Xerox 2012 Annual Report Download - page 44

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Management’s Discussion
42
Installs 2012
Entry
• 39% increase in color multifunction devices driven by demand for
the WorkCentre® 6015, WorkCentre 6605 and Xerox® ColorQube
8700/8900.
• 23% increase in entry black-and-white multifunction devices driven
by demand for the WorkCentre® 3045.
• 7% decrease in color printers driven by a decrease in sales to OEM
partners.
Mid-Range
• 2% decrease in installs of mid-range color devices driven as a
difficult compare in the U.S. from the fourth quarter 2012 was
partially offset by demand for products such as the WorkCentre®
7535/7125/7530 and the WorkCentre® 7556, which enabled
continued market share gains in the fastest growing and most
profitable segment of the office color market.
• 10% decrease in installs of mid-range black-and-white devices.
High-End
• 34% increase in installs of high-end color systems driven by strong
demand for the Xerox Color 770. This product has enabled large
market share gains in the Entry Production Color market segment.
• 26% decrease in installs of high-end black-and-white systems,
reflecting continued declines in the overall market.
Install activity percentages include installations for Document
Outsourcing and the Xerox-branded product shipments to GIS.
Descriptions of “Entry”, “Mid-range” and “High-end” are defined in
Note 2 – Segment Reporting, in the Consolidated Financial Statements.
Revenue 2011
Document Technology revenue of $10,259 million decreased 1%,
including 2-percentage points positive impact from currency. Total
revenues include the following:
• 4% decrease in equipment sales revenue, with a 1-percentage point
positive impact from currency, primarily driven by a decline in Europe
reflecting the economic conditions in the Euro Zone, particularly
in the fourth quarter 2011. In addition, install declines of entry
and mono products were only partially offset by install growth in
mid-range and high-end color products. Consistent with prior years,
price declines were in the range of 5%-10%. Document Technology
revenue excludes increasing revenues in our DO offerings.
• 1% increase in annuity revenue, including a 2-percentage point
positive impact from currency. An increase in supplies revenue was
offset by a decline in pages.
• Document Technology revenue mix is 22% entry, 57% mid-range
and 21% high-end.
Segment Margin 2011
Document Technology segment margin of 11.1% increased
0.6-percentage points from prior year. Lower cost and expense from
restructuring savings in addition to an increase in equity in net income
from unconsolidated affiliates more than offset the gross margin
decline.
Installs 2011
Entry
4% decrease in entry black-and-white and color multifunction devices
and color printers reflecting:
• A decline in sales to OEM partners.
• A decline in developing markets due in part to a very strong 2010 in
which installs increased significantly.
These declines were partially offset by growth in newly launched
products such as the WorkCentre® 3045 and WorkCentre® 6015.
Mid-Range
• 26% increase in installs of mid-range color devices driven primarily
by demand for new products, such as the WorkCentre® 7530/7535,
WorkCentre® 7545/7556 and WorkCentre® 7120 and the Xerox
Color 550/560. This growth has enabled market share gains in the
fastest growing and most profitable segment of the office color
market.
• 2% increase in installs of mid-range black-and-white devices
driven by strong demand for the recently launched WorkCentre®
5325/5330/5335 products partially offset by declines in Europe.
High-End
• 7% increase in installs of high-end color systems driven primarily by
installs of our market-leading Xerox Color 800 and 1000 and iGen
as well as strong demand for the recently launched Xerox Color
770 and the DocuColorTM 8080. These products have improved our
offerings in the entry production color product category.
• 8% decrease in installs of high-end black-and-white systems driven
by declines across most product areas.
Other Segment
Revenue 2012
Other segment revenue of $1,400 million decreased 8%, including a
1-percentage point negative impact from currency, due to a decline in
paper sales, which is driven by lower market pricing and activity, as well
as a decline in revenues from wide format systems and lower patent
sales and licensing revenue. Paper comprised approximately 59% of
the 2012 Other segment revenue.