Xerox Considers Acquiring HP?

By Andy Slawetsky – While nearly everyone seems to have been thinking that HP might acquire Xerox, it seems the reverse may be a distinct possibility.

The Wall Street Journal reported today that Xerox is considering a takeover at HP.

I don’t think anyone saw this coming.

The two got closer than ever in July when they announced an expansion of their business relationship. That’s when I started feeling like the two of them coming toether was inevitable. It was a monumental agreement if you follow these companies.

As of yesterday’s settlement with Fuji Film, Xerox is essentially free to pursue other OEMs for their printing hardware. They’re unhooked from Fuji Xerox, a relationship that lasted 57 years. At the moment, HP is flush with A3 hardware coming out of the South Korean Samsung factories that they acquired just over 2 years ago.

When Ursula essentially outsourced the Xerox MFP and printer programs, Xerox became even more entrenched with Fuji Xerox for products. At the time, the arrangement looked perfect, with the two companies staying out of each other’s territories while the Xerox hardware orders kept the Fuji Xerox factories humming.

Flash forward to a couple of years ago and Xerox’s board, led by Carl Icahn decided that Xerox wasn’t getting a good deal from Fuji Film and he accused the Japanese partner taking advantage of Xerox for years. The whole thing blew up into a massive, very public lawsuit that I won’t rehash here. The end result is that Xerox gets to split off on their own, divesting themselves of partial ownership of Fuji Xerox.

If the HP-Xerox rumors are correct, Fuji Xerox  could find themselves in a tough situation as they could instantly be looking to replace one of the world’s largest A3 customers. If Xerox acquires HP (or if the reverse happens), they will have all the hardware they need and FX will be scrambling.

HP also gains a lot from a merger with Xerox. First off, they get a very large A3 customer list through XBS and dozens of dealers and Agents. Once Xerox flips from the Fuji Xerox products to the HP MFPs, their factories will probably more than double or triple in production (at least). On top of everything, their products complement each other very well, both in the office and especially in production print.

This move would also give Xerox an instant presence in some very lucrative markets where they do not currently sell. Asia, Australia, New Zealand and most of that part of the world buys equipment from Fuji Xerox. Until yesterday, Xerox owned a chunk of that company. But now they don’t and it’s a wide open market. How long do you think Xerox will ignore 1/3 of the global market? My guess is, not long.

And HP already has offices all over this region. I know this because I have seen them in Seoul, Australia and Singapore. Overnight, Xerox could be in front of 10s of thousands of potential customers that they’re not currently selling to.

That said, I would expect that Fuji Film and Fuji Xerox are already looking at expanding their footprint in North America and Europe, where they have always relied on Xerox as their partner.

What about the fact that this merger would bring together arguably the two largest MPS (managed print services) companies? Both vendors are consistently recognized as industry leaders for managed print and if they could integrate the two (a very difficult proposition), they could become quite elite in this space.

I could write on this topic for hours. But in the end, nobody knows what’s going to happen. There are huge benefits to these two companies coming together. Most of us, including myself, were predicting that HP, the  would be the one buying Xerox, especially considering they’re about three times the size of Xerox (estimated $8B VS $29B). However it happens, it seems that two of the most iconic brands in the imaging industry may be a big step closer to coming together as one.

SOURCE Industry Analysts Inc.

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