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Xerox Strategy Focuses on Color Products
STAMFORD, Conn. (4/05) – Xerox Corp.
is betting its future on a more colorful business world. The Stamford-based
maker of printers and copiers is launching new products geared at allowing
small- and medium-sized businesses to produce photo-quality color documents.
It’s part of what the company
calls the second phase of its color strategy, in which Xerox says it is devoting
two-thirds of its $1.4 billion annual research and development budget.
“Color is no longer a ‘nice to have,”’
Xerox chief executive Anne Mulcahy said ahead of Wednesday’s launch in San
Francisco. “It’s a smarter, more effective way to communicate and add value to
information.”Xerox struggled with
mounting debt and competition a few years ago but has since returned to
profitability, led in large part with sales of color products. The company’s
color business amounted to $3.9 billion last year, or 27 percent of its total
sales, up from 16 percent in 2001 when its color strategy began.
The move intensifies Xerox’s
competition in the office market, one of the last bastions of black-and-white
printing. Xerox is hoping its new products will help increase the number of
pages printed in color by businesses from 3 percent to 10 percent in the next
three years.Companies such as Xerox generate
five times as much cash per page with color compared to black and white.
As part of its strategy, Xerox is
counting on the use of its patented solid ink technology, which eliminates
traditional printer cartridges. The process involves loading a color crayon-like
substance into a printer, which changes from solid to liquid and then again to
solid when it hits the paper.Xerox on Wednesday planned to
announce the first use of the solid ink technology on an office multifunctional
device that copies, prints, scans and faxes documents.The product is aimed at smaller
and medium-sized businesses, a segment Xerox has historically had trouble
reaching.Analysts say the strategy makes
sense, but they caution that substantial competition from companies such as
Canon, Ricoh and Hewlett-Packard puts pressure on the prices Xerox can charge.
Shannon Cross, principle of Cross
Research in New Jersey, cautioned that there could be a backlash by businesses
that don’t want to spend so much on producing colorful documents.
But she said the strategy makes
sense.“I think they’re on the right
track,” Cross said. “Color is absolutely a growth engine for the company.”
Shares of Xerox closed Tuesday on
the New York Stock Exchange at $14.93, down 20 cents and near the middle of its
52-week range of $12.55 to $17.24
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