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 user 2005-04-02 at 9:53:00 am Views: 78
  • #29408

    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

    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

    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

    “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