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Growth Opportunities:
Ursula BurnsPresident, Business Group Operations
The New Business of Printing
andColor
Today’s Discussion
Color
• Market Opportunities
• Market Trends
• Xerox Differentiators
• Customer Successes
Color Leadership
Winning in Color requires:Winning in Color requires:
¨ Market understanding
¨ Technology leadership
¨ World-class partners
¨ Broad and innovative product portfolio
¨ Channels that optimize value and reach
Source: Xerox Internal Analysis
$112B
2004
Lead the Services Market
Drive the Color Revolution
Create the New Business of Printing
Growth Opportunities
Market Opportunity
Color Opportunities
Services$20B
EligibleOffset$17B
EligibleOffset$17B
Production$8B
Production$8B
Office$67BOffice$67B
Color $10BColor $10BB&W $7BB&W $7B
Color $17BColor $17B
B&W $58BB&W $58B
Color Market Growth Drivers
• Offset transfer• Market and application
development• Mono to color transition
• Increasing use of color in business applications
• Improving ease of use
• Lower color run costs
Source: Xerox Internal Analysis
2004 2009
$10B
$17B
$11B
$34B
OfficeOffice
OfficeOffice
EligibleOffset
EligibleOffset
ProductionProduction
OfficeOffice
EligibleOffset
EligibleOffset
ProductionProduction
Key Drivers:
Color Market Growth Dynamics – Pages
• Color page opportunity is huge
• In 2004 approximately 3 trillion total pages in market, excluding Eligible Offset
• Only 5% of 2004 pages were color
• Color page growth rate is accelerating
• Color pages projected to grow to 17% of total pages in 2009
Color Pages % ofTotal Pages
Source: Xerox Internal Analysis; consists of Production and Offi ce pages
17%
9%
5%
0%
5%
10%
15%
20%
2004 2006 2009
Color Market Growth Dynamics
TotalColor
TotalColor
EligibleOffset
1.8M
$17B
$10B
A3A3 A4A4
• Majority of activityin page printers
• Majority of revenuein 11+ ppm A3 MFD
• Eligible Offset is incremental opportunity
2004 Color Revenue
2004 Color Installs
Source: Xerox Internal Analysis
PagePrinters
1.5M
1-10ppm
11-20 21-30 31-40 41-59 60+ or> $150K
PagePrinters
1-10ppm
11-20 21-30 31-40 41-59 60+ or> $150K
Color Copiers / MFDs
$5.6B
Xerox Focus in the Market…
• Color growing in installs, revenueand pages
• We will aggressively compete in A4 and lead in A3
• Our sweet spots:• 11+ ppm A3 MFDs• Production color• Eligible Offset
…lead in color page and color revenue shareSource: Xerox Internal Analysis
5.8M
$34B
$10B
Total Color
1.8M
$17B
2004 2009
4.7M
PagePrinters
1-10ppm
11-20 21-30 31-40 41-59 60+ or> $150K
PagePrinters
1-10ppm
11-20 21-30 31-40 41-59 60+ or> $150K
$11B
Eligible OffsetTotal Color20092004 20042009
A3A3 A4A4
2009 Color Revenue
2009 Color Installs
Color Copiers / MFDs
$10.6B
Differentiators: Technology
• R&D aligned with strategic planks
• Customer-driven research• $1.5 billion total (Xerox and Fuji
Xerox) in 2004• 2/3 in color in 2004 – ramping up
services and workflow
• Rich patent portfolio• Over 500 new patents in 2004• 8,000 active patents
Xerox CoreTechnologyStrengths
Rich Patent Portfolio
Rich Patent Portfolio
Customer-Driven Research
Strategic Planks• Production• Office• Services
Xerox CoreTechnologyStrengths
Core Technology StrengthsSolid Ink• Proprietary• Superior reliability• Exceptional ease of use• Scalable
EA Toner• Less of everything• Cost effective• Environmentally friendly
Image on Image (IOI)• Unmatched performance and
quality at very high speeds
Paper Handling• Robust capability• 50 to 350 GSM• Continuous & cut sheet
Document Management• World-class controllers• Productivity enablers• Business process expertise
Rich Patent Portfolio
Rich Patent Portfolio
Customer-Driven Research
Strategic Planks• Production• Office• Services
Xerox Core Technology Strengths
Rich Patent Portfolio
Rich Patent Portfolio
Customer-Driven Research
Best and Broadest Color
Portfolio
Best and Broadest Color
Portfolio
Strategic Planks• Production• Office• Services
Xerox CoreTechnology Strengths
• Solid Ink• EA Toner• Image on Image • Paper Handling • Document Mgmt.
