Xerox Colors Itself Hopeful With Plan
By Doug Olenick -- TWICE, 4/2/2001
NEW YORK -The reinvention of Xerox continues with the company announcing last month a grand strategy that will focus on the general office products and high-end printing categories, but not at the expense of its nascent retail small office/home office business.
Xerox president/chief operating officer Anne Mulcahy said the top-to-bottom overhaul of the company that is now taking place will bring it back to profitability by the second half of 2001, and the company that emerges will focus on having color-capable products throughout its product lines.
However, the SoHo Business Group, which markets the company's inkjet and multifunction devices, will not be affected by any of the upcoming changes, said Marc Young, the group's strategic marketing VP.
No major changes are expected for the retail product lines this year, he said. The inkjet line will be refreshed at midyear with models bringing faster print speeds at prices hovering around the $99 mark.
Xerox's multifunction printer line, which started shipping in January, will have an entry-level unit priced at $200, and Young expects low-end MFPs to displace the high-end inkjet printers now on the market.
"There will be very strong [MFP] price degradation this year, and they will have a faster growth rate than printers," Young said, adding that stand-alone inkjet printer growth will be in the single digits, while MFP growth should be in the 18 percent to 22 percent range.
Xerox's retail partnership will stay focused on the office superstores, and to a lesser extent, consumer electronics and computer chains, he said. Xerox also sells product direct from its website.
While the retail segment of the business is expected to maintain the status quo, the remainder of Xerox will undergo a huge change.
Mulcahy said the company will continue to simplify its business practices by shedding unneeded assets and reducing internal costs to free resources, about $1 billion worth this year, so it can grow in new areas. Xerox now has a 25 percent interest in Fuji Xerox. The plan has seen Xerox sell half this interest to Fuji Photofilm last month, along with several Asian manufacturing sites.
"GE, AT&T and IBM have all had to renew themselves, and now it's Xerox's turn," she said in a speech to Xerox employees and industry analysts in New York.
In the coming months the company will pull back from some areas it now services, but Mulcahy would not state exactly what might be done. "We can't spread ourselves too thin, and we can't be all things to all people, but we can be everything to a few," she said.
The end result will be a much different Xerox, and it will deliver color copying to all of its market segments. Mulcahy said that by 2005, Xerox's interest will lie in the general office products area, where it will introduce color laser printers with monochrome print speeds, and the high-end print business.
The company's SoHo Business Group will operate somewhat outside the main company, with much of the product development and manufacturing being handled through partnerships.
The general office product category is where Xerox plans to make the biggest splash. This is now dominated by black-and-white printers, which have the high page per minute print speeds required by offices, but Mulcahy feels Xerox's new color laser printer technology will entice offices to shift to the new platform.
"This is potentially a $1 trillion business worldwide," she said, "and a huge opportunity for us."
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