Xerox Corporation

Company Profile

Publication Date: 24 Dec 2009

www.datamonitor.com
Datamonitor USA Datamonitor Europe Datamonitor Germany Datamonitor Hong Kong
245 5th Avenue Charles House Kastor & Pollux 2802-2803 Admiralty Centre
4th Floor 108-110 Finchley Road Platz der Einheit 1 Tower 1
New York, NY 10016 London NW3 5JJ 60327 Frankfurt 18 Harcourt Road
USA United Kingdom Deutschland Hong Kong

t:+1 212 686 7400 t:+44 20 7675 7000 t:+49 69 9754 4517 t:+852 2520 1177
f:+1 212 686 2626 f:+44 20 7675 7500 f:+49 69 9754 4900 f:+852 2520 1165
e:usinfo@datamonitor.com e:eurinfo@datamonitor.com e:deinfo@datamonitor.com e:hkinfo@datamonitor.com
Xerox Corporation

ABOUT DATAMONITOR

Datamonitor is a leading business information company specializing in industry analysis.

Through its proprietary databases and wealth of expertise, Datamonitor provides clients with unbiased
expert analysis and in depth forecasts for six industry sectors: Healthcare, Technology, Automotive,
Energy, Consumer Markets, and Financial Services.

The company also advises clients on the impact that new technology and eCommerce will have on
their businesses. Datamonitor maintains its headquarters in London, and regional offices in New
York, Frankfurt, and Hong Kong. The company serves the world's largest 5000 companies.

Datamonitor's premium reports are based on primary research with industry panels and consumers.
We gather information on market segmentation, market growth and pricing, competitors and products.
Our experts then interpret this data to produce detailed forecasts and actionable recommendations,
helping you create new business opportunities and ideas.

Our series of company, industry and country profiles complements our premium products, providing
top-level information on 10,000 companies, 2,500 industries and 50 countries. While they do not
contain the highly detailed breakdowns found in premium reports, profiles give you the most important
qualitative and quantitative summary information you need - including predictions and forecasts.

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Datamonitor plc.
The facts of this profile are believed to be correct at the time of publication but cannot be guaranteed. Please note that the
findings, conclusions and recommendations that Datamonitor delivers will be based on information gathered in good faith
from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Datamonitor
can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

Xerox Corporation Page 2

© Datamonitor
Xerox Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5

Xerox Corporation Page 3

© Datamonitor
Xerox Corporation
Company Overview

COMPANY OVERVIEW

Xerox Corporation (Xerox) is a provider of document management technology and services. It offers
digital systems which include printing and publishing systems; digital presses, advanced and basic
multifunctional devices (MFD’s), which can print, copy, scan and fax; digital copiers; laser and solid
ink printers, and fax machines. The company provides software and workflow solutions. Xerox also
offers software, support and supplies, such as toner, paper and ink. The company primarily operates
in the US. It is headquartered in Norwalk, Connecticut and employs 57,100 people.

The company recorded revenues of $17,608 million during the financial year ended December 2008
(FY2008), an increase of 2.2% over FY2007. The operating loss of the company was $114 million
in FY2008, compared to operating profit of $1,438 million in FY2007. Its net profit was $230 million
in FY2008, a decrease of 79.7% over FY2007.

KEY FACTS

Head Office Xerox Corporation

45 Glover Avenue
Norwalk
Connecticut 06856-4505
USA
Phone 1 203 968 3000
Fax 1 203 968 3218
Web Address http://www.xerox.com
Revenue / turnover 17,608.0
(USD Mn)
Financial Year End December
Employees 57,100
New York Ticker XRX

Xerox Corporation Page 4

© Datamonitor
Xerox Corporation
SWOT Analysis

SWOT ANALYSIS

Xerox is a provider of document management technology and services. It offers digital systems
which include printing and publishing systems; digital presses, advanced and basic MFD’s, which
can print, copy, scan and fax; digital copiers; laser and solid ink printers, and fax machines. The
company provides software and workflow solutions. Xerox also offers software, support and supplies
such as toner, paper and ink. The company’s strong brand image provides it an edge over its
competitors, by providing easier acceptance of product expansions and innovations. However,
intense competition could lead to pricing pressures thereby affecting the margins and market share
of the company.

