that job and having it flow through a print process (prepress) or some sort of midway stage before production and then up to the RIP and ultimately to the production engine. In every process what EFI focuses on are the business tools around print so when the job comes in how much is that job going to cost?
Is it integrated with the estimating tool, are all the costs captured, is it integrating with the accounting system, is it talking to the devices sitting on the floor? All of that is more of a smart factoring approach where everything is talking to each other and that is sort of the world where we live in within the commercial print and production markets.
Going back to the original question, the answer is absolutely. We’re seeing our customers getting a lot smarter in terms of what’s available in the marketplace. It’s a competitive requirement today for a printer to turn that job around as quickly as possible because they’re competing with digital campaigns that have a lot of print returns. And there’s so many different technologies available to a printer so having visibility as to what is the most efficient, most cost-effective technology to print that job, having that visibility is more essential today than ever before. In some cases we provide data to customers where they’re going to cost out a job and it’s not priced properly and they’re going to end up losing money so in some cases they may not take it or find alternative methods to satisfy their customers.
Now that color technology has been embraced by the business community as well as the dealer community, are you finding new opportunities for your products beyond some of the traditional verticals where you’ve done so well in the past?
Mallozzi: In some cases yes. A great example is inkjet (industrial inkjet, wide format, super wide format, UV technology). When you look at the typical dealer we’re familiar with, they’re very knowledgeable about color and applications, and they’ve got the infrastructure and wherewithal to sell these products so when you look at a wide format, there’s really little difference in selling a digital color press or copier. It’s understanding the applications and the differences and addressing those markets.
There’s a big opportunity because there’s a big upside for service, a big upside for color management, and more importantly, there’s a lot of upside for the ink annuity. The other thing that’s interesting when you look at some of these new applications like packaging, digital for packaging, super wide format, there’s more of a desire for quality and the expertise that our dealer has in color management is an absolute opportunity, so from that perspective yes.
The other area that’s a no brainer is the Web-to-print of our Digital StoreFront in terms of our integration portfolio. Some of our really good dealers are taking advantage of it and leveraging their knowhow on the workflow and attaching the devices making the sale a lot more stickier. We kind of call ourselves the glue, and giving our dealers the ability to sell the glue and create the wrapper around their core products is something we see our dealers taking advantage of.
Most of my readers are independent dealers, how would you gauge EFI’s success through that channel and is that still a viable channel for EFI?
Mallozzi: It’s still a very viable channel for us. As some of the big guys are going after managed print services and competing against divisions within HP, the dealer needs to have a different value proposition and those dealers certainly recognize that. With our technology we allow the dealers to go out and find differentiation in the market. We like the independent dealers and the flexibility and fast turnaround the dealers provide to us. These dealers are very bright, they know the changes in the market, and what needs to be done, and we want to continue to be part of it.
I have a pretty decent infrastructure in the marketplace that supports the independent dealers. I have sales people aligned with the independent dealers because of the importance they represent in the marketplace. All the changes going on in the marketplace, you’re looking at mobile printing technology, technology like Fiery Dashboard, and PrintMe (cloud printing). These are technologies that dealers can take to market and compete with the bigger guys out there.
What should the dealer community be prepared to hear out of EFI in the coming year without tipping your hand too much right now since I’m sure you need to keep a few things under wraps for now?
Mallozzi: It’s a DRUPA year and we will focus on large leaps of technology. Expect a preview of the next generation of Fiery. We’re going to focus on mobile printing and enabling mobile users to print seamlessly and easily, and providing more analytics and tools like we have with the Fiery Dashboard. That gives the user a look at what’s important on that job, the costs associated with it and which devices are optimal for that job. You’re going to see more analytics certainly and some of the latest and greatest in our MIS offerings.
You’ve been with EFI for 13 years now, what’s the biggest difference in the company between today and when you first joined it?
Mallozzi: There were 790 employees when I started, we have over 2,200 today. When I started 13 years ago, 99 percent of our business was OEM, today it’s very even in terms of Fiery, inkjet, and application software. We sold exclusively through partners and today we have a mix of partners and direct sales. I have a big direct sales organization that sells to the commercial print community. What’s interesting is being a Silicon Valley based company in a print industry, that’s large and established, and we’re a high tech company in that space and we try to leverage that. You’ve got to be nimble, you’ve got to constantly reinvent yourself, constantly change, and that’s what I’ve seen over the last 13 years, EFI looking at what’s the next growth area and how do we bring those technologies to market.
Are you still having fun?
Mallozzi: A lot of fun. It’s always new, exciting, changing, and there’s still an opportunity to add value to the business. The day you’re not adding value is the day you look elsewhere.