iGen3®iGen3®
iGen3 110
iGen3 110 with UV Coater
Steady Stream of Value-Added Services Offerings
Col
orDifferentiators: Best & Broadest Color Portfolio
Softw
are
Office Production
Solid Ink Color Laser MFD DocuColor®DocuColor®
DC6060
DC8000
DC5252
DC7000
DC3535
WorkCentreM24
Phaser 8400
WorkCentre®
C2424
Phaser 8500 / 8550
Phaser6300
Phaser6350
Phaser 7750 Phaser EX7750
Phaser6120
Phaser®
7400
Laser Printer
DC240 / 250
DC12
CopyCentre® 3545, 2636, 2128
WCP3545, 2636, 2128
Manual and Book Factory
Differentiators: DocuColor 240 / 250…
• MFD introduced mid-year
• Provides fast, flexible, reliableand affordable color
• Superior image quality
• For graphic communications, demanding office environmentsand central reproduction centers
• Outstanding face-off to Konica Minolta
…will take share in color
Xerox Core Technology Strengths
World-Class Software and
Hardware Partners
World-Class Software and
Hardware Partners
Rich Patent Portfolio
Rich Patent Portfolio
Customer-Driven Research
Best and Broadest Color
Portfolio
Best and Broadest Color
Portfolio
Strategic Planks• Production• Office• Services
Xerox CoreTechnology Strengths
• Solid Ink• EA Toner• Image on Image • Paper Handling • Document Mgmt.
Differentiators: World Class Partnerships
• R&D – Fuji Xerox• Manufacturing – Flextronics• Workflow – Adobe, EFI, XMPie, Creo, others• Finishing – Bourg, others• Integrated solutions – OmTool, Kofax, Equitrac, others• Channels
Role of Partnerships
Leadership
Xerox Core Technology Strengths…
Broad, Coordinated
Channels
Broad, Coordinated
Channels
…enable color leadership
World-Class Software and
Hardware Partners
World-Class Software and
Hardware Partners
Rich Patent Portfolio
Rich Patent Portfolio
Customer-Driven Research
Best and Broadest Color
Portfolio
Best and Broadest Color
Portfolio
Strategic Planks• Production• Office• Services
Xerox CoreTechnology Strengths
• Solid Ink• EA Toner• Image on Image • Paper Handling • Document Mgmt.
Source: Xerox Internal Analysis
Differentiators: Broad Go-to-Market Strategies
$112B Market Opportunity
LargeEnterprises
$46B
LargeEnterprises
$46B
GraphicCommunications
$25B
Small / MediumBusinesses
$41B
Small / MediumBusinesses
$41BLarge Enterprises• Services-led• Global account
relationships• Account intimacy• Enterprise productivity
focused
Graphic Communications• Dedicated industry
experts• Complementary
channels• Fully integrated
solutions
Small / Medium Businesses• Direct and indirect
channels• Xerox and third-party
branded products• Channel-ready products
and solutions
Xerox Solution• CopyCentre 2636 – provided convenience
color, ease of use, customer control• DocuColor 250 – in-store quality, speed
and productivity• DocuColor 8000 – POD, high-volume
production applications
Customer Value• Xerox enabled OfficeMax to be single
supplier with multiple solutions for its customers
• Replaced convenience mono devices with Xerox color capable – providing mono and color with one device
• Xerox DC250 increases capacity from 12-ppm to 50-ppm color
• Xerox DC8000 provides near offset quality
Office & Production Color – Customer Success
"From a product standpoint, color printing and copying is our top priority because it represents an opportunity to serve our business customers' growing needs. Xerox is helping us make high-quality color accessible and easy to use for all of our customers."
