Over the past couple of months, Memjet has been grabbing headlines—some good, some not so good. At first, it looked like the high-speed inkjet technology provider might be heading for the rocks, but subsequent news indicated that the company should not only survive but also thrive. It appears that Memjet is in fine form, maybe its best shape ever in terms of technology and new customers.
It all started back in mid-March, when word broke that one of Memjet’s key investors had initiated a lawsuit against the firm’s founder, Kia Silverbrook, as well as others alleging fraud and deception that resulted in the theft of millions of dollars. A couple weeks later, Memjet was back in the news when its customers began demonstrating new devices based on the next generation of its desktop inkjet technology. News from Memjet reached a crescendo at drupa, one the printing industry’s most important trade fairs, which was hosted in Dusseldorf, Germany in May. When the quadrennial event opened, we learned that the company had signed up some important new clients. Then, Memjet announced that it had settled the legal fracas started in March.
After years of being more than a little skeptical about the viability of Memjet, all the news is making me rethink the firm and its technology. It may just have a bright future after all especially in certain market segments.
In case you haven’t heard of Memjet, it is a unique, high-speed inkjet technology. The print heads are fabricated using microelectromechanical systems (MEMS), which allow nozzles, heaters, and firing chamber to be packed densely onto a metal-oxide semiconductor (CMOS). Each 20 mm of a Memjet head contains 6,400 nozzles, and the heads can be ganged together to make page-wide arrays. Unlike conventional inkjet printers, Memjet heads remain stationary and the paper—or other media—passes by the head while printing. By packing thousands of nozzles onto the print head and eliminating it from shuttling back and forth, the technology is capable of achieving extremely fast print speeds.
Memjet is the brainchild of the Australian inventor Kia Silverbrook, who founded Silverbrook Research “down under” in 1994. With the help of a team of engineers and scientists, Mr. Silverbrook has amassed an impressive patent portfolio with thousands of patents. Thanks to the support of a few deep-pocketed private investors, Mr. Silverbook’s eponymous named company managed to operate without generating any revenue for more than a decade and went largely unknown to the general public.
I first encountered Memjet in 2007 at the PMA (Photo Marketing Association) International Convention and Trade Show in Las Vegas. Mr. Silverbrook privately demonstrated a prototype of a Memjet desktop photo printer to various analysts, myself included. Delivering a snapshot every two seconds, the technology was incredible. Many analysts hailed Memjet as a disruptive force that would change the industry forever. Some predicted Memjet machines would soon dominate every product category and drive hardware and consumables costs to new lows.
Initially, it seemed that Memjet would conquer the world. Photo Me International, a European photo kiosk vendor, announced at the 2007 PMA show it would soon launch a Memjet device for processing digital snapshots. Within a couple of weeks, a representative from Memjet’s label unit told attendees at the Global Ink Jet Printing conference in Prague that industrial machines would be available shortly. Other devices seemed to be right around the corner. Silverbrook Research demonstrated a letter/A4-sized “reference model” with an estimated print speed of 60 ppm in color and black and white. It featured an 8-inch print head packed with 70,400 nozzles. The machine was expected to sell for under $200 and deliver a black-only page for 2 cents and a color page for 6 cents. The firm indicated that it was working on reference models for more machines including wide-format units and production presses.
Not So Fast
After PMA, I contacted various engineers at competing OEMs and told them about the ground breaking photo printer I had experienced. I asked them if this was the end of the world as we knew it. To a person, every OEM engineer I spoke with knew about Memjet technology and many had witnessed it in action. None seemed too worried that their respective companies would soon be consigned to the ash heap as Memjet units captured every segment of the digital imaging market.
For various reasons, OEMs declined to sign up for Memjet. One reason was Mr. Silverbrook had embraced a business model such that his firm would supply technology like the print heads, ink, and other systems and not the actual hardware. As a Memjet customer, some OEMs fretted in the future they’d be competing with machines based on virtually identical imaging technology. Another problem was the Memjet heads couldn’t fire pigmented inks and dye-based inks are not appropriate for certain applications because they can smear when exposed to moisture.
