Financial Analysis Of The Xerox Corporation Commerce Essay


Xerox, a photocopier machine producer which later expanded into producing and supplying colored printing started out as a remarkable company which revolutionized the state of the technology in the 19th century but in the year 2000 the company's performance declined drastically. According to Diane McGarry and Fred Heller (2004)the reason for this near bankruptcy level was contributed by the way the company failed to respond to the queries of the consumers and the problems they were facing. On analyzing the situation the company discovered that the fault basically lay in the way the company collected their responses which brought about in some case delayed results because of the time it would take for the end result or the necessary response to be attained. Therefore to counter this problem they effectively set out to communicate more effectively with their consumers.

Xerox Annual Sales Revenue Analysis

2000 to 2001

The financials of the company represent the situation discussed above whereby in the years 2000 to 2001 Xerox was losing money. Although according to Anthony Bianco and Pamela L. Moore (2001) the company had overstated their profits and several lawsuits had been filed against the company by the Securities and Exchange Commission. This also led to the rapid deterioration in the performance of the company as well as the heavy insurance liabilities that the company had invested in against protecting themselves from property casualties that could occur, brought about the company's downfall.

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As can be observed from the table, the income statement reflects the profitability scenario of the company whereby in the year 2000 to 2001 the sales of the company declined from approximately $18 million to $17 million; the factors contributing towards this decline as has been discussed by the were the near bankruptcy level and consumer loss due to the competition they received from other competing firms such as Canon, Hewlett-Packard and the less costly services being offered by the Japanese firms to the consumers resulted in their market share decreasing hence resulting in this decrease of sales. Moreover the sales kept declining in the next few years as a result of the loss in their market share.

2001 to 2002

From 2001 to 2002 the sales of the company fell drastically from $17 million to $15 million. This was also because of the weak performance of the company as suggested by Diane McGarry and Fred Heller (2004) which was because of the poor customer feedback they received due to the company's negligence and inability to successfully evaluate the problems encountered by the consumers when using Xerox's products. Moreover according to Anthony Bianco and Pamela L. Moore (2001),Xerox was also encountering internal conflicts within the management which further slowed down the progress of the company. When comparing it with the leading competitors of Xerox it was clear that Hewlett-Packard and Canon once again took the lead.

2002 to 2003

This decline was stabilized enough to prevent it from further decreasing drastically from the year 2002 to 2003 which reflected a minute and steady decrease in the sales of the company although reporting a sales of $15 million. From 2002 to 2003 the company experienced a stable decrease in its revenues whereas its competitors reported a remarkable increase in the level of sales achieved by them which indicated the capturing of market share by the competitors.

2003 to 2004

From 2003 to 2004 a minute yet effective change was brought about in the level of sales of the company which increased and hence onwards it kept on steadily increasing with few fluctuations occurring in the year 2004 whereby the sales fell slightly. According to Joel Kubby (2003), Xerox was once again improving their technological methods used and was now investing in Research and development so as to cater to the problems they previously encountered, hence progressing towards an increase in sales which as the table shows increased from $15701 million to $15722 million. This was a vast improvement brought about by the company.

2004 to 2005

From the years 2004 to 2005, a decline was observed in the sales figure of Xerox which was attributed to the competitive edge achieved by Canon and Hewlett-Packard through the ways they reduced their costs and prices to attract more customers and hence capture more of the market (Diane McGarry and Fred Heller, 2004). Therefore the decrease in sales was inevitable as most of the market was captured by Hewlett-Packard and Canon and the sales henceforth increased for the competing firms.

2005 to 2006

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During the years 2005 to 2006, the revenue slightly increased and yielded more sales for the company but the sales revenue achieved by Xerox was still by far quite less as compared to the sales revenue of the competitors. Canon and Hewlett-Packard kept up their steady pace of increasing their revenues while Xerox struggled to catch up with them.

2006 to 2007

From 2006 to 2007 a steady increase in the level of sales for Xerox was reported as can be observed by analyzing the income statement of the company. This reflected the fact that Xerox was finally re-establishing itself successfully by conducting appropriate research as to the needs of the consumers and by meeting them effectively. They still earned revenue below the $20 billion margin whereas its competitors earned revenue lying in the range of $80 to $100 billion.

