CalComp Technology Inc, vs. Inkjet

1959-1999 A Division of Lockheed-Martin

1959-1999
A Division of Lockheed-Martin

Plotter utilizing raster technologyIn 1959 CalComp Technologies, Inc was formed in Anaheim, California to manufacture plotters, high-resolution printers for integrated circuit designers, map makers, scientists and engineers requiring precise and detailed information printed in color on “D” and “E” large-size special paper. Over the next two decades they developed vector and raster technologies. The vector technology essentially utilized 8 colored pens to draw on the two-dimensional paper, whereas the raster technology used thermal paper (heat) and electrostatic technology to accomplish the same detailed printout much faster. High-end raster electrostatic printers could cost a buyer upwards of $60,000 each (CalComp n.d.).

Most of us are familiar with the ubiquitous inkjet printer today. It was laboratory- proven in 1976 but not until 1988 did it become a high-volume consumer product. When consumers first started purchasing inkjet printers the price point was around $1,000 (“History of Computer Printers” n.d.). In the decade of the 1990’s CalComp held many strategy meetings to contend with this potential disruptive threat. I worked at CalComp during this time, running finance, logistics and materials functions, and witnessed a classic debate between marketing and management.

Hewlett-Packard Inkjet PrinterThe marketing position was that inkjet was a real disruptor, and if we didn’t come up with a new strategy to counter Hewlett-Packard and Canon, we would be out of business in a relatively short period of time. The management team had a different view. Management believed that our sales and marketing folks were becoming ineffectual at differentiating our high-resolution products aimed at the niche market consisting of engineers and scientists, not consumers. Marketing countered that at the inkjet low-price, high-resolution might not be enough for CalComp to defend their market share. They also predicted, correctly as it turned out, that inkjet printer prices would come down and resolution would go up over time.

CalComp hired two senior executives from the Inkjet SBU within Hewlett-Packard’s San Diego office; I was ultimately reporting to these two individuals. Strategy meetings were contentious, so the road of least resistance appeared to become a “fast-follower” as a “sustaining” strategy. CalComp designed their own inkjet printer product line, but were stymied when their gross margins were more than eaten up by the license fees and royalties they had to pay Hewlett-Packard and Canon based upon the inkjet proprietary technology that had been protected by the filing of numerous patents.

By 1997 CalComp ceased production on its plotter products and launched their own wide-format inkjet printers under the brand name “Crystal Jet” in a last ditch effort to become a fast follower to Canon and Hewlett-Packard’s now highly successful inkjet printer. The new CalComp inkjet printers ramped to volume by the second quarter 1998. Unfortunately, as a result of technology challenges and a failure to gain adequate market share, CalComp entered a period of critical cash flow difficulties, culminating in their bankruptcy in 1999 (CalComp Technology Inc. 1999). By the time the bankruptcy filing was completed, CalComp had struggled with a joint development agreement with Kodak, and experienced net losses of almost $177 million over the past three years (Gaw, 1998).

If I was the CEO of CalComp, and of course I was not, although I was in a position to influence strategy, I would have opted to heed the warnings and the advice coming from the marketing team. Management hubris is what led to the “oops, we are too late” response to the inkjet disruption. I’ve thought about how CalComp might have countered this threat but the technology was so innovative and utterly “breakthrough,” combined with the intellectual property protection, I am uncertain whether any strategy whatsoever could have leveraged their core competencies in plotter technology to products that would allow CalComp to innovate and survive.  ~r

Rodd Mann | CPA | MBA | APICS CPIM | Six Sigma Hands-on-Champion | DBA (Candidate)r_mann

 

 

 

References

Bellis, M. History of Computer Printers. Retrieved from
http://inventors.about.com/library/inventors/blcomputer_printers.htm

CalComp. In Wikipedia. Retrieved August 18, 2014 from

http://en.wikipedia.org/wiki/Calcomp

CalComp Technology, Inc. (1999). 10-Q. Retrieved from Edgar Online database
http://yahoo.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHtmlSection1?SectionID=1436317-10758-37788&SessionID=DMko6W-QlYoJDR7

Gaw, J (1998, December 30). CalComp Plans to Close After Losing Support of Lockheed

Technology: The company, which employs 250 in Anaheim, will shut down over six months because its credit is running out. Los Angeles Times. Retrieved from
http://articles.latimes.com/1998/dec/30/business/fi-58778

Hearn, D., & Baker, M. P. (2004). Computer Graphics with Open GL, 3/E. ISBN: 0-13-
015390-7, Prentice Hall.

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