A new era begins at Xerox
By Andy Slawetsky – Xerox recently held their annual investor’s conference at the New York Stock Exchange. While Ursula Burns winds down her last weeks at the helm, this was incoming CEO Jeff Jacobson’s show and he set the tone, discussing “A New Beginning at Xerox.”
Companies rarely get a chance to hit the reset button and that’s exactly what Xerox is doing as they split with Conduent (formerly ACS when acquired by Xerox in 2010). They get a fresh start and the ability to focus on what made Xerox great – imaging technology.
Xerox will hit the ground running in 2017 as Jeff announced Xerox’s biggest launch ever (mentioned 4x in 30 minutes of presentations). 29 new ConnectKey products will begin to roll out in the first few months of the New Year.
The new Xerox will focus on MPS for SMB customers – a new direction for them. When discussing this during the analyst roundtable, Jeff clarified that they’d focus more on the M than the S portion of SMB. At 7% growth, MPS is a bright spot within Xerox, one of many that often get overshadowed by the considerable challenges Xerox faces in other areas.
Through tools, services and their Global Imaging (GIS) network, Xerox is well poised to go after SMB (the bread and butter of GIS). Additional tools and resources in the hands of this channel have a lot of potential.
Incidentally, GIS is another one of those bright spots, and arguably the best acquisition in Xerox history. Acquired in 2007 for about $1B, the Xerox subsidiary has doubled in size though organic growth and acquisitions. And Xerox is now considering plans to expand this model to Europe.
Having two senior executives at GIS that were former Presidents of major Xerox competitors, Tom Salierno, President and COO of Ricoh and Mike Pietrunti, President and CEO of Kyocera. gave GIS a level of leadership that truly understood dealers and clearly has helped them identify and acquire a growing base of high quality feet on the street.
GIS operates as it’s own company, something that’s both good and bad. It’s kept the C word out of their hair (Corporate!), but it’s also indirectly hampered their dealer strategy in my opinion.
It’s no secret that Xerox operates a program to recruit dealers to market the WorkCentre portfolio. Newly appointed Chief Commercial Officer and longtime Xerox veteran Kevin Warren (he’s been through it all) told us they are going after the “untapped dealer pool,” signing independent dealers that place 75% of A3 products. To reinforce this messaging, Xerox had video during the conference showcasing relationships with dealers like Lou Usherwood (Usherwood) and Jim Dotter (Virginia Business Systems) discussing what brought them to Xerox.
As a relative newcomer to supporting dealers compared to companies like Canon, Ricoh and others who have been doing it since the set up shop in the 1970s and 1980s, Xerox has had to play catch up.
But why? GIS has an infrastructure that’s already built and running like a well-oiled machine. I’d like to see a little more sharing between different groups and companies within Xerox. After all, aren’t’ they all on the same team at the end of the day?
From where I sit, it’s always appeared like GIS competed with Xerox at a certain level. They competed with the Agent program and now they compete with the dealer program to be the favorite child in the Xerox family. Maybe it’s just me but that’s how I’ve seen it over the years.
Xerox has taken a hard look at their revenue to identify where they should focus their efforts going forward. In years to come 54% of revenue will come from current growth areas, which Xerox defined as A4 MFPs, Large Enterprise MPS, Production Color, SMB MPS and Workflow Automation.
The plan is to offset mature markets like A3 MFPs, production mono and single function printers, all of which are in decline for Xerox.
Can Xerox sell enough color production to make up for what they’re losing in monochrome production? Can they sell enough A4 MFPs to offset more expensive A3 MFPs that are in decline? Time will tell. To me, the key will be the services piece – MPS and workflow automation, where healthier margins will help make up for these continued losses.
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Xerox is currently ranked 9th in A4 and Kevin told listeners they see a lot of opportunity in this area. Does anyone else think it’s kind of funny that Xerox’s big opportunity is A4 printers and HP’s biggest opportunity is A3 copiers?
Xerox is also focusing on other areas like inkjet and the exploding packaging industry where their investments in commercial inkjet have given them a growing presence. Their new Direct Object Printing is just another example of amazing Xerox innovations in production print.
Innovation is what made Xerox great and there will be a renewed effort in R&D, where Xerox currently spends $1B+ /year (with Fuji Xerox) to keep advancing technology. I see a rekindled emphasis on PARC, the think tank/technology nerve center subsidiary of Xerox that essentially invented what would become the computers we all use today, among many other things.
This renewed focus on PARC and the direct involvement of the Xerox CEO with them shows me they’re serious about maintaining and even improving their reputation as a global technology leader.
It was a great conference and you could just feel the enthusiasm among the Xerox employees. I haven’t seen them this fired up in years. Not since Anne turned the ship.
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The time is now for Xerox. This is what they’ve been waiting for, It’s all on them. No more suffering from bad press due to lawsuits from areas that have nothing to do with imaging (and there were many). No more sharing resources and siphoning funds from the technology group to send it to what is almost an entirely different company on some levels (and it will be very soon). It’s all on them and they’re excited for this clean slate and a chance to sink or swim on their own again.
Key executives are now in new leadership roles, waiting for their chance to take the ball and run with it. Jeff is the new CEO. Kevin is the new CCO, Mike Feldman is President, Large Enterprise Organizations, Toni Clayton-Hine is now Chief Marketing Officer, Bill Osbourn Jr. is CFO, Stephen Hoover is now CEO of PARC and on and on. Xerox has been waiting for this and 2017 is just about here. Exciting times.
Don’t underestimate Xerox. They’ve taken a beating in the press because of bad financial numbers. But the technology is there. The investments have never stopped and there’s more going on behind the curtain at Xerox than almost any other vendor I cover. They’re a monster.
The conference ended with a panel of Jeff, Kevin, Mike Feldman and outgoing CFO Leslie Varon fielding questions from the crowd of mostly financial analysts.
I think Jeff’s choice of words to close the event were perfect – We are a new Xerox and we are well positioned for success.
~Andy Slawetsky