2007 to 2008

From 2007 to 2008, sales revenue increased for all the three companies although the year 2008 showed the beginnings of a decline for both Xerox and Canon because of the financial crisis that shook the whole world. Hence this optimistic growth persisted in this period with Hewlett-Packard still taking the lead and hence the market share.

2008 to 2009

Moreover in 2009 after having observed a steady increase in the level of sales of the company, the figure drastically fell again from $17 million approximately to $15 million as it had previously fallen in the years 2001 to 2002. This drastic decline was contributed to the global financial crisis effects that were being felt by companies worldwide of which both, Xerox and Canon, were no exception. Hewlett-Packard on the other hand pursued a steady increase in their sales whereas the sales for both Canon and Xerox fell during these crisis years. Overall a mean average of $16.63 billion was observed for Xerox, with Hewlett-Packard having a mean average of $79.22 billion per year and Canon having a mean average of ¥3.47 trillion per year. The highest sales figure recorded from amongst the three firms was by Hewlett-Packard earning $118.7 billion in the year 2009. Not much volatility was observed for Xerox, with the volatility figure being 30% hence indicating a stable trend throughout. Although the highest volatility observed was by Hewlett-Packard which was 60% and indicated an upward increasing trend. Canon on the other hand showed 50% volatility and also showed a consistent increasing trend although its sales decreased towards 2008 and 2009.

Sales per employee Annual Analysis

2000 to 2001

To further analyze the situation of the company, the sales per employee have to be observed through the graph by comparing it with the major competitors of Xerox. The financial observation that can be made is such that Xerox in the year 2000 to 2001 reported a sales level per employee below that of both his competitors, Hewlett-Packard and Canon with Hewlett-Packard remaining in the lead. The sales level recorded per employee by Xerox was approximately $200,000 with Canon reporting a sales level per employee as approximately $400,000 which was double the level achieved by Xerox. Hewlett-Packard on the other hand reported a sales level per employee as being $500,000. This reflected the market share being captured by the employees of Xerox as being less as compared to the major competitors.

2001 to 2002

Furthermore, this trend persisted again for Xerox in the next two years that is from 2001 to 2002 whereby the sales per employees were of the same amount, approximately being $200,000 again. This fact can be attributed to the way the company remained stable in not letting their market share slip from their clutches and maintain a steady flow of sales even though its competitors, Hewlett-Packard and Canon apparently took the lead.

2002 to 2003

In addition to this from the years 2002 to 2003 a slight increase in the level of sales per employee was observed which can be attributed to the fact that the company was fighting for its come-back after having gone into a decline and was thus making efforts to revitalize their organization by obtaining a better understanding with their consumers and by communicating much more effectively with them. This strategy helped them reclaim their market share and thus this strategy resulted in the increase of sales per employee which meant that the company was now obtaining more market share. However the competitors still remained in the lead with Xerox barely catching up to them.

2003 to 2004

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From the years 2003 to 2004, sales per employeeconsiderably rose for Xerox as well as for Hewlett-Packard and Canon with Xerox reporting approximately $250,000 to $280,000, Canon reporting approximately $400,000 and Hewlett-Packard reporting $500,000 approximately. This increase in sales can be attributed to the rejuvenating of the Xerox Company in order to capture the market share and attain its lost leading position once again. The company cut down its costs and started implementing the same methods as that of canon in order to provide less costly services and products.

2004 to 2005

From 2004 to 2005 the steady persistent increase was once again noticeable for all the three firms with Xerox almost reaching the $300,000 mark. This did not entail that it topped the leading companies but it was closer in doing so although canon and Hewlett-Packard both steadily increased their sales per employee through technological innovations.

2005 to 2006

From 2005 to 2006, once again the companies steadily increased their sales per employeeand hence increased their market share just as steadily with Hewlett-Packard once again taking the lead.

