Xerox continues to play for all the marbles in multiple segments of the printing industry and is aggressively moving to increase its already enviable market share in both black and white and digital color printing. In January, the company launched the DocuTech 100/120 copier-printer, the successor to the original DocuTech, along with two new smaller color engines. More announcements are coming next week at On Demand. You'll hear about new moves in color, monochrome and workflow, along with several intriguing business development resources for customers.
To gain a perspective on what Xerox is doing on the eve of 2004's largest digital printing exhibition in North America, WhatTheyThink.com talked with Valerie Blauvelt, vice president of marketing for Xerox Corporation's Production Systems Group. PSG is the home of all the print engines Xerox is using to gain its dominant market position and where the company has been making its most visible moves in recent years.
WTT: You announced the new DocuTech 100/120 copier-printer about a month ago. What has been the initial reception to the machine? What are existing customers saying?
VB: The response has been tremendous. Customers are telling us this is a product that now gives them more powerful capabilities at an affordable price point. This allows them to handle more complex and high volume work, resulting in new revenue for their business. They are especially impressed with the image quality, dual head scanner, the CD reader/writer and DVD reader.
WTT: Can you say how many orders have been taken already?
VB: We are not disclosing specific order numbers at this time, however, we've had incredible interest in the products and are accepting orders on a daily basis.
WTT: What kinds of print providers are ordering it?
VB: We're seeing orders from several market segments including quick print shops, in-plant central reprographic departments and the public sector. Basically, these devices appeal to anyone who is looking for expanded capabilities beyond what light production machines can offer. Customers tell us they will use the new DocuTech 100/120 Copier/Printers for print jobs such as reports, booklets and day-to-day copying and duplicating. This product is perfect for doing short run, quick turnaround, personalized printing with offset-equivalent quality.
WTT: Are sales so far replacements of existing DocuTechs or new units? Which older machines are being replaced?
VB: Sales have been new units, or replacements of both Xerox and competitive analog machines. The new products are addressing the mid-production segment, which other DocuTech products didn't previously target. The new DocuTech 100/120 Copier/Printers is a natural progression for owners of Xerox 5100, 5800, 5900 and 5090 machines. This further advances the digital transition of our business and the printing industry in general.
WTT: Xerox used groups of existing customers as input on the design and features of the new machine. What were the most important recommendations they made? To what extent are some of the recommended features being emphasized as key advantages --or even differentiators-- by the sales force?
VB: Throughout the development process, our customer advisory councils constantly challenged us to create a product with the best black-and-white image quality, greater reliability and faster scanning capabilities, and that is what we delivered. The new DocuTech 100/120 Copier/Printers are the first black-and-white products to use DocuColor iGen3 SmartPress Imaging technology, providing superior monochrome image quality using a patented non-contact process. Compared with existing digital production printers, the new DocuTech 100/120 Copier/Printers use 40 percent fewer moving parts, which translates into faster repair time and excellent reliability. The new DocuTech 100/120 Copier/Printers are also the industry's only copier/printers that can simultaneously scan both the front and back of a document. The dual scan heads provide the fastest, highest-quality scanning in the market 120 pages per minute. We listened to our customers needs, and the result is a revolutionary product. These are all key differentiators and the sales force emphasizes them as such.
WTT: IT Strategies recently noted how the DocuTech 100/120 and the Phaser 8400 are positioned in what they termed a "sandwich strategy" that sets up a new "mid-production" category for the 100/120 and a "mid-volume" one for the Phaser. To what extent is Xerox creating really new categories with these machines, and do you see these "middle" machines expanding to cover a wider range of documents and applications--that is expanding the definition of the middle range?
VB: Mid-production delivers printing and publishing power that has traditionally been available only with more expensive, higher-end equipment. The superior quality and scanning that this product features are not offered by competitive products or by Xerox products targeting lower priced segments. Charlie Pesko, managing director, CAP Ventures said, Market research indicates a significant gap exists in the market between light- and full-production digital black-and-white copier/printers. This gap makes it difficult to profitably address intermediate print volumes and job complexity. The new DocuTech 100 and 120 are the first to fill this gap with more advanced, more robust capabilities than light-production equipment and at a lower cost than full-production machines.