Strengths Weaknesses

Strong brand image High dependence on the US and Europe

Significant R&D capabilities
Strong distribution network

Opportunities Threats

Acquisition of ACS Intense competition

Strategic alliances Environmental regulations
Expansion in small and midsized business Foreign exchange fluctuations
markets

Strengths

Strong brand image

Xerox is one of the world's leading document management, technology and services company. It
has one of the oldest operating histories in this sector. Xerox has a strong brand image and its name
has become synonymous with photocopying. The company's brand is a valuable resource and it
continues to be recognized in the top 10% of all US brands. Xerox figured in the 56th place in the
BusinessWeek-Interbrand's Top 100 Global Brands list in 2009. Its brand was valued at $6.4 billion
in 2009 by the BusinessWeek-Interbrand combine, higher by 1% over 2008. Xerox ranked 147
among the Fortune 500 companies in 2009.

Furthermore, Xerox was named as the world's most admired company in the computer industry as
per FORTUNE magazine's annual reputation survey in March 2009. According to industry sources,
the company is one of the leading players in managed print services (MPS) and MFPs and printers.
In 2008, the company was the market leader in MPS market with approximately 40% of MPS revenues
worldwide. In addition, Xerox was named as one of 2009’s World’s Best Companies by Ethisphere

Xerox Corporation Page 5

© Datamonitor
Xerox Corporation
SWOT Analysis

Magazine. Its strong brand image provides Xerox an edge over its competitors, by providing easier
acceptance of product expansions and innovations.

Significant R&D capabilities

The company has strong research and development (R&D) capabilities. The company has aligned
its R&D investment portfolio with its growth strategies of leading color transition, enabling the 'new
business of Printing', and increasing customer value through services. R&D spending in FY2008
focused primarily on the development of high-end business applications to drive the ‘new business
of Printing’, extending color capabilities, and expanding services offerings and delivering lower-cost
platforms and customer productivity enablers. Xerox's R&D is strategically coordinated with that of
Fuji Xerox, which invested $788 million in FY2008, $672 million in FY2007 and $660 million in
FY2006.

Xerox was awarded 609 US utility patents in 2008 and was ranked 31st on the list of companies
that were awarded the most US patents during 2008. Including those awarded to its research partner,
Fuji Xerox; Xerox was awarded over 940 US utility patents in 2007. As of FY2008, Xerox owned
approximately 8,900 design and utility US patents.

The company also has a number of cross-licensing agreements with companies with substantial
patent portfolios, including Canon, Microsoft, IBM, Hewlett Packard, Oce, Sharp, Samsung and
Seiko Epson. In 2008, including those of its PARC subsidiary, Xerox added 11 agreements to its
portfolio of patent licensing agreements, and either Xerox or its PARC subsidiary was a licensor in
all 11 of the agreements.

Strong R&D capability enables Xerox to stay ahead of the market by introducing innovative
technologies and products.

Strong distribution network

Xerox has a strong distribution network consisting direct sales people and indirect agents,
concessionaires, resellers, dealers, and web-based channels. The company sells its products and
solutions directly to customers through a worldwide sales force and a network of independent agents,
dealers, value-added resellers and systems integrators. The company uses direct sales force to
address complex demands of its customers such as more advanced technology, solutions and
services requirements; and uses cost-effective indirect distribution channels for basic product
offerings.

In the US, GIS continues to expand its network of office technology suppliers to serve an
ever-expanding base of small and mid-size businesses. The company markets Phaser line of color
and monochrome laser-class and solid ink printers primarily through office information technology
industry resellers, who access its products through distributors. In 2008, Xerox expanded its
distribution partnerships in North America by recruiting information technology resellers and
strengthening its network of independent agents.