2006 to 2007

During the 2006 to 2007 period, Xerox showed a tendency to increase their sales per employee whereas Hewlett-Packard and canon both started their descent from the year 2007 onwards from the peak they achieved in the years 2006 to 2007. This can be attributed to the fact that with the coming of the global financial crisis the first onslaught of which was being felt by the two firms which could be observed with the beginnings of a reduction in their sales per employee as of the year 2007.

2007 to 2008

During the years 2007 to 2008, Xerox remarkably kept on increasing their sales per employee although sales per employee for Hewlett-Packard and Canon both started declining gradually due to the liquidity constraints being imposed by the global financial crisis and because of a loss in the ensuing loss in consumer confidence. This negatively affected the competitors whereas Xerox started coming up with newer innovating technology through the research and development they conducted.

2008 to 2009

During this period all the three companies started their descent due to the severity of the financial crisis. Due to this declining trend Xerox was able to catch up with Canon later in the year. The mean average that Xerox was able to attain was $253,200 whereas the mean average that Hewlett-Packard and Canon were able to achieve was $554,900 and ¥32.65 million respectively.

Return on Equity Annual Analysis

2000 to 2001

The return on equity is the total amount of profit a company managed to earn with the shareholders' money. At the end of the year 2000, Xerox had a negative return on equity of nearly 6%. This showed that the company was not properly utilizing the money at hand. The net income for Xerox was negative at the end of the year, re-instating why the returns on equity for Xerox was negative. According to their statement of net income, Xerox had a net income of negative 271 million dollars. The other companies in the same industry, namely Hewlett-Packard and Canon, were doing much better since they had positive returns on their net worth. Hewlett-Packard had a return of around 19% on their equity while Canon was reporting a return of 11%. This paints a vivid picture of how far behind Xerox were in contrast to their competitors.

2001 to 2002

By the end of the year 2001, Xerox had slowly managed to rectify their return on equity situation. Although they were still reporting a negative return on their investment, the stated value of their return on net worth had been reduced to a mere negative 2%. The net income for Xerox was now a negative 92 million dollars which was a drastic improvement over the last year. In comparison, Canon were still doing quite well as they had managed to retain their positive return on net worth (which had now increased to around 12%). Hewlett-Packard's financials were in quite some trouble and their return on net worth had come down from 19% to a mere 2%. This spelled trouble for Hewlett-Packard and it meant that Xerox was not the only company with low returns on their net worth.

2002 to 2003

At the end of 2002, Xerox was no longer in troubled waters, having successfully managed to get rid of negative returns on their equity. The company was finally showing a positive net income (around 154 million dollars) although the figure was not as substantial as those of Canon. It was doing much better than Hewlett-Packard, though, who was now experiencing negative returns on their net worthbut Canon was still the industry leader in terms of the return on net worth. By December 2003, Xerox had nearly zero returns on their equity while Hewlett-Packard and Canon had returns of almost negative 5% and 13% respectively.

2003 to 2004

At the end of the year 2003, Xerox had drastically improved its return on equity which had increased to around 9%. This sudden change came about as a result of the internal improvements the company had made. The net income had more than doubled over the previous year to around 360 million dollars. Canon was still at the top with a return of around 16% on their net worth and Hewlett-Packard had recovered from their losses too with a 7% return on their total equity.

2004 to 2005

The year 2004 ended with Xerox finally beating its industry rivals where return on their equity was concerned. Xerox had achieved a return of more than 18% on its net worth. This was helped along by more than doubling the net income over the previous year to 776 million dollars. Canon was not far off; they had achieved a return of 16% on their net worth but Hewlett-Packard was still struggling with a return of only 9% on their total equity.

2005 to 2006

By the end of 2005, Xerox was relatively stable; they had managed to increase their net income by a little over 20% to 933 million dollars. The total amount of equity had increased by a greater amount since the return on equity for Xerox had fallen to almost 15%. Canon was facing almost the same return on their net worth and Hewlett-Packard was now slowly recovering. Hewlett-Packard had managed to increase their return to 10% but was showing promising signs of greater things to come.