According to data from IDC, the sub-$1,000 segment is the fastest-growing part of the U.S. color page printer market, growing at 212 percent year over year in unit shipments. The Phaser 8400 delivers the speed and features that set an industry standard for performance and functionality in this segment. Small businesses previously shopping for a low-end color printer can easily afford the Phaser 8400, blurring the lines between low- and mid-volume segments and sandwiching the market between low and high volume office printing.
WTT: I know Gil Hatch has said the sales people should Lead with Workflow. Can you give us a sense at all how this strategy is playing out with customers and prospects?
VB: This strategy is progressing quite well. Workflow solutions offer print service providers an opportunity to increase the value they deliver to customers by allowing quicker turnaround times, Web access to documents and shorter runs. New workflow solutions around variable data are generating new revenue and profit streams for many of our customers. We spent significant time with our sales force to communicate the message that an integrated, streamlined workflow saves customers valuable resources in their digital operations. Annual kickoff training went well, the message was well understood and our sales people are doing a fantastic job of sharing the benefits of workflow with current and potential customers.
WTT: Partners are a big part of the FreeFlow strategy. Critics--and competitors--say the FreeFlow partners are really just a group of companies that Xerox has rounded up to address specific issues. But there is obviously more to FreeFlow than that. Can you talk about the tiers of FreeFlow partners and how they advance the FreeFlow initiative?
VB: Partners are an integral part of Xerox's workflow strategy and have been for many years. We have been working with over 100 partners on this initiative and are now strengthening and enhancing our already successful program to provide greater benefit to Xerox, its partners and its customers.
Key to improving and optimizing a customer's workflow is fitting into their existing environment and supporting their key applications. In short, each customer is unique and since one size doesn't fit all, partners ensure that Xerox can provide with the best solution for our customers' particular businesses.
As part of the enhanced program, we are now organizing our partner program to optimize the strengths of Xerox and partner offerings, while enabling our partners to expand their relationship with Xerox as their business grows. There are currently three levels of partnership in the program and a potential partner's level is based on all aspects of the partner's businessincluding its reach and presence, value proposition, alignment, breadth of offering and mutually beneficial business opportunities.
Once a partner has entered the program, we support them with sales training, sales and marketing tools, and development elements that include SDK development and access, product validation and equipment access. Through our partnerships with some of the best in the industry, we are providing customers with faster, more consistent and more secure document processes from job creation and ordering to fulfillment and distribution.
At On Demand we will be making announcements relative to our FreeFlow partners, so stay tuned for more information.
WTT: Similarly, standards are a big deal, especially JDF. Please tell us about Xerox's support for JDF and other key standards as part of FreeFlow. From a customer's perspective, how important is the adoption of standards within FreeFlow?
VB: The adoption of standards is of huge importance to customers. Printers are faced with the challenge of shorter run lengths and jobs with greater complexity. Open standards and JDF specifically, give printers the flexibility to automate their workflow and enable one set of electronic instructions to direct a job from creation to distribution. Xerox is supporting the development of standards and we have 40 engineers assigned to various standards bodies including JDF. JDF is a key standard that we are adopting and we plan to continue to announce future JDF capabilities in our products.
WTT: Will Xerox be making any important announcements at On Demand or at drupa? Can you give us some hints about what is to come?
VB: At On Demand and drupa, we will continue to provide customers better ways to compete and generate revenue, with industry-leading color and monochrome digital printing technologies, flexible workflow solutions and digital business development resources.
Worth mentioning for On Demand is Xerox's involvement at the show that goes above and beyond the exhibit hall. Xerox President and CEO Anne Mulcahy will give a keynote address titled, Innovation at Work: The Link Between Document Strategies and Business Results on the opening day of the show. Ursula Burns, president of Xerox Business Operations, will take part in "The Office of the Future: Redefining Document Processes" roundtable that will cover how organizations are changing the way they think about document-based communication in the office. Additionally, many other Xerox executives and customers will be sharing their expertise through the On Demand educational conference tracks.
WTT: Thanks so much, Valerie, for taking the time. It's a pleasure, as always. See you in New York.