As vice-president of Worldwide Marketing for the Xerox Channels Group, Rob Stewart is well placed to observe the battle for office supremacy between monochrome and colour printing. In London to preview new products from Xerox’s Office Group, he noted that black and white laser class devices still have some life left.
“If you look at the marketplace, most of the machines bought in either a copy only, printer only or multifunction configuration are mostly black and white,” he says. “In most segments, however, demand for black-only in all of those product categories is declining slightly and demand for colour-enabled machines is rapidly growing across the board.
“In 2004, colour-enabled systems probably grew in the European marketplace in the region of 80-100pc year-on-year. Worldwide, 15-20pc of all laser class print devices that now ship are colour enabled,” he explains. The picture in the multifunction and copier space is slightly different, with just under 10pc of those devices colour enabled.
Stewart attributes most of this growth to the fact that the price of printers and total cost of ownership has reduced dramatically over the past two years. “Our market research shows that if a colour enabled device is priced at no more than 20pc over a black and white device of similar performance, people will step up and buy the colour device,” he says.
A key factor in reducing total cost of ownership is the fact that there is no longer any penalty for printing black-only on a colour-enabled machine. There used to be one, yet, it was eliminated years ago, according to Stewart. “People still carry the perception that it is there. They believe all of these colour devices are expensive because the old devices were expensive. Most early usage of colour devices was at the local print store where they charged £1 per sheet, thus causing the perception that it cost £1 per sheet, when in fact it didn’t.”
In the inkjet sector it is now impossible to find a new black-only printing product. Stewart feels, however, that the black-only devices will be around for a while longer. “Eventually we will see the demise of the black-only laser device but it will take a longer transition than we saw for inkjets. There is a production cost element to a colour laser device that a black-only laser device does not have, so it keeps the price premium high. But we are in that transition today. It’s just a case of how long it’s going to take – it won’t be two years; it won’t be four years either – it may be five.”
As part of its growth strategy, Xerox now focuses on three main areas: office equipment, professional printing and services and solution, with the third pillar taking on growing importance. “Today the services and solutions business is worth US$3bn worldwide out of our total revenue of US$15.5bn,” says Stewart. “That’s about 20pc. Of that US$3bn, most comes from managed services such as outsourcing which has been the traditional service we have offered to our accounts.”
Outsourcing is not the only element, however. A growing part of Xerox’s service offering covers other areas such as consulting, document management and assessment, and deployment of equipment. “These may include managing populations of equipment or documents or they may not,” says Stewart. “I don’t think managed services is the real growth business – rather, growth will be in the other element.”
As an example, Stewart cites a large organisation, such as an airline, that is required to produce service manuals on a regular basis. “In the whole process they create the manuals, print them, store them and distribute them but it’s just not what they want it to be. So our organisation can go into theirs, study the process they employ to create, store and distribute this information and redesign the whole process for them. Maybe even manage the whole thing thereafter. It may be that we actually don’t use documents any more but put the content on computer screens where people can get at it,” he explains.
“Other applications of the services would be in situations where people have content but it is scattered throughout the organisation. They want us to come in, sweep it up, organise it and deploy software or some approach to make it more readily available within the organisation,” adds Stewart.
Xerox has also revamped its channel strategy over the past few years, moving from a direct sales model to one which involves different types of reseller such as corporate resellers and volume channels.
“We’ve always had a broad product line,” says Stewart. “What we haven’t done necessarily is provide all our prospective channel partners access to these products. Over the past few years we have increased the distribution breadth of our product line through a number of initiatives. We have more initiatives that we will take to market that will provide access to more of our products to more partners. All of our office products today are taken to market by IT distributors. We have maintained a special channel called concessionaires. We have added to the concessionaire population a group of selected corporate resellers that would not have had access to our full product line in the past but do now. And we have had a long standing IT reseller base who have access to the lower end of product line, and that’s our profile today. As we go forward we are going to bring more of our products to more of our partners,” predicts Stewart.
By David Stewart