2006 to 2007

Before the financial crisis hit the markets, Xerox reached their peak return on equity of 18%. This was aided by an increase in their net income by almost 30% from 933 million dollars last year to more than 1.2 billion dollars by the end of 2006. Canon and Hewlett-Packard had a return of 16% and 17% respectively.

2007 to 2008

By the end of 2007, the net income for Xerox had declined to 1.1 billion dollars. The return on net worth for the company had also decreased to 15% while the other companies in the same industry were doing better. Hewlett-Packard averaged the highest return on its net worth; a 20% return. Canon, on the other hand had slightly increased the return on its net worth to 17%.

2008 to 2009

2008 was a bad year for Xerox. The financial crises had affected them and hit them hard. The net income for Xerox had declined to a mere 230 million dollars; showing a decrease of almost 80%. The return the company was earning on its net worth had been slowly declining throughout the year and by the end of 2008, it had decreased to only 4%. Canon was, similarly, in troubled waters and the return on their net worth decreased to 11%. Hewlett-Packard, on the other hand, had managed to continue on their upward trend by increasing their return on equity to 21%. Xerox managed to recover quickly from their losses and doubled their net income over the previous year. By the end of 2009, the return on their equity was 8% and Canon had the same figure. Hewlett-Packard were still the industry leaders in terms of the return earned on net worth and the company was earning a steady 20% return on their equity.

Fixed Assets Annual Analysis

Fixed assets are those assets that cannot readily be converted into cash. These assets generally include property, plant, and equipment.

2000 to 2001

By the end of the year 2000, Xerox held 2.5 billion dollars in fixed assets. Hewlett-Packard were holding almost double the amount of fixed assets (around 4.5 billion dollars) while Canon owned the highest amount of fixed assets among the three competitors; 9.2 billion dollars' worth of fixed assets. This shows that Xerox had a long way to go in order to catch up to its competitors.

2001 to 2002

At the end of the year 2001, Xerox had sold off some of its fixed assets and the remaining fixed assets were worth 2 billion dollars. Hewlett-Packard were operating with the same amount of fixed assets as compared to the previous year while Canon had increased the number of fixed assets that it owned to a total net worth of 10 billion dollars in fixed assets.

2002 to 2003

The year 2002 ended with Xerox owning almost the same amount of fixed assets as compared to the previous year. The net worth of the fixed assets was almost 2 billion dollars. Canon had a similar situation where the worth of the fixed assets had remained the same at 10 billion dollars. Hewlett-Packard, on the other hand, bought a large amount of fixed assets during the year and the net worth of those assets measured a little over 7.5 billion dollars.

2003 to 2004

There was no substantial change in the worth of the fixed assets over the year and by the end of 2003, all three companies (namely Xerox, Hewlett-Packard, and Canon) had fixed assets which had a net worth almost equal to the previous year.

2004 to 2005

During the year 2004-2005, the total net worth of the fixed assets of Xerox fluctuated from 2 billion dollars to 2.5 billion dollars and then back to 2 billion dollars, indicating some changes in the plant, property, and equipment. Hewlett-Packard managed to keep the worth of their fixed assets stable at 7.5 billion dollars during the year while Canon increased the worth of their fixed assets to 11.5 billion dollars.

2005 to 2006

Again, Xerox's fixed assets fluctuated by the same values as last year and by the end of 2005, their fixed assets were worth 2 billion dollars. Hewlett-Packard saw no change in the value of their fixed assets but Canon's fixed assets were now worth almost 14 billion dollars. This shows how little Xerox was investing as compared to the industry leader.

2006 to 2007

Over the following year, Xerox continued to keep its fixed assets valued at a steady rate of 2 billion dollars while Hewlett-Packard's fixed assets had increased to 8 billion dollars. Canon, still at the top of the industry in terms of value of fixed assets, had 15.5 billion dollars' worth of fixed assets; showing its steady increase in plant, property, and equipment.

2007 to 2008

With relatively minor changes in the value of fixed assets, Xerox remained stable once again by the end of 2007. Hewlett-Packard did not see a change in their fixed assets which were previously valued at 8 billion dollars. Canon's continuous increase in its fixed assets finally slowed down and their fixed assets were valued at 16.5 billion dollars.

