The shadow of a dream

A few weeks ago I caught up with John Mills, CEO of Xaar, for a video call to discuss where Xaar is now, how it got there, and where the company is headed. This is the first of three stories that have resulted from that interview.

John Mills, took over as CEO of Xaar at the end of 2019.

It’s fair to say that Xaar has had some ups and downs in its history. This includes enormous success with the ceramic market, which converted rapidly to digital, with Xaar supplying heads to almost all of the printer vendors at the start. However, this success left Xaar over-reliant on a single market and the company has been playing catch-up ever since.

In 2016 Xaar announced two partnerships, one with Xerox to expand its range of bulk piezo printheads, and another with Ricoh to help take Xaar into thin film printheads and ultimately to give it a share in the growing packaging and textile printing markets. From Xerox, Xaar gained the 5501, a bulk piezo printhead that could handle aqueous fluids, while the deal with Ricoh led directly to the Xaar 1201, a thin film head that Xaar used primarily to gain access into the Chinese market for wide format and industrial printers.

Both of these arrangements have now come to an end and Xaar no longer sells the associated printheads. Mills says: “We are here to design, manufacture and sell Xaar print heads and that’s it.” He clarifies that there was no sharing of intellectural property, adding: “For the 5501 from Xerox and the 1201 from Ricoh, they were just purely commercial arrangements of selling those heads.”

However, there was quite a lot more to the arrangement with Ricoh, because it also included a tie-in with Ricoh’s partner, Rohm Semi-conductor, which was a crucial part of Xaar’s wider efforts to break into the thin film market and the development of its own 5601 printhead. However, Mills is adamant that the arrangements with Ricoh and Rohm did not include transferring any intellectual property.

He clarifies: “When we bought the actuators from Rohm there was an implicit access to some IP associated with buying those actuators. It’s a bit like if we sell you a head you get an implicit license to the technology that goes into making those heads. So they were selling actuators and there was a very close relationship between Ricoh and Rohm and there was some IP arrangements there that we benefited from. So it was really just access to IP that came through purchasing the technology. There was no license agreement as such other than through purchasing the components.”

In the end, Xaar had to abandon the development of the 5601 head and its thin film dream. I’ve already written about the immediate circumstances surrounding this at the end of last year. The fallout from this led directly to a change in management, with John Mills taking over as CEO from Doug Edwards. Mills is a seasoned inkjet professional, having started his career as a development scientist at Domino Printing Sciences, where he rose to director of development. He has also been CEO at DataLase, COO at Plastic Logic, and most recently, CEO of Inca Digital. 

Xaar’s 5601 was a thin film silicon MEMs printhead.

Thin film market for packaging and textiles

The general consensus is that there was nothing wrong with the thin film 5601 printhead that Xaar developed – quite the opposite as several OEMs were actively developing new printers with it and certainly some of the samples that I saw were extremely promising. 

So, what does Mills think went wrong with it? He answers: “The problem was two-fold. One, we just didn’t have the balance sheet to fund it, but the reason we didn’t have that balance sheet was because the market wasn’t there. Thin film is predominantly water-based high resolution high speed so it’s really a packaging printhead and if you look at the packaging market, well, people said that was an $800bn market and that it would digitise within a couple of years and then 20 years later we are still saying the same thing.”

He continues: “I just don’t see what the value of digital packaging is. If I’m going to buy a Kitkat, for example, then what is it on the Kitkat wrapper that makes me want to spend more? I just want the chocolate, so as a consumer I don’t get the value of digital packaging. And digital packaging really hasn’t made it into the mainstream. You have niche label-type products but if you go into the supermarket now the vast majority of products are still printed in the same analogue methods. And the value proposition, in a world now where people don’t like packaging because it’s the stuff that kills polar bears and strangles seals, so the idea of investing in packaging just felt like the wrong direction to be taking and thin film was absolutely a packaging head.” 

Mills is equally dismissive of the digitally-printed textiles market, explaining: “If you were starting today in thin film focussing on textiles the return on investment wouldn’t look particularly attractive. I think the only thing that really justifies that level of investment is a market the size of packaging but textiles doesn’t deliver enough volume, and the volume is the issue. The thing that’s very different about the bulk piezo technology is the development costs, where you can take off at least one nought, and there are real advantages that we have over thin film.”

He says that Xaar tried, and failed, to sell the IP behind the 5601 to other head vendors, noting: “It’s because everybody else concluded the same thing, there’s no market.”  

Nonetheless, Mills continues to insist that Xaar has benefited from its experiences in developing the 5601 head, noting: “The 5601 was more than just the thin film actuators. There was the whole printhead technology, from the electronics and data path and ASIC (application-specific integrated circuit) that would drive the head through to new manufacturing processes, new adhesives, new design methods, so there was a whole range of technologies that were arranged around that program so when you look at the £70m that we spent on thin film, only a fraction of that was spent on the actuator. There was a lot spent on other areas, and those other areas, the technology is transferrable to the bulk technology.”

The very substance of the ambitious

is merely the shadow of a dream

William Shakespeare, Hamlet

Loss of focus

Leaving aside the technology for now, it seems clear to me that the bigger problem at Xaar was a loss of focus within the management team. There was good reason to concentrate on heads that could handle water-based fluids and to develop thin film printheads to take advantage of the expected growth in digitally printed packaging and textiles. But it surprises me that no one at Xaar seemed to notice the opportunities from industrial printing, or that Xaar’s existing technology could address that opportunity and this is a theme that will run through and link these three stories.

This problem was compounded by Xaar’s efforts to address the gaps in its product range that were created by its headlong pursuit of thin film printheads. That includes everything from forming partnerships with rival head manufacturers through to the way that Xaar interacted with its own customers. It also explains why it took Mills 10 months to pick up the pieces and devise a strategy to move the company forward such that he could be confident enough to start talking with journalists.

Mills explains: “I spent the first few months talking to customers to understand how they see Xaar and the perception was that we weren’t easy to work with and not very supportive.” He adds: “We have talked to the OEMs and told them that we were focussed purely on selling to the OEMs and not through the channel. We are only selling Xaar technology because we believe there is a value proposition, there is a very clear market for Xaar technology and we found that if you give people clarity and certainty then they understand what you are doing.”

Stay tuned, as there are two more parts to this story that I’ll publish next week, starting with Xaar’s latest approach to bulk piezo printheads, ImagineX.

The second part of this story is A light from the shadows, and the third part is Under the sun.

…with a little help from my friends

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