Xerox 2005 Annual Report Download - page 41

Xerox Corporation
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Office
2005 Equipment sales were comparable to 2004, including a
negligible impact from currency. Strong install growth was offset
by price declines of approximately 7% and product mix, which
reflected an increased proportion of lower-end equipment sales.
Office product install activity for 2005 included the following:
•22% install growth in black and white digital copiers and
multifunction devices driven by strong sales of Segment 1 and
2devices (11-30 ppm), which more than offset declines of
Segment 3 to 5 devices (31-90 ppm).
•51% install growth in office color multifunction systems driven
in part by strong sales of the DocuColor 240/250, which was
announced during the second quarter of 2005.
•111% improvement in install activity for color printers.
2004 Equipment sales wereessentially unchanged from 2003,
reflecting the following:
•Installation growth of approximately 20% and favorable currency
of 3-percentage points were offset by moderating price declines
of approximately 6% and the impact of product mix. Product mix
reflected an increased proportion of low-end equipment due to
very strong growth in office monochrome (“Segments 1 and 2”)
of 30% as well as monochrome and color printers of 54%.
•Color printer growth of 74% primarily reflects the success of
the solid ink Phaser®8400, the first product launched from our
new solid ink platform in January 2004, as well as other color
printer introductions.
DMO
Equipment sales in DMO consist primarily of Segment 1 and 2
devices and office printers. Equipment sales in 2005 increased
11% from 2004, primarily reflecting strong growth in Eurasia and
Central and Eastern Europe. Equipment sales in 2004 increased
8% from 2003, primarily reflecting growth in Russia and Central
and Eastern Europe offset by declines in Latin America, primarily
driven by Brazil, and shift in product mix to lower segments.
Other
2005 Equipment sales declined 16% from 2004, driven by
declines in value-added services. The decline in value-added
services reflects the integration of a portion of our service
contracts into our outsourcing business, the revenue from which
is included in the Office and Production segments. Other 2004
equipment sales grew 11% from 2003, primarily due to growth
in equipment sales associated with our value-added services
business and a 2-percentage point currency benefit.
Post Sale and Other Revenue
Post sale revenue is largely a function of the equipment placed
at customer locations, the volume of prints and copies that our
customers make on that equipment and the mix of color pages,
as well as associated services.
2005 Post sale and other revenues of $10.3 billion were
comparable to the prior year period, with our growth areas
(“digital office, digital production and value-added services”)
collectively growing 5% and DMO growing 4%, more than
offsetting a 40% decline in analog light-lens products. Color
post sale and other revenue grew 16% for 2005, and color
sales represented 26% of post sale and other revenue in 2005
versus 22% in 2004. In 2005, approximately 7% of our pages
were printed on color devices, which is up from 5% in 2004.
Color pages generate around five times more revenue and
gross profit dollars than black and white pages.
2004 Post sale and other revenues of $10.3 billion declined 1%
from 2003, including a 4-percentage point benefit from currency.
These declines reflect lower equipment populations, as post sale
revenue is largely a function of the equipment placed at customer
locations, the volume of prints and copies that our customers
make on that equipment and the mix of color pages, as well as
associated services. 2004 supplies, paper and other sales of
$2.8 billion (included within post sale and other revenue)
increased 2% from 2003, primarily reflecting currency benefits
which offset declines in supplies. Supplies sales declined due
to our exit from the SOHO business in 2001. 2004 service,
outsourcing and rental revenue of $7.5 billion declined 3% from
2003, as declines in rental and facilities management revenues
morethan offset benefits from currency. Declines in rental
revenues primarily reflect reduced equipment populations within
DMO and declines in facilities management revenues reflect
consolidations by our customers as well as our prioritization
of profitable contracts.
Production: 2005 Post sale and other revenue declined 2% from
2004, as declines in older light-lens technology were only partially
offset by revenue growth from digital products. Currency impact
was negligible for 2005. 2004 Post sale and other revenue declined
2% from 2003, as declines in monochrome products, driven
primarily by lower page volumes, offset favorable mix from color
page growth of approximately 40% as well as favorable currency.
Office: 2005 Post sale and other revenue increased 1% from
2004, primarily reflecting a 1-percentage point benefit from
currency and growth in digital black and white, color printing
and color multifunctional products. These positive effects were
partially offset by declines in older light-lens technology. 2004
post sale and other revenue improved modestly from 2003 as
favorable mix to color pages, digital page growth and favorable
currency were partially offset by declines in older technology
light lens products.
Xerox Annual Report 2005