2008 to 2009

Once again, the year 2008-2009 was a stable one, in terms of the amount and worth of fixed assets for Xerox. The value of fixed assets for Xerox remained at 2 billion dollars. In the middle of 2008, however, Hewlett-Packard invested in fixed assets and by the end of 2008, its fixed assets were valued at 11 billion dollars. On the other hand, the value of Canon's fixed assets decreased to 16 billion dollars by the end of 2008. Xerox was now seriously behind their competitors in terms of production because their plant, property, and equipment were minor as compared to the industry leader. By September 2009, Xerox continued to use the same amount of fixed assets and so did Hewlett-Packard. Canon, on the other hand had fixed assets worth almost 16 billion dollars.

Stock Price Annual Analysis











Stock Price (Year End)











S&P 500











2000 to 2001

In the years 2000 to 2001, industry benchmark set by S&P 500 had been reported to be $1320 for the stock price whereas for Xerox the stock price was reported as $4.63. The stock price reflects what the customer is willing to pay for it; hence it reflects the value that is attributed to the company. Therefore when comparing the stock price of Xerox with the industry benchmark we can conclude that the value of the company was quite low during the year 2000 and 2001 with the prices of Xerox's stock being $4.63 and $10.42 as compared to the industrial benchmark of $1320 and $1148. Even though an increase in stock prices was observed, it was nowhere near the industrial benchmark.

2001 to 2002

During the years 2001 to 2002, a decrease in the value of the stock price for Xerox was observed which reflected a decrease in the value of the firm. Although during this period it was also observed that the stock price for the industry had considerably decreased. This was because the internet bubble taking place from the year 1995 till the year 2000 had burst by that time. The internet bubble is a term attributed to the persistent rise in stock values of firms representing the technological sector. This decline in the value of the industrial benchmark figure was also because S&P had to delete a few firms from its current list because this period was marked by an increasing amount of mergers and acquisitions.

2002 to 2003

During this period, the stock price of Xerox rose once again to reflect the rising value of the firm. This increase was also marked by an increase in the industrial benchmark set by S&P 500. The reported figures were $879.8 to $1112 for the industry and for Xerox the figures were reported to have been from $8.05 to $13.8.

2003 to 2004

From 2003 to 2004, the increasing trend persisted for Xerox as well as for the industry. This depicted the fact that the value of the firm steadily increased with the increase marked in the value of the industry.

2004 to 2005

From the years 2004 to 2005, the price of the stock and hence the value attributed to Xerox fell from $17.01 to $14.65 although the industrial benchmark value of the stock was observed to have risen during this period.

2005 to 2006

During this period, the value once again rose to reflect the increase in the value that the consumers were willing to pay for buying a share of the company's stock. Along-with the increase in the value of the firm, Xerox, the industrial benchmark was also observed to have been increasing with Xerox still not able to attain the same level of value attributed to the industrial benchmark set by S&P 500.

2006 to 2007

During this period, the value of the stock for Xerox slightly declined whereas the value for the industry persistently increased two-folds.

2007 to 2008

From 2007 to 2008, the value of the stock for drastically fell from $16.19 to $7.97 which reflected the decline in the value of the firm attributed by the consumers. This drastic decline was also observed in the industrial benchmark figure which fell from a staggering $1418 to $903.3. This decline was attributed to the number if firms going bankrupt due to the global financial crisis observed during this period whence consumers lost confidence and the value of the firms including Xerox fell.

2008 to 2009

During this period, an increase in the value of Xerox's stock was observed which showed that the company was trying in their efforts to attract more consumers even though the global financial crisis persisted. The industrial benchmark as reported by S&P 500 also observed an increase in the value of stocks.


Xerox started out as a company that held the leading position in its industry and no other competitor could break through and win that position away from Xerox but unfortunately in the year 2000 Xerox started losing money. This weakening of their reign had started during the middle of the 19th century and persisted till the 20th century. The company started losing out on their consumers and they started losing their market share to other competitive firms which provided the customers with better technology at reduced prices. The analysis conducted showed the same result whereby Hewlett-Packard took the lead by offering innovative less costly products and services and Canon followed with the same strategy. Furthermore the inner conflicts presiding within the management also brought about the decline of Xerox since effective policies due to the conflict were not being made. Moreover the fact that Xerox had overstated their profits during the 19th century made them lose their consumers as they lost the trust of their loyal customers when this fact was revealed to the public. This further contributed to the decline of Xerox.

