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Xerox CEO: Our journey from paper docs to printed electronics

CEO Jeff Jacobson on how Xerox will transcend it roots, and emerge from a declining industry by investing in new technologies.

It's not uncommon to see Xerox characterized as a company past its prime, as a survivor from a bygone era that's been left behind by the modern world.

Revenues at the print services company have been steadily declining for years, dropping by about 6% in 2016—partly a reflection of the shrinking demand for the printed page in an era of internet-connected phones and tablets.

Yet Xerox remains an $11bn company, which enjoys gross margins of 40 percent and has cut annual costs by more than $300m, as part of an ongoing strategic transformation program.

And company CEO Jeff Jacobson acknowledges that Xerox needs to change tack, to refocus its efforts on areas in print where demand is growing, not falling.

"The industry is declining and if you were to look at the top six people in the industry, they're probably declining from three to five percent and our declines have been in line with that," he said.

"Part of the reason we're introducing this new strategy is to reverse the revenue trajectory of our business, to minimize the declines, to generate more cash flow, and be able to reinvest back into the business in innovation and in technology."

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As part of its strategy to carve out a more promising future, Xerox has just staged the largest product launch in its 110-year history, releasing 29 multi-function printers under its AltaLink and VersaLink brands.

"Let's say a little under 40 percent of our revenues are in the growth markets," says Jacobson.

"What our goal is by the year 2020, is to have at least 50 percent of our revenue in those growth markets—A4 multifunction devices, production color, managed print services and to generate more share in the SMB market," he said.

Printed electronics trumps 3D printing

Aware that Xerox will need to significantly pivot its business in the long run, the company is specializing in the emerging technologies it sees as a natural fit for its core competencies. Somewhat surprisingly, given the hype, 3D printing isn't a high priority.

"At this point we're not sure that we will go heavily into 3D printing," said Jacobson, describing it as "an area that is in the very early stages".

Xerox is looking to get in on the ground floor in other newer print technologies, such printing directly on objects.

"One of the technologies we're just introducing now is the direct-to-object printer. So you can basically take any object you want, put it into the device and it'll print on plastics, it'll print on fabrics, it'll print on baseball caps, golf balls, thermoses, coffee mugs, books, whatever you want," he said.

Xerox's direct-to-object printing is already being tested by customers in the UK, although Jacobson says the technology is still at "very early stages".

Another new area that Xerox is already experimenting with is printed electronics, for example, smart labels for packaging that can help tracking a package or offer information about a product, such as whether food produce has spoiled.

"We're in the very early stages, but that's where we're placing our bets right now," he said, saying the technology will play a role in the accelerating the Internet of Things, particularly in embedding compute, storage and sensors into 3D printed objects.

To an extent, Xerox is now freer to pursue research directly related to print than it previously was, having recently completed the spinoff of its business services unit Conduent.

The split into business services-focused Conduent, much of which originated from Xerox's acquisition of Affiliated Computer Services (ACS) for $6.4bn in 2010, and the print-focused Xerox will allow each to pursue their very different markets, according to Jacobson.

"There really weren't a lot of synergies. We believe that separating the two companies and having Conduent focus on its own business and having the new Xerox focus on its business, would be best for both companies and therefore best for the shareholders," he said, adding that Xerox is now pursuing R&D in areas related to automation, workflow and content management, graphic communications, analytics and printing.

Robert Palmer, research director with IDC's imaging, printing and document solutions group, said, in the short term, it makes sense for Xerox to target a broader range of print customers, such as SMBs, but added the firm will face competition from market incumbents.

"Xerox is making significant investments in technology and support infrastructure to expand deeper into the SMB market, particularly in the A4 business where it currently holds single-digit share.

"The strategy is sound but success will depend upon Xerox's ability to take share from competitors that are already entrenched."

However, modest changes of focus will also only take Xerox so far, and will need to be the first step in a more profound transformation of the business, according to Holly Muscolino, research VP for content technologies and document workflow at IDC.

"All of these strategies are short term (mid-term at best) as they all increase share of a declining market. Market share is simply shifting around between the players - there is no net growth," she said.

"As a next step, Xerox must diversify into adjacent new markets. They must help organizations transform their document strategies, contribute to overall business transformation and deliver innovative solutions that can offer independence from the declining printing equipment market."

One note of consolation for Xerox is that most offices are still awash with paper, and are likely to remain so for some time. While acknowledging that demand for paper printing is in decline, Jacobson is skeptical that the paperless office, whose arrival has been forecast for decades, will become a reality for most businesses anytime soon.

"I think it has a long, long, long tail," he said, pointing out that technologies such as offset printing have endured for more than 100 years after their invention.

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About Nick Heath

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

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