*NEWS*XEROX BETS FUTURE…COLOR DOCUMENTS

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*NEWS*XEROX BETS FUTURE…COLOR DOCUMENTS

 user 2006-03-14 at 10:20:00 am Views: 67
  • #14801

    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.