Xerox revamps office product line

In an effort to reclaim a bigger piece of the office-product market and raise revenue, Xerox Corp. Wednesday announced an overhaul of its line of copiers, printers and multifunction units, as well as a panoply of new services and distribution channels.

Xerox, which has lost ground to competitors such as Canon Inc., Ricoh Co. Ltd., Lexmark International Inc. and Hewlett-Packard Co., is battling back with a three-tier product strategy that covers a range of businesses. Xerox launched 21 redesigned or new office products that come under three product families: CopyCentre, WorkCentre and WorkCentre Pro.

"The office market is a US$52 billion opportunity; this is our heartland," said Anne Mulcahy, the company's chairman and chief executive officer. "We will have the broadest ... and most cost-effective product line in the market, bar none. In the past when Xerox lost business we lost on price, not capability ... now we have both."

CopyCentre digital copiers are priced starting at US$2,299, and offer printing speeds from 16 ppm (pages per minute) to 90 ppm. WorkCentre products, priced starting at about US$900, are basic multifunction systems that offer networked copying functions, with speeds from 16 ppm to 55 ppm, and options for e-mail, faxing and scanning. WorkCentre Pro multifunction units provide copying speeds from 16 ppm to 90 ppm, and offer the ability to integrate services and application from third-party providers. These high-end machines are priced starting at US$13,150 for a color-enabled device.

Xerox business partners that announced add-on services, including networked scanning and fax capabilities as well as accounting applications, include: Omtool Ltd., Captaris Corp, Cardiff Software Inc., ScanSoft Inc., Kofax Image Products Inc., Equitrac Corp. and Control Systems Inc. For months prior to Wednesday's announcement, Xerox worked with its partners to deliver software develop toolkits and APIs (application programming interfaces) so that various add-on applications would be ready when the products were launched, according to Jim Miller, president of the company's Office Group.

The high-end line includes the WorkCentre Pro 32 Color and the WorkCentre Pro 40 Color. Both devices use Xerox toner technology for sharper image quality and higher reliability. Furthermore, the WorkCentre Pro 40 operates at 40 ppm for black-and-white and 22 ppm for color, while the WorkCentre Pro 32 is capable of 32 ppm in black-and-white or 16 ppm for color.

The high-end copiers, WorkCentre machines and third-part services, aimed at enterprises, come amid a major push into smaller companies that the financially beleaguered Xerox, which recently emerged from lawsuits related to accounting practices, is making in hopes of increasing avenues of revenue generation, according to officials.

"We are expanding our line to include segments of the market we haven't served as well as we could have in the past," said Nancy Morris, vice president of Monochrome marketing at Xerox.

The new low-end product family includes devices that are not connected to the network, but are upgradeable, Morris said. To make its wares more appealing to small companies, Xerox also plans to offer "competitive pricing."

The WorkCentre M15, for example, is aimed at users buying their first multifunction digital machine, and offers features including copying, PC printing and network printing in a desktop design, at a suggested price of US$899.

New design features across the product families include an arched panel that describes a machine's functions in words, rather than icons. Xerox officials said that research showed that, though some icons are universally understood and are appropriate in many situations, descriptive words gave users a quicker, easier way to understand the various features of a product.

Xerox's Mulcahy spent most of her stage time putting Xerox products into the context of business in a time of recession and cost-cutting. She mentioned, for example, the company's expanded Office Document Assessments (ODA) services, performed by Xerox Global Services consultants. ODA helped Electronic Data Systems Corp. (EDS) identify how it could reduce cost of hardware, consumables and operational support by as much as 25 percent.

To help drive home the point that Xerox products and services can help users deal with workflow and business efficiency issues, the company trotted out IT industry guru Esther Dyson and business process re-engineering icon Michael Hammer for a chat with Mulcahy and various company customers.

"Today's customers have an extraordinary degree of power," Hammer said. "The more information customers get the greater their choices are; they are demanding extraordinary levels of speed and low cost. ... But you can't just throw equipment at them."

The bottom line for Xerox, according to one analyst, is whether Xerox can deliver quality products at a lower cost than competitors.

"Xerox was getting beat in the market because companies like Canon were offering good products at better prices. Xerox needs to offer better products at better prices; the rest of what they're saying is hype," said Robert Karr, a principal for Joho Capital LLC, a New York investment firm.

One customer said while price is important, other aspects of Xerox's offering are attractive.

"I don't mind spending a little more for quality, but that's getting harder to justify in today's financial climate," said Eric Steiner, director of information technology at Berdon LLP, an accounting firm in New York. Steiner has transitioned to both high- and low-end Xerox products from competitors over the last few years, as leases on equipment came up for renewal. "But down the road, the open architecture, the APIs, may get to be more interesting if I start to want to integrate software and equipment together in our networked environment."

Breaking with company tradition, Xerox will offer multifunction devices in the U.S. via distributors and resellers. The company also for the first time will post prices for multifunction units on the Web (http://www.xerox.com).

In Europe, the company will follow through with a transition to a two-tier channel strategy it already had started. In both North America and Europe, Xerox will start delivering products to distributors, which in turn will distribute products to value added resellers and concessionaires.

There are two reasons for the move to start selling through channels, according to Xerox's Miller. Since office products are now networked, IT managers are joining facilities managers in making buying decisions, and the technology officials are used to dealing with resellers.

At the same time, the move to sell through pan-European distributors was part of a cost-cutting decision to centralize certain business functions and move away from a country-by-country selling model.

The M15, color-button and 65 ppm through 90 ppm machines will be released Thursday in North America and June 1 in Europe. The 35 ppm, 45 ppm and 55 ppm machines will be released on July 1 in North America and Europe.

Rollout in other countries will take place over the third quarter.

(Tom Sullivan, associate news editor for Infoworld, contributed to this report.)

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