Xerox Corporation Page 6

© Datamonitor
Xerox Corporation
SWOT Analysis

The company continued to increase product offerings available through a two-tiered distribution
model in Europe and developing markets. The company is also increasing its use of partners to
expand market coverage. Through its global reseller alliance with Fujifilm, the company distributes
its production products and solutions to graphic communications customers as well as photo specialty
markets spanning retail, professional lab and processing center businesses. In 2008, the company
also signed additional country-level contracts with Fujifilm Graphics Systems in Europe and developing
markets to extend Xerox digital production systems reach to new commercial print customers and
prospects. In Europe, Africa, the Middle East, India, and parts of Asia, Xerox distributes products
through Xerox Limited, a company established under the laws of England. Its strong distribution
network enables the company reach customers all over the world, increasing its revenue base.

Weaknesses

High dependence on the US and Europe

The company is highly dependant on the US and Europe for its revenues. Although, it has operations
across the world, it still derives majority of its revenues from the US and Europe. In FY2008, the
company derived approximately 51.8% and 34.1% of total revenues from the US and Europe,
respectively. The US and Europe collectively accounted for 85.9% of company’s total revenues in
FY2008. The company’s principal markets, the US and Europe have experienced a slowdown in
the recent times. The GDP growth rate for the US is expected to be low in coming years, primarily
due to the turmoil in the financial markets, very weak housing market indicators and negative
consumer sentiments. Consequently, the GDP growth of the US in 2008 was down to 0.4%, compared
to 2.1% in 2007. Further, the GDP growth of the US is expected to contract by 2.7% in 2009. The
Euro area’s GDP declined from 2.7 in 2007 to 0.7% in 2008 and is forecast to contract by 4.2% in
2009. The company’s high dependence on the US and Europe makes its operations vulnerable to
fluctuations in the economies of those regions.

Opportunities

Acquisition of ACS

In September 2009, Xerox acquired ACS, one of the world's largest diversified BPO firm, for $6.4
billion. ACS is a $6.5 billion company with revenue growth of 6% and new business signings of $1
billion in annual recurring revenue during its fiscal 2009. This acquisition marks Xerox's entry into
services industry and the company expects to triple the revenue it generates in services from $3.5
billion in FY2008 to $10 billion in FY2010. The ACS's expertise in managing paper-based work
processes and providing specialized BPO and information technology services for industries is
expected to further strengthen Xerox’s capabilities.

Xerox Corporation Page 7

© Datamonitor
Xerox Corporation
SWOT Analysis

Furthermore, the BPO is estimated to be a $150 billion market and is growing at a rate of 5% per
year. This acquisition will enable Xerox to become a leading global enterprise for document and
business process management, and will accelerate its growth in the growing market.

Strategic alliances

The company has formed strategic alliances in recent periods. Xerox formed a strategic global
alliance with HCL Technologies, a leading global IT services company in November 2008. As part
of the alliance, HCL will serve as a systems integrator for Xerox's managed print services offering,
which helps companies control their office print environment. In the same month, Xerox signed an
agreement with IBM to serve as the preferred global imaging partner for IBM Managed Business
Process Services (MBPS), a unit of IBM Global Technology Services. Such strategic alliances will
enable Xerox to enhance its customer base thereby increasing its revenue stream in the coming
years.

Expansion in small and midsized business markets

Xerox has been trying to capture the small and mid sized business (SMB) market in recent times.
In February 2009, GIS, a Xerox company completed the acquisition of ComDoc, one of the leading
independent dealers of document management solutions in the US. This acquisition will expand
GIS’ coverage into four states of the US offering them access to more than 14,000 new small,
mid-sized and major account business customers.

