- If Xerox fails in unseating Heidelberg it won’t be the product that takes the hit. This one falls squarely on management’s shoulders.

- Xerox management should have a plan, which includes a short-term strategy and a long-term strategy - but please, not the current strategy.

At this year's On Demand Show, Xerox promoted its DocuColor iGen3 digital production press. Once again, the company reiterated its plan to take on commercial printing giant Heidelberg and compete in the commercial printing industry.

Xerox has consistently delivered on making great equipment ever since the first line of DocuTechs. The equipment has never been the issue at Xerox and sales numbers for the line of DocuTechs have been phenomenal. There is no doubt Xerox has delivered on the goods with its new press. Unfortunately, I believe this is where the good news ends for Xerox.

The challenge facing Xerox is the whole "Document Company" culture and its management team. The team that continues to run Xerox is not prepared to take on Heidelberg and lead the commercial printing industry. I think it was a strategic blunder on the part of Xerox’s management to even attempt to go head to head with Heidelberg right out of the gate. Xerox should have gone for the number two or three slot, but not number one. Xerox has put their stake in the ground and it is Heidelberg or Bust!

Xerox has not put together the necessary infrastructure to support the commercial printing industry as of yet. If you attend their media shows and read their press releases, I am not sure they understand what is required.

Recent visits to Xerox’s and Heidelberg’s web site is a telling example. It illustrates the stark differences between how the two companies view the present and the future of the commercial printing industry. Clearly, Heidelberg is positioned to continue their diverse leadership in the commercial printing industry. It is apparent that Xerox is a large company focused on other things besides commercial printing and the required infrastructure, money and talent to support it.

Short-term Versus Long-term

So far, Xerox management has been unable to articulate that it understands the complex workflows and processes that make up this world. Five years from now it might. This is why Xerox management should have a plan, which includes a short-term strategy and a long-term strategy.

The short-term strategy should be to focus on HP Indigo and their space while Heidelberg should be left for the long-term strategy plan. What Xerox has done now is set the bar so high, it cannot possibly succeed. Xerox even risks having no place to fall back when it can not offer commercial printers the type of solutions Heidelberg packs in its vast and more experienced arsenal.

Another item is that commercial printers have a long history of being very slow movers at adopting new technology. While Xerox is excited about variable data and believes that this is one of their strongest weapons, this too is a major challenge. Xerox is not going to be able to use this weapon for profit for quite some time. In order for variable data to finally come into its own, printers must prove they know how to deal with databases. So far the synergy and education that must take place in order for this to come to fruition has not happened.

Financial Challenges

Xerox still must deal with financial distractions too. In order for Xerox to take on Heidelberg they must spend millions of dollars on infrastructure, marketing and rebuilding their sales teams. Their competition has already done this. It does not help that the printing industry and the economy are not at the top of their games either.

Recently, Xerox was once again downgraded (by Moody’s). This casts further doubt on whether or not Xerox has enough money to properly compete in the commercial print space to begin with. Definitely not enough money to devote at this time to taking on Heidelberg. HP Indigo yes, because they have struggled in the past to get their own commercial printing initiative out of the garage and may be at more of an even starting point with Xerox.

Yes, Xerox will sell some presses to those printers who are early adopters and do not require Xerox to deliver on the necessary infrastructure. Unfortunately these printers represent a smaller part of the market. Once Xerox, Heidelberg, HP Indigo and Scitex carve up the early adopters of new digital technology, Heidelberg is simply better positioned to eat up a majority of the rest continuing its domination of the market.

Don’t call out the industry leader, unless you are ready.

Listen to Charlie Pesko’s assessment of this industry at this years On Demand Show: “Where is the $300 billion paper-centric printing and publishing industry in its lifecycle? It should come as no surprise that this is a mature industry, characterized by overcapacity, reduced prices, cost cutting and industry consolidation. Demand is a continuing problem." The growth of electronic pages is continuing to have a negative impact on the printing industry. Pesko goes on to say "And this launch will require the booster rockets of revolutionary-not evolutionary-change." This is not good news for Xerox. When you think of revolutionary change and booster rockets - most commercial printers certainly do not think of Xerox.

In the past, Xerox management has had serious problems with revolutionary change. Giving away the Apple O/S. Letting John Warnock leave, forming Adobe which revolutionized the printing industry with Postscript and then PDF. How ironic is it that Xerox now has to pay Adobe to license a technology that they should by all rights own?

Xerox management let another major opportunity pass in the early 1990’s when they could have become a dominant player in the commercial world of digital color. Instead of partnering with EFI, like Canon, Xerox’s management team went with Splash. The term "Fiery" became synonymous with file to Rip printing, while Splash remains a reference to a measurement of alcohol added to a drink.

Then at Drupa 2000 - in front of the entire graphics world, Xerox announced they were entering the commercial print and graphics market. Their key weapon? The "New Business of Printing" initiative and the Premier Partners program. Xerox executives stated they would use this program to take on Heidelberg.

In the past two years, what penetration has Xerox made into the traditional commercial printing market? Time has proven once again that Xerox management, has been and is still not properly prepared to execute on these major initiatives.

Meanwhile, over at Heidelberg

On the other hand, life at the mighty Heidelberg has been very different. Over the past 154 years, Heidelberg has seen its share of evolutionary and revolutionary change. Heidelberg management rose to the occasion and built an established well-run company capable of executing it’s management vision. The company created a stable of great products and services, which are harnessed to a team of well-seasoned sales professionals and a strong dealer channel, which help round out the successful company.

When Heidelberg management needs to make adjustments - they do so without hesitation. Heidelberg is the very type of company that thrives in a revolutionary type of environment. Heidelberg even has a history of making great acquisitions of companies like Linotype-Hell and forging partnerships with companies like Kodak. Everything at Heidelberg must lead to results and it all seems to work well. Heidelberg continues to develop new lines of presses that meet the diverse needs of their customers while making sure that the entire management team is keenly focused on its mission at hand.

Read the following quote from a recent interview that WhatTheyThink.com conducted with Niels Winther, President & CEO, Heidelberg USA. "A new chapter has begun in our heritage, and we are now charged with bringing the Heidelberg standard to the digital age. We’re off to a strong start, with solutions that are in the market, running strong and producing profit. When we use the phrase "total digital solution," we mean it. We mean incorporating digital technologies to prepress, press and postpress processes, and enabling a totally integrated print shop."

These are the words of a leader that understands his market.

While Xerox management lost the momentum they once had with Premier Partners, Heidelberg has all the momentum in the world. Last month, Heidelberg introduced HeiPort, a new kind of e-portal which will allow print providers to communicate directly with print buyers through a designated Web site and will enable an array of e-services, from remote proofing and online requests for printing quotes and orders, to job management and secure file transfer.

The HeiPort system also will be customizable to feature the branding of individual print businesses and will serve as an online gateway to Heidelberg’s emerging Prinect products.

Summary

By choosing to go after Heidelberg first, Xerox has again set itself up for possible failure and could find itself chasing HP Indigo and Scitex. Xerox must fundamentally change the way it does business and its culture if it is serious about leading the digital commercial print market. I think it is time for Xerox management to move out from under the "Document Company" image if it wants to become a major player in this market.