Brian Norris, Senior Vice President, Print and Document Services
Xerox Solution• 24 iGen3 Digital Production Presses• Centralized credit card statement
billing for 44 credit card companies
Customer Value• Approximately 9 million impressions
per month• Solid business partnership
Production Color – Customer Success
JAIS — Sumitomo Bank, Japan
¨ Market understanding
¨ Technology leadership
¨ World-class partners
¨ Broad and innovative product portfolio
¨ Channels that optimize value and reach
Summary
We will win in Color because we have:We will win in Color because we have:
þ Market understanding
þ Technology leadership
þ World-class partners
þ Broad and innovative product portfolio
þ Channels that optimize value and reach
Today’s Discussion
The New Business of Printing®
• Market Opportunities
• Market Trends
• Xerox Differentiators
• Customer Successes
The New Business of Printing Strategy
Complement traditional offsetwith digital printing capabilities
• Provide the industry’s broadest, most advanced product portfolio
• Strengthen our leadership position in monochrome and color
• Leverage the power of FreeFlow• Streamline customer print operations
and create new business opportunities
Lead the Services Market
Drive the Color Revolution
Create the New Business of Printing
Growth Opportunities
$112B
2004
Services$20B
EligibleOffset$17B
EligibleOffset$17B
Production$8B
Production$8B
Office$67B
The New Business of Printing Major Trends
*The NAPL 2004 – 2005 State of the Industry Report, National Association for Printing Leadership, Paramus, N.J.
“Timely delivery of customer communications is the #1 concern
among industry print buyers.”
Turnaround Times Most Important!Turnaround Times Most Important!
“Over 48% of printers citeshorter run lengths.”
Source: NAPL*
“Digital printing presses/systems were the #1 investment priority - 58% over
the next 5 years.”
Digital Investments Important!Digital Investments Important!
Source: NAPL*
“Enabled 28% price premium.”
Variable Content Creating Growth!Variable Content Creating Growth!
Source: InfoTrends / CAP Ventures - June 04
“Digital printing revenue to double to 14% from 2004 to 2007 as a % of
printer’s total revenue.”
Digital Printing Growing!Digital Printing Growing!
Source: NAPL*
Source: EDSF 2005 Trends Survey
Run Lengths are Getting Shorter!Run Lengths are Getting Shorter!
• Marketing Managers• HR Managers• Book Publishers• MIS Managers• Business Owners
DEMAND GENERATORS
• Lower costs• Higher response rates• Quick turnaround
The New Business of Printing Value Chain…
Value Chain Requirements• New sources of
revenue and profit
DEMAND FULFILLERS
• Commercial Printers• Service Bureaus• Direct Mail Printers• Book Printers• Quick & Franchise Printers• Data centers• In-Plant/CRDs
…requires the Right Technology, Right Workflow, Right Value Proposition
• Graphic Design• Advertising Agencies• Corporate Design• Commercial Photography
• Increase value addfor customers
• Personalization
DEMAND SPECIFIERS
MonoColorColor
XeroxNuveraTMiGen3iGen3
DocuColorDocuColor 4110TM
DocuTech®
HLC
Differentiators: The Right Technology…
Benchmark image quality
Outstanding application breadth
Maximum uptime
Productivity – for the customer and for Xerox
…provides competitive advantage and customer value
DEMAND GENERATORS DEMAND FULFILLERSDEMAND SPECIFIERS
Differentiators: The Right Workflow…
Source: InfoTrends/CAP Ventures – January 2005
“FreeFlow helps customers reduce production costs and improve efficiency by streamlining workflow – a key strategy that drives profitable business for printers.”
