Very little of the old Scitex company remains, and virtually none of it is involved in the graphic arts industry. HP also acquired the "Scitex" trade name. What is left of Scitex will be rebranded with a new corporate name once the deal is finalized. Eastman Kodak acquired Scitex Digital Printing in 2004.

  Revenues at Scitex Vision have grown in each of the past 10 quarters, according to company Chairman Ami Erel. In 2000, Scitex sold its prepress and digital film and plate production business to Creo, which was itself purchased by Kodak. Scitex holds just over 70% of the stock in Scitex Vision. About $24.5 million of the purchase price will go to repaying the company's current liabilities, mostly held by Israeli banks.

  Scitex Vision's core business is wide and superwide format printers for signage and industrial applications, including billboards and packaging. HP has been involved in wide format for many years and was interested in Scitex Vision's proprietary piezo print-head ink-jet delivery technology, as well as its presence in growing markets, its established distribution network, and its service and support infrastructure. Scitex Vision also has its own ink manufacturing capabilities.

  Scitex Vision has 560 employees worldwide, with about half of them based in corporate headquarters in Netanya, Israel. Some 1,700 Scitex Vision machines operate in 1,000 companies worldwide, and Scitex Vision provides full support services. About two-thirds of its revenues comes from machinery and a third from the sale of inks made predominantly in its Cape Town, South Africa, ink manufacturing plant. The company manufactures solvent-based, UV inks and proprietary water-based pigmented inks. Scitex Vision's TURBOjet is the fastest industrial inkjet machine on the market and prints more than 400 square meters per hour.

  Noting that this sector is rapidly becoming a digital marketplace, Enrique Lores, HP's VP for Large Format Business said, "Currently 17% of printing in this area is done digitally, and we expect that to double in the next five years. Scitex Vision is one of the leading companies in this space, with a strong customer base, unique products and technologies, and an outstanding customer support organization.

  During a press teleconference, HP management said the acquisition will provide the company with a fourth marketing segment for inkjet printing devices. HP has been well represented with products in the wide format (large format Designjet series), digital press (Indigo), consumer and small business sectors. Scitex Vision provides HP with a foothold in the superwide, industrial and packaging markets.

  HP regards this market as primed for growth. "There's a lot of analog pages out there, and as those analog pages can be addressed by digital technology, it's going to change the business model," said Stephen Nigro, HP's senior VP for its Graphics and Imaging Business. "It's going to change who's going to be a leader in this space. So we think we're well positioned and [it's a great] growth opportunity for us."
Nigro said Scitex Vision will help HP provide its customers with "a total print management solution. It fits tightly into our strategy and gives us an opportunity to go after those additional high value pages in a growing market."

  In addition to the Scitex Vision acquisition, Nigro pointed out that the company will concentrate on the multifunction inkjet and digital copier markets. "It's not an area where we're established as a leader, but it's something we're growing rapidly with our multifunction printer base [MFPs], and we're going to be developing more products in this [area] going forward."

  Nigro hinted that Scitex Vision's proprietary piezo printheads might add fuel to this expansion. One important aspect of the purchase will be the possibility of "vertical integration" of technologies, he said. "It gives you the strength to innovate and... some natural advantages."

  Scitex Vision President and CEO Dov Ofer sees tremendous growth opportunities in super wide format printing due to pressure from the advertising and marketing communities to produce shorter runs and better, faster and cheaper output devices. "It's really in our hands to determine this growth," he said. "The more we come in with solutions, the higher the percentage of printed jobs will move into digital."
"The Scitex product is piezo," said Lores. "We believe that most of the core technology that we have available over the years for thermal inkjet technology is going to help enable us to deliver even better (products) than what Scitex has today in its own technology development."

  HP does not expect to rapidly exploit some of the textile opportunities for superwide format. Lores said there are "significant workflow and customer process changes that need to happen to enable those opportunities. We're going to be maintaining some of the efforts Scitex has started in those areas, especially working with some partners."

  Our Take

  One of the more fascinating aspects of this acquisition is that HP bought the Scitex name as well as the company. Scitex had sold off parts of the company on several occasions but had held onto the Scitex name. Clearly, HP is convinced that it has acquired a company whose name alone can bring in business.

  Creo didn't buy the name when it acquired the biggest chunk of Scitex a few years ago. Meanwhile, Kodak, which acquired Creo early this year, is rebranding all of the products that once bore the Scitex name with the Kodak moniker. For HP, it's a relatively small but significant acquisition. It shows that HP is serious about expanding its market space and gives it some strong footholds in critical emerging economies where Scitex Vision already has made inroads. This acquisition appears to be designed to enhance and increase market penetration rather than to reduce overall costs.

  As far as we can tell, HP will leave Scitex Vision largely intact. Ofer figured prominently in the press presentation and is scheduled to present the companies' future vision at Print 05 in a couple of weeks. HP did discuss some possible cost savings in the service end of the business from "common customer relationship management."

  Scitex's engineers have a reputation for technological prowess that any cutting-edge company would covet and its technical support team is considered world-class by most observers. It's a reputation that HP would do well to exploit.