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Xerox Sandwich Strategy Creates Opportunities

Press release from the issuing company

Hanover, MA…February 18, 2004 - On January 29, 2004, Xerox held a major press event where they released a complete new technology platform and an extension of an existing one. The most significant introduction was the platform replacement of the original 14-year-old DocuTech. The second announcement was about a technology extension and repositioning of Xerox’s solid ink jet technology. In both areas Xerox has taken a "sandwich-strategy" approach creating a new "mid-production" category in the high-end sector and a "mid-range" category within the desktop color laser sector. DocuTech 100/120 Xerox has engineered a completely new engine for the monochrome DocuTech successor. This new product offering is intended to sustain Xerox’s position in monochrome production printing. According to Mark Hanley, president of I.T. Strategies, "This area is worth more than $2.5 billion per year in revenue to Xerox." To do this, Xerox has in essence redefined the Production Printing space by raising the engineering and performance specs on the monochrome "Lite Production" area, a space which was essentially created by others and was effective in the market against Xerox. Xerox has created a new sector, "Mid-Production" which sits between the High-Volume Production sector and the lower volume, Lite Production sector. In the new Mid-Production sector, Xerox is setting what they believe will be a hard-to-obtain standard for others to match. Phaser 8400 Xerox has also substantially renovated solid ink jet technology in order to produce a 24 ppm, 2400 dpi office color printer priced below $1,000. According to Hanley, "With the Phaser 8400, Xerox is implementing a ‘sandwich strategy’ similar to what it has done with the DocuTech 100/120. They are attempting to cut off the very low end of the color desktop office printing segment and leave it to the low-price leaders like Minolta, while they are recognizing the hard-to-move HP position in the high-speed network area. Xerox is pushing in the middle with a virtually new category at this price/speed performance level."