But the really big sticking point about Memjet technology was it had not been mass-produced. Many printer manufacturers expressed concerns about fabricating the print heads en masse. Many felt it would be difficult if not impossible to fabricate the heads by the millions. There was doubt that Memjet could reliably mass-produce arrays packed with thousands of nozzles. There seemed to be a consensus that there would be problems with the nozzles in Memjet heads, which may clog or misfire or just fail altogether.
labels printer engine
After hearing concerns from various sources, I began getting skeptical and adopted a “wait-and-see” attitude about the technology. And the longer I waited, the less I saw. No Photo Me International kiosk, or Memjet label machine, or any other device was released in 2007. Memjet remained the hot topic despite the absence of an actual product launch and rumors swirled that companies such as Dell and Sony would soon market devices with Memjet technology. Memjet fueled the rumor mill by promising that all sorts of machines would soon be available. The firm’s office group, for example, announced A4-sized units would be out by the end of 2008. Later, however, that launch date was pushed back to 2009 and then to 2010. But the products never came and the company began to resemble the fabled boy who cried wolf.
But all was not quiet, either. After 2007, the corporate entity, Memjet, was formed to oversee the various groups entering different market segments. The firm attracted some with well-known senior managers. For example, Bill McGlynn, an ex-HP executive who helped develop the LaserJet MFP business, came out of retirement to head up Memjet Office, and David Clark, former director of integrated health systems for Eastman Kodak, was tapped to run Memjet Labels. In 2010, Len Lauer took the helm as the firm’s president and CEO. While Mr. Lauer was not from the imaging industry, he had an impressive resume. He was executive vice president and chief operating officer at Qualcomm prior to joining Memjet and before that served as Sprint’s president and chief operating officer before Qualcomm.
Hardware with Memjet technology also began shipping in 2010 but these were industrial printers not office machines. In 2011, the firm finally launched its first office desktop color printers. The year started with announcements that the company partnered with Lenovo to market a Memjet office device in China and struck similar deals with some smaller companies including WeP Peripherals in India and Kpowerscience in Taiwan to release machines in those respective regions. In the spring of last year, Memjet said that the UK-based compatible cartridge and specialty paper maker Lomond Trading Company would market its EvoJet Memjet-based desktop printer in Russia and Eastern European markets. In June, Memjet announced that LG Electronics had begun to market its Machjet LPP6010N in Korea.
In addition to all the desktop deals, Memjet continued expanding its footprint in the industrial printer market. Machines with Memjet technology for labeling applications was announced from such companies as Addressing and Mailing Solutions (AMS), Astro Machines, Impression Technology Europe, OWN-X Industrial, Rapid Machinery, and RENA Systems. Last September, Brookfield, WI-based Colordyne announced it would release a production unit powered by Memjet technology and a week later Xanté announced it, too, would release the technology in a new wide-format commercial printer.
With a growing list of OEM customers, Memjet began gaining some street cred. Despite the glacial pace of its customers’ initial product launches, the firm was poised for growth. Granted, it had not signed up any big name printer manufacturers, but the company was acquiring the much-needed legitimacy after all the missed deadlines and failed product introductions.
Then, just as Memjet appeared to be building a nice head of steam, one of the firm’s largest investors filed suit against Mr. Silverbrook and his partner Faye Lee, along with Silverbrook Research, casting a pall over the firm’s future. The George Kaiser Family Foundation (GKFF), a Tulsa, OK-based philanthropic organization, accused the defendants bilking it out of “tens, if not hundreds, of millions of dollars” through fraud and deception.
LG Matchjet 2
According to GKFF, Mr. Silverbrook and Ms. Lee first met with the foundation in 2003 to fund the Memjet companies and commercialize the new inkjet technology. Silverbrook Research would provide Memjet with technical R&D services without profit and grant Memjet exclusive and perpetual licenses to all Memjet technology. Mr. Silverbrook and Ms. Lee would make their money later when the Memjet companies prospered. As noted, however, it took much longer than expected to get the Memjet program off the ground. Lawyers for the foundation claim that in the interim Mr. Silverbrook and Ms. Lee “drained as much value from Memjet as they could to feather their own nests” and make money for their own businesses such as Silverbrook Research.
According to the GKFF court filing, between 2004 and 2008, Mr. Silverbrook and Ms. Lee collected a total of $75 million from the foundation, which explained, at least partially, how Silverbrook Research could go so long without generating any revenue. GKFF said it invested $150 million in 2009 and became the majority shareholder, and they put up an additional $230 million in equity and debt financing. In May 2011, the attorneys say GKFF loaned the Memjet companies $25 million followed by $130 million more between June 2011 and February 2012.
GKFF accused the defendants of other chicanery such as fraudulently executing deals to reach certain milestones that would trigger additional funding. In addition, Mr. Silverbrook and Ms. Lee were accused of renting Memjet office space near Sydney, Australia at an inflated fee through a property management they co-owned. The court documents also contended that the pair failed to facilitate an audit of the company to determine “where money had previously been spent” and negotiated a secret settlement with DuPont, which required a $10 million pay-out to the chemical firm after a Memjet deal went awry.