Furthermore, in 2008, the company completed several acquisitions to further strengthen its distribution
capacity and expand its reach in SMB market. GIS acquired Saxon Business Systems, an office
equipment supplier with offices throughout Florida, as well as three additional smaller businesses,
Better Quality Business Systems, Precision Copier Service DBA Sierra Office Solutions and Inland
Business Systems of Chico. The company also acquired Veenman, expanding its reach into the
SMB market in Europe. Veenman is Netherlands’ leading independent distributor of office printers,
copiers and multifunction devices serving SMB.

Expansion in SMB markets will enable the company to broaden its customer base and improve its
revenues.

Threats

Intense competition

The company faces intense competition across its business segments. The company’s competitors
range from large international companies to relatively small firms. The company competes on the
basis of technology, performance, price, quality, reliability, brand, distribution and customer service
and support. Its key competitors include Canon, Ricoh, Hewlett-Packard, and, in certain areas of
the business, Pitney Bowes, Kodak, Oce, Konica-Minolta and Lexmark. Some of the companies

Xerox Corporation Page 8

© Datamonitor
Xerox Corporation
SWOT Analysis

such as Canon and Hewlett Packard Company have larger scale and have generated higher revenues
than Xerox. In the office market, Japanese companies such as Canon and Ricoh are offering
competitive products at lower prices. This has been a big threat since customers in the low-end
market are more price-sensitive.

Intense competition could lead to pricing pressures thereby affecting the margins and market share
of the company.

Environmental regulations

Xerox's operations and products are subject to environmental regulations in each of the jurisdictions
in which it conducts business and sells products. Some of the company's manufacturing operations
and some of the products use substances that are regulated in various jurisdictions. Various countries
and jurisdictions have adopted or are expected to adopt restrictions on the types and amounts of
chemicals that may be present in electronic equipment or other items. The previously enacted
European Union Directive known as the Restriction on the Use of Hazardous Substances (RoHS)
is an example.

Further, various countries and jurisdictions have adopted or are expected to propose, programs that
make producers of electrical goods, including computers and printers, responsible for certain labeling,
collection, recycling, treatment and disposal of these recovered products. The previously enacted
European Union Directive on Waste Electrical and Electronic Equipment (WEEE) is an example.

Other potentially relevant initiatives throughout the world include proposals for more extensive
chemical registration requirements, various efforts to limit energy use in products, and other
environment related product programs. For example, the European Union's Energy-Using Products
Directive (EUP) is expected to lead to the adoption of "implementing measures" intended to require
certain classes of products to achieve certain design and/or performance standards, in connection
with energy use and possibly other environmental parameters and impacts. It is possible that some
or all of Xerox's products may be required to comply with EUP implementing measures.

Another example is the European Union "REACH" Regulation (Registration, Evaluation, Authorization
and Restriction of Chemicals), a broad initiative that requires parties throughout the supply chain to
register, assess and disclose information regarding many chemicals in their products. Depending
on the types, applications, forms and uses of chemical substances in various products, REACH
could lead to restrictions and/or bans on certain chemical usage. Failure to comply with new
environmental legislation could result in significant penalties and liabilities.

Foreign exchange fluctuations

The company operates in various countries, and is exposed to risk from changes in foreign currency
rates. In FY2008, the company has generated approximately 48.2% of its total revenues from
operations outside the US. The company’s operations outside the US are reported in the applicable
local currencies and then translated into US dollars at the applicable currency exchange rates for

Xerox Corporation Page 9

© Datamonitor
Xerox Corporation
SWOT Analysis

inclusion in its consolidated financial statements. The fluctuation of exchange rates for currencies
of these countries in relation to the US dollar affects the company’s operating results.

Currency fluctuations have a material impact on the company’s financial condition, results of
operations and cash flows. For instance, the company reported a decrease of $57 million in its cash
and cash equivalents in FY2008 as a result of exchange rate fluctuations. Exchange rate fluctuations
from time to time could affect the company’s results and financial condition.

Xerox Corporation Page 10

© Datamonitor
Copyright of Xerox Corporation SWOT Analysis is the property of Datamonitor Plc and its content may not be
copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written
permission. However, users may print, download, or email articles for individual use.