Xerox 2005 Annual Report Download - page 31

Xerox Corporation
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Competition
Although we encounter aggressive competition in all areas of
our business, we are the leader, or among the leaders, in each
of our principal business segments. Our competitors range
from large international companies to relatively small firms.
We compete primarily on the basis of technology, performance,
price, quality, reliability, brand, distribution, and customer service
and support. To remain competitive, we invest in and develop
new products and services and continually enhance our existing
offerings. Our key competitors include Canon, Ricoh, IKON,
Hewlett-Packard and, in certain areas of the business, Pitney
Bowes, Kodak, Oce, Konica-Minolta and Lexmark.
We believe that our brand recognition, reputation for document
knowledge and expertise, innovative technology, breadth of
product offerings, global distribution channels and our customer
relationships and large customer base are important competitive
advantages. Weand our competitors continue to develop and
market new and innovative products at competitive prices and,
at any given time, we may set new market standards for quality,
speed and function.
Marketing and Distribution
We manage our business based on the principal business segments
described above. The marketing and selling of our products and
solutions, however, are organized according to geography and
channel types. Our products and solutions are sold directly to
customers by our worldwide sales force of approximately 8,000
employees and through a network of independent agents, dealers,
value-added resellers and systems integrators. Increasingly, we
are utilizing our direct sales force to address our customers'
more advanced technology, solutions and services requirements,
while expanding our use of cost-effective indirect distribution
channels, such as Teleweb, for basic product offerings.
We market our Phaser line of color and monochrome laser-class
and solid ink printers through office information technology
industry resellers, who typically access our products through
distributors. In 2005, we increased the product offerings
available through a two-tiered distribution model in Europe
and DMO. Through a multi-phased roll-out, we will continue to
increase offerings through this lower-cost distribution channel
for our Office portfolio. Additionally, we expanded our distribution
channels in North America in 2005.
In Europe, Africa, the Middle East, India and parts of Asia, we
distribute our products through Xerox Limited, a company
established under the laws of England, and related non-U.S.
companies (collectively "Xerox Limited"). Xerox Limited enters into
distribution agreements with unaffiliated third parties covering
distribution of our products in certain countries located in these
regions, including Iran, Sudan and Syria. Iran, Sudan and Syria,
among others, have been designated as state sponsors of
terrorism by the U.S. Department of State and are subject to
U.S. economic sanctions. We maintain an export and sanctions
compliance program and believe that we have been and are in
compliance with applicable U.S. laws and government regulations
related to these countries. In addition, we had no assets, liabilities
or operations in these countries other than liabilities under the
distribution agreements. As a result of the termination of these
agreements, we anticipate that our revenues attributable to these
countries will decline over time. Xerox Limited is terminating its
distribution agreements related to these countries and expects
that, by the end of 2006, it will have only legacy obligations such
as providing spare parts and supplies to these third parties. In
2005, we had total revenues of $15.7 billion, of which less than
$10 million was attributable to Iran, Sudan and Syria.
Xerox Annual Report 2005