Xerox 2010 Annual Report Download - page 7

55Xerox 2010 Annual Report
One very positive sign: last year, we developed a services pipeline
of more than $5 billion in business that neither Xerox nor ACS could
have signed without the value the other brought to the table.
Sowedonotwantforopportunity.Ihavegreatcondencein
our value proposition and in the technology and talent we have to
deliver it. And that’s a very good place to be.
Renowned Innovation
This company was built on innovation, which remains central to our
strategytoday.IfyoucouldlookunderthehoodofourR&Dlabs
around the world, you would probably be surprised at what you would
nd.Youwouldseeworkthatisstretchingtheboundariesofwhat
ispossibleindigitalprintingofcourse,butyouwouldalsondinat
least equal measure work on intuitive data analysis and a variety of
green technologies to make business processes more sustainable. In
other words, you would see innovation that reflects the new Xerox.
One measure of how well we are doing is the number of patents
our innovators are awarded. Last year, that number was 1,031 – up
46 percent from 2009. That would rank us in the top 20 companies.
Last year’s patents included innovations to improve inventory
management, e-mail overload and personalized packaging. Other
patents help manage documents and make sense out of large
collections of information.
Our Real Business: Sound Strategy and Effective Execution
We now have two distinct yet synergistic business segments –
technology and services. This gives us a steady mix of annuity revenue.
In technology, it comes from service and supplies. In services, it comes
from multi-year outsourcing contracts. Together, they account for
more than 80 percent of our total revenue – a very attractive feature
of our business model. By the way, annuity revenue in 2010 on a pro-
forma basis was up 2 percent without the impact of currency1.
In technology, our annuity stream is fueled by the sales of Xerox
equipment.Lastyear,equipmentsaleswereupasignicant10
percent without the impact of currency1. That growth reflected
both strong demand for new products and expanded distribution
coverage around the world. The combination positioned us
extraordinarily well to take advantage of an improving economy
and the willingness for customers to begin investing in technology.
Just as our annuity revenue is fueled by equipment sales, our
equipment sales are fueled by a steady stream of new products.
During 2010, we launched 21 products with an emphasis on
maintainingourleadershipinboththeproductionandofcemarkets.
Big contributors to equipment sales growth in 2010 were the Xerox®
Color 800 and 1000 series as well as the ColorQube® family of
multifunction systems, which uses our proprietary solid ink technology.
Total color revenue for the year was up 8 percent without the impact
of currency1 and color pages were up 9 percent – strong signs that our
color strategy is on track.
While our services business received a major power surge with the
acquisition of ACS, this part of our business has been evolving for a
very long time. By the time we acquired ACS one year ago, we already
had over a $3.5 billion services business – some of it through organic
growth and some of it through smaller acquisitions. The ACS deal was
a logical – albeit bold – leap forward. Overnight, we became a $10
billion services business.
“ …revenue from services was up
3 percent. Business signings were
up13percent.”
Color Revenue
(includedintotalrevenue–millions)
’06
’07
’08
’09
’10
5,578
6,356
5,972
6,669
6,397
Net Cash from
Operating Activities
(millions)
’06
’07
’08
’09
’10
1,617
1,871
2,208
1,554*
2,726
939*