Thence overall the performance of Xerox throughout the financial period, 2000 to 2009 revealed the efforts made on behalf of the company to compete with the leading firms namely, Hewlett-Packard and Canon. Although commendable, the efforts did not yield the desired results as Hewlett-Packard was too far ahead in its leading position to be caught up with. The sales figures, sales per employee figures, fixed assets and return on equity all revealed this fact although all three firms were negatively affected towards the end of 2008 and throughout the year 2009 but Hewlett-Packard still managed to retain its leading position and Xerox was still unable to re-capture its market share and the leading position it once held. Hence Xerox still needs to work and manage its costs as well as its sales and income so as to attain the desired level of profitability and fame that it once held.

Chapter 3

Strategic Analysis

2. What Xerox's competitors did that may have affected the financial performance of Xerox either positively or negatively.

Over the past few decades, Xerox, especially in America, has become a household name - to such an extent that the brand name is widely used to replace the actual word of "photocopying" itself. However, in the last decade or so, Canon, Lexmark and HP have proven to be strong competitors of Xerox.


Canon In particular has specifically targeted Xerox's success In America and has built a sound foundation for its copying and printing endeavors. Although Canon's primary business involves imaging and camera technology, it has over the course of the past decade successfully established its printing and copying department to be one of the major players in those industries.

This began in the year 2000, when Canon began listing American Depositary Receipts on the New York Stock Exchange (NYSE). This allowed ample American investment to fuel Canons development and ever-growing presence in the market, which was typically dominated by the likes of HP and Xerox.

Also in that year, Canon received great publicity by receiving the prestigious Copier of the Future IEA-DSM Award of Excellence - This no doubt caused people to turn heads towards the brand and considered its products rather than that of Xerox's.

Having established itself as a key market force, Canon then went on to bring innovative new products that had features that Xerox's product did not - namely the iR series MFD chart plotters, which provided unprecedented functionality related to providing document collation and distribution functions. This stimulated many sales for Canon which no doubt effected Xerox negatively.

The year 2001 saw Canon consolidate on the good work done in the previous year. It was a year focused primarily on expansion and growth, to capitalize on the demand created by the company in the previous years. Various new factories were constructed to maximize production capacity - Canon established in Hanoi as a production site for inkjet printers, along with establishing a copying machine production site in Suzhou, China.

In addition, the company's third laser printer production site in China was established. The increased demand and increased production meant that Canon had started to eat into the market share established by its competitors, which of course included Xerox.

To complete the 4-pronged strategy for the year, Canon Information Systems, Inc. and Canon R&D Center Americas, Inc. merged to form Canon Development Americas for enhanced focus and development for the American Market.

Canons strongest attribute over the past decade has been its ability to innovate in its product development, and offer these products to the consumers at a lower price. Canon was the first to introduce environmentally friendly products - namely the image RUNNER 3300 which had a mass appeal to conscious consumers at a time when environmental awareness was at a boom in all markets.

Although, unlike Xerox, Canon's products focused primarily on solutions for consumers rather than professionals, Canons continuous innovation in that department stimulated sales of its professional equipment as well, and allowed Canon to eat into Xerox's market share.

In 2003, Canon printers and copiers had reached a peak in its demand, in lieu of Xerox. Canon Aptex and Canon Copier held a merger to for the newly incorporated Canon Finetech. This was primarily established as a foundation for mass production of Inkjet and bubble jet printers using a high quality value-added mass production for the inkjet printer business - to cater to the rising demand.

In 2004, to increase its base of investors, Canon altered the stock trading unit to 100 shares, down from 1000. This significantly increased the investor base of Canon and help fund one of many new projects Canon wanted to undertake. This effected Xerox negatively as potential small scale investors in Xerox had shifted to Canon. Also in 2004, Canon announced that its Inkjet printer shipments reach 100 million units, and was fast catching up to Xerox who had shipped less in the previous 2 years.

