*NEWS*XEROX BETS FUTURE…COLOR DOCUMENTS

[Anonymous]

Xerox stakes its future on the growth of color documents
(March 
2006) – At one time, Xerox Corp.’s success helped slow down the growth
of color documents in the workplace. Now, the company is banking on
color reproduction to drive its growth.
Typewriters had been
produced with a red underlining ribbon, for highlighting purposes. But
Xerox’s machines in the 1960s printed only in black and white, and
their popularity soon convinced typewriter manufacturers that only
black ribbons were necessary.
The company is now in the middle of a
color blitz that it hopes will change the way businesses use color
documents and drive Xerox’s profits.
Xerox announced its “Color
Everywhere” campaign in 2001 but took the idea to a new level in 2005.
It rolled out dozens of color products, most notably the Workcentre
C2424, a desktop copier/printer/scanner based on the company’s
proprietary solid ink technology, and the DocuColor 240/250 color
machines designed as workhorses in larger offices. A multimillion
dollar ad campaign featuring color continues in print, online and on TV.
“Our
investments in color continue to pay off,” Chairman and Chief Executive
Anne M. Mulcahy told analysts during a conference call in January.The
company is furthering its commitment to color by building a $59 million
plant in Webster that will produce a new generation of high-tech
toner.Revenue from color has been growing between 15 percent and 20
percent a quarter for the last three years, say company figures.Last
year, color products and services made up $4.6 billion, or 30 percent,
of Xerox’s $15.7 billion in revenue. They represented 32 percent of
Xerox’s revenue last quarter, up 16 percentage points from 2001.
Why?
The simple answer is money. Color copies and prints are five times as
profitable as black-and-white counterparts, Xerox says. That’s largely
because there’s more to the process of color printing and copying. A
color copier or printer is essentially four single color machines
working together in one unit – with black, cyan, magenta and yellow
toners.
That means there are four sets of supplies to replace. While
the cost of color printing may likely come down some, current
technology can’t make those four sets of toner go away, experts say.
“Color
is clearly the most vibrant part of the marketplace, and it’s color
everywhere, from the low-end to the high end,” Jim Firestone, president
of Xerox North America, told an investors conference this week.
Installations of all machines are growing, but color units are leading the charge, he said.
In
the fourth quarter of 2003, 4 percent of the pages printed by Xerox
machines were color pages. That doubled to 8 percent in the fourth
quarter of 2005.And the market should continue to grow. Roughly 3
percent of all pages printed are color pages. By 2008, that number
could grow to 10 percent, Xerox said.
Lyra Research says sales of color multifunction devices should increase from 100,000 in 2005 to 600,000 by 2009.
Competition
But
competition is fierce as rivals such as HP, Canon, Ricoh and Konica
Minolta fight for space. While Xerox’s iGen3 dominates the market for
digital production color presses, competitors such as Eastman Kodak
Co.’s NexPress division and HP’s Indigo line are looking to catch up,
said Steve Reynolds, an analyst for Lyra.
And in the office market,
competitors are slugging it out, especially in the midrange machines
that might typically produce color pages 30 percent of the time.
“Everybody and his dog is rushing product to market as quickly as they can,” Reynolds said.
That’s leading to price cuts, with some low-end products now starting at much less than $1,000.
Firestone acknowledges the battles calling the market “fiercely competitive.”
But Xerox’s aggressive product introductions have given the company solid footing, he said.
“That helps us,” he said.
Changing perceptions
However, Xerox is reaching for more, and looking to educate customers on how color can help their businesses.
Mike
Spinelli, a principal with Xerox Global Services, said his organization
tries to show customers how they can save money in other areas by using
color.
“Color has a direct relationship to customer loyalty,”
Spinelli said. “Most people are using color for aesthetics and they
need to consider it to drive behavior.”
For example, credit card
companies or insurance companies can use color in bills or policies to
highlight important information for customers. Studies have shown that
well-designed documents can cut down on calls to support centers,
saving businesses money, Spinelli said.
Color can do that by acting as “visual Velcro,” he said.
“How can I get your eyes to land on the parts of the documents of what you want them to read?” he said.
Xerox also wants customers to use color smartly, said Peter Crean, a senior fellow at Xerox’s color research lab in Webster.
“When
color first came out people used it just to use color,” he said. “It
was the office equivalent of reading a ransom note. If you look at the
professionals, they’re using color strategically to make an impact.”
Jill
Morton, who runs a Hawaii-based color consulting company, said
businesses are paying more attention to how color impacts their
customers. Pharmaceutical companies spend more time studying the color
of pills, she said.
“I really see an explosion of awareness about
color,” said Morton, who has done consulting for Xerox and famously
noted that Mulcahy was wearing a shade known as “drunk-tank pink” at an
event last year.
That awareness is moving into the office because laser printing technologies are finally more affordable, she said.
“You really need to look professional now. It’s a really competitive marketplace,” she said.
But
color adoption has been notoriously slow especially in the office.
Xerox introduced its first color copier in 1965, and 40 years later,
still produces only 8 percent of its pages in color.
“In a lot of
office applications, where you just need to get me a piece of paper
with some information on it, just doesn’t add that much and isn’t worth
the cost,” Reynolds said.
Xerox’s Crean acknowledges that, but sees a future coming quickly when users will switch to color.
“Televisions
switched to color when it was 2.5 to 3.5 times the cost of black and
white. Photography was similar. Color printing is still 5 times the
cost of black and white,” he said.
But with color televisions, personal computers and even cell phone screens everywhere, color is changing old habits, Crean said.
“If
you’re just writing minutes, (black and white) is fine,” he said. “But
if you’re presenting data, you might want color. Today, people don’t
think twice about going to the Web and grabbing an image or two for a
document.”
And in an overall market estimated in the hundreds of billions of dollars, even small gains can mean big money. 

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March 14, 2006 at 10:20 AM