Within days of the GKFF filing, Silverbrook Research vowed to defend itself “vigorously” against the “entirely baseless and inaccurate claims” made by the plaintiffs. The company characterized the lawsuit as a “hardball” negotiation tactic employed by GFKK to gain ownership of the Memjet printing technology. Mr. Silverbrook filed a witness statement with Britain’s High Court claiming GKFF had agreed to settle any legal disputes in the U.K. not the United States. He went on to deny the plaintiff’s allegations and disputed the amount of GKFF’s investment. Mr. Silverbrook asserted that the Memjet companies actually owed Silverbrook Research $22 million. He maintained that Memjet’s low sales and inability to commercialize the technology were due to the firm’s mismanagement, not because of Silverbrook Research’s short comings.
Growing increasingly entrenched, it appeared the litigants were destined to journey the long and costly path to trial. A glimmer of hope, however, flashed just a few days before drupa when Jeff Bean, vice president of brand and communications for Memjet, told my company Actionable Intelligence that, “Negotiations are ongoing and we are optimistic that a resolution can be reached between the parties.” He also hinted that Memjet may have big news at the drupa event, although he provided no concrete details.
Dispatches from Düsseldorf
It turns out that Mr. Bean’s optimism was well-founded. On the second day of drupa, Memjet announced that an agreement had been reached with the Silverbrook defendants. Although GFKK didn’t make a formal announcement, on May 4 we noted an entry in the court record for the George Kaiser Family Foundation v. Silverbrook Research suit indicating the matter was settled.
Memjet printhead full shot
While full terms of the agreement were not available as of this writing, a Memjet statement released on May 4 said the company will assume direct ownership and control of the intellectual property portfolio related to Memjet technology including “some 4,000 issued and pending global patents.” It also will take direct control of all research, development, and commercialization activities of the technology. According to Memjet, Mr. Silverbrook “will continue to support Memjet as a special advisor to the Memjet Board of Directors and as an ongoing consultant.”
Word that an agreement had been reached between the warring factions followed just a day after Memjet announced some of its most important partnerships to date. On May 3, the firm said Océ plans to introduce a Memjet-based large-format color printer with print speeds of up to 500 A0 (33.1 × 46.8-inch) prints per hour. Dubbed Project Velocity, the machine was demonstrated at Canon Europe’s drupa stand. Memjet also announced that it is partnering with Toshiba TEC to develop an office MFP featuring Memjet print heads, controllers, software, and ink. A prototype of the co-developed three-function device, which delivers 60 color pages per minute, was on display in Memjet’s booth. Toshiba TEC is also evaluating Memjet technology for industrial and commercial applications.
Apparently, machines with Memjet technology were on display at various drupa stands. Delphax had its Memjet-powered elan 500 sheet-fed printing system for print-on-demand applications running in its booth. Operating in the Memjet and Xanté stands was the Xanté Excelagraphix 4200, a 42-inch-wide commercial printer for short-run and variable-data printing that is expected to ship in June. Several Memjet-powered industrial printers were also running in the Memjet booth including the Colordyne CDT-1600 PC Sprint from Colordyne Technologies and Astro Machine’s AstroJet M1 and M2 devices.
Coming out of drupa, Memjet has never looked so strong. If the agreement between GFKK and the Silverbrook defendants is implemented as it’s been described, Memjet now has complete control of its technology and it has managed to retain the brains behind the technology, Kia Silverbrook. The firm should be the master of its own domain.
The partnerships announced at drupa are also important. Memjet has at last struck deals with major global printer companies like Océ/Canon and Toshiba TEC. Of course, the deals are modest and involve only a few machines. Regardless, it appears that Océ/Canon and Toshiba TEC are willing to take a chance with Memjet technology. This offers Memjet a tantalizing proposition: if its newest partners are able to mass produce the new products, bring them to market, and they do well, perhaps that may mean more Memjet-based products to come from both Océ/Canon and Toshiba TEC. And, if that happens, you can bet more will follow.
Clearly, the final chapter in the Memjet story is still to be written but it looks like the tale may not end tragically—as it once did. When the lawsuit was announced in March, it seemed like the beginning of the end for Memjet. All the news out of drupa, however, changes all that and suggests Memjet is nearing the end of what has been a very long beginning. Still, there is a ways to go before Memjet can be declared a “success.”