Xerox 2006 Annual Report Download - page 6

Our second strategic platform for growth is what we call the New Business of Printing.
®
It’s a market where Xerox is competitively advantaged. Our customers in this space are
typically commercial printers, marketing and graphic arts companies and large enterprises.
They depend on digital printing to print on demand, produce short runs of books, personalize
documents as they come off the press and leverage the power of our digital technology in a
myriad of other ways. Our digital presses, sophisticated workflow capabilities and expanding
set of solutions and applications help our customers grow their businesses.
New products helped drive a 74 percent increase in installs of Xerox’s production color
publishing systems and printers – that’s actual placements in a customer’s workplace.
We closely track install data as an indicator of what’s to come in post-sale revenue. The
more color products we sell, the more pages printed on Xerox systems. More pages
mean more profitable annuity, all adding up to sustainable growth.
One especially satisfying trend: the acceptance of the Xerox iGen3®Digital Production Press,
our flagship and unparalleled product that creates up to 110 full-color impressions per
minute with the ability to personalize each and every one. The iGen3 is a winner with our
customers. In fact, some 180 customers now own more than one. And, about 70 of our
customers’ iGens produce more than 1 million images per month.
Last year we acquired XMPie for $54 million. XMPie provides software that enables
multimedia campaigns with personalized e-mail, Web sites, catalogs, brochures and other
documents. When applied to direct marketing campaigns, these capabilities significantly
increase standard response rates and open up new ways for marketing professionals to
communicate with their customers.
You’ve probably received marketing materials in the mail that are targeted to your personal
buying needs – like postcards from car dealers with an image of the new version of your
car including a license plate with your initials or a travel itinerary from a cruise line featuring
activities that appeal to your individual interests.
These marketing campaigns cut through the clutter. They’re personalized, colorful and
most likely printed on Xerox color systems using XMPie software. The market for variable
data jobs that capture individual information such as name, address, account information
and photographs is projected to grow from 49 billion pages in 2004 to 138 billion pages
in 2009. That’s an annual compounded growth rate of 23 percent. Xerox is in the forefront
of driving that market opportunity.
Our third strategy for growth is to lead in services in our major accounts – and here,
too, we’re making good progress. Our services signings last year were up over 15
percent from the previous year. Customers who are entrusting us to manage large
enterprise systems include the likes of Medco and Honeywell, the University of Calgary
and Microsoft, OfficeMax and United Technologies and more.
XEROX ANNUAL REPORT 2006
4
Color Revenue
(Included in Total Revenue –
$ millions)
’02 ’03 ’04 ’05 ’06
2,781
3,267
4,188
4,928
5,578
Net Cash from
Operating Activities
($ millions)
’02 ’03 ’04 ’05 ’06
1,980
1,879
1,750
1,420
1,617
CHAIRMAN’S LETTER
’02 ’03 ’04 ’05 ’06
11,879
11,451
11,242
11,182
11,438
Net Income
($ millions)
’02 ’03 ’04 ’05 ’06
91
360
859
978
1,210
Post-Sale and
Financing Revenue
(Included in Total Revenue –
$ millions)