Customer convenienceand turnaround time
Variable data to create personalized communication
Automatic correction of print file problems
before printing
Xerox FreeFlow Enables
…reduces costs and increases productivity across the value chain
Differentiators: The Right Value Proposition…
“(Xerox has)…the most comprehensive program in the industry”
• Providing tools and resources for Demand Fulfillers to create new and profitable business opportunities:
• Educating Demand Generators on value of digital:“This campaign accomplished what I was tryingto do better than anything I’ve done in the past.”
• Educating and training Demand Specifiers on how to design for digital:“… Xerox provided a platform for discussion and the exchange
of information and ideas that could help us all do better,more effective work.”
…increases customer revenue and profits
Doris Brown, Vice President, Marketing, Pantone, Inc.
Doug Campbell, Creative Specialist, New York Life Insurance Co.
Mike Pannagio, Direct Mail Express
DEMAND GENERATORS DEMAND FULFILLERSDEMAND SPECIFIERS
Market Development Business Development
Business Development
Business Development
MonoColorColor
WorkflowWorkflow
iGen3iGen3
DocuColorDocuColor
The Right Technology, Workflow, Value Proposition
…make Xerox the leader in the New Business of Printing
and the Right Business Partners…
XeroxNuvera
4110
DocuTech HLC
Xerox Solution• iGen3 Digital Production Presses• DocuTech, DocuPrint Continuous Feed
and Xerox Nuvera Production System• Xerox FreeFlow – workflow solutions
Customer ResultsWith Freeflow we are:• Improving turnaround time from 7 days
to 1 day• Growing from 100s of book titles to 1000s
of titles• Growing from 1.5B pages per year to 5B
pages per year
New Business of Printing – Customer Success
“When you look at digital technology and the way the digital world will continue to evolve, it is clear there are great opportunities before us.”
Joe MakarewiczExecutive Vice President
Xerox Solution• iGen3 Digital Production Presses• Xerox Nuvera Digital Production Systems
Customer Results• Created web-based business unit –
MyPhotoFun• Allows customer to arrange digital
photos into high quality bound albumsand calendars
• Print volume doubled in each of first few months of operations leading to the installation of a third iGen3 DigitalProduction Press
New Business of Printing – Customer Success
“We’re filling a huge demandin the marketplace and driving very profitable growth for TED Gigaprint and our partners.”
Tico van der LindenSales Director,
MyPhotoFun
Xerox is the Leader in the New Business of Printing
ü Over 16,000 DocuColor family sold to-dateüOver 800 iGen3s sold to-date
ü10 billion Production Color pages expected in 2005ü> 3 billion pages to date on iGen3 - unmatched
combination of page volume and performance
ü Over 16,000 DocuColor family sold to-dateüOver 800 iGen3s sold to-date
ü10 billion Production Color pages expected in 2005ü> 3 billion pages to date on iGen3 - unmatched
combination of page volume and performance
Market Share Data as of 1H05 for US and Europe combinedSources: IDC Webtracker 9-16-05; Infosource for Europe, Xerox Internal Analysis
“The iGen3 looks like offset printing – but you be the judge. The iGen3 is in a league of its own. The results show Xerox color science and engineering deliver key technical breakthroughs in a field Xerox invented.”
Henry Freedman, Technology Watch Sept 9, 2005
“It’s no exaggeration that Xerox is the king of high-end cut sheet printers.”
Jon Bees, Better Buys for BusinessJune 2005
“Xerox greatly upped the ante with its iGen3 –a digital machine in a class by itself.”
Graphic Arts Monthly, 2005
Total Color revenue shareMono 91+ high-end cut sheet
High-end Color 60+ppm 41+ppm Color
Total Color revenue shareMono 91+ high-end cut sheet
High-end Color 60+ppm 41+ppm Color
#1
#1
#1
#2
Summary
We will continue to lead the New Business of Printing by:We will continue to lead the New Business of Printing by:
¨ Focusing on the entire value chain
¨ Offering the most comprehensive set of products and solutions
¨ Providing the Right Technology, Right Workflow and Right Value Proposition
þ Focusing on the entire value chain
þ Offering the most comprehensive set of products and solutions
þ Providing the Right Technology, Right Workflow and Right Value Proposition