After a few years focusing on display panels and projectors, in 2009, Canon announced a strategic alliance with the then number one player in the printing business - HP. This was very detrimental to Xerox's success as it had been, as number two, aiming to usurp HP with innovations and collaborations of its own. Canon and HP, with this merger had singled out Xerox's market share to penetrate into, and to-date, have remained successful in starving of Xerox's attempts to become the market leader of that segment.


Contrary to that, Hewlett Packard exuberantly emerged itself as a new brand over the last decade. It introduced devices for home, office and industrial use as a whole. It branched out many operations in the earlier decade which included IT consulting, outsourcing, product support, HP education and solutions deployment globally. It further enhanced its operation in India later in the year.

Whereas announcement of HP and Compaq's merger didn't alarm Xerox because their strength as a whole increased in the area of computing, displays and imaging. Xerox did lose some sales in 2002 due to the merger announcement but it didn't hit hard as it solely deals in printing devices and plotters as a competitive edge.

HP exists in more than 160 countries and has a wider range of products as compared to Xerox. Whereas in 2000, Xerox generated profits of more than $725 million and gained second position in the global printing market behind HP. This was a major threat to Xerox in the short as well as long run because of HP's drastically growing market share.

HP launched various innovative products in printing and imaging series. Initial rollouts included HP Deskjet5550 printer which featured up to six-ink printing and 4,800 optimized dots-per-inch (dpi) technology. HP's groundbreaking research in molecular electronics and nano technology has geared HP's brand equity and brand image onto another dimension.

Later, HP introduced its Business and IT implicated new service software and solutions which enhanced linkages between the two industries and aided them in managing well. It created its image as more fun loving than being technical and introduces more than 100 consumer products.

Xerox although, was not hit very hard as its primary target market were home based consumers, which as a good response to consumer products' quality, chose HP products for office use as well. This took some market share from Xerox and stifled its sales.

HP's also working for small and medium sized businesses and has announced it as most important segments in the global economy. The Smart Office initiative provided tailored support services, local expertise, and products to help SMB manage their unique business needs. Through this, HP has tapped small and medium business segment which was untouched by any solution provider before hence making it directly alarming to Xerox.

HP unveiled the world's fastest home and office photo printing devises in 2003 which were built on new technology. Contrary to that, Xerox joined Microsoft and others to aid in studying how organizations can take advantage of technology to increase productivity.

Xerox Corporation received the 2003 IEEE Corporate Innovation Recognition award for its pioneering work that created the DocuTech product line and resulted in the $30 billion print-on-demand industry which helped replenish already loosing customer base. HP has currently shipped its 100 millionth LaserJet printer globally since 1984 hence establishing itself as the market leader.


The major difference between Lexmark and Xerox's operations is that Lexmark deal in all in one devices that function for many purposes than just one, whereas, Xerox provides with multifunction units via channel.

Lexmark innovated in new multifunction devices which included a print server at lower and competitive price which was an increment to its existing line of printers. It had print, scan and fax capabilities which were one of its own kind. The new product range offered a one touch, PC-free copying capability that was compact and non-pricey hence fitting into low budget usage.

Lexmark lunched various low cost products meeting the functionality in office use. It could be connected to an Ethernet print server connecting Lexmark printers as well as other third party printers.

Xerox, on the other hand has been innovating into multifunction systems through a channel program but with a huge entry price as compared to Lexmark's similar specification products. This was a downturn loosing sales and leads to sales. Moreover, the competition was toughened after the inclusion of services attached to the products sold in the market. Xerox's efficient customer service and solution systems have heightened its brand image by far.

Consumers, however, opt more for HP and Compaq products due to its merger and flexibility between high-end to low-end products due to changes in Lexmark's channel policies hitting directly to all its major competitors including Xerox. Still, Xerox's All in one policy is giving itself uplift by fulfilling all the printing needs all by itself and also helps it customers for supplies on outdated and older printer models.


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