Thursday, June 30, 2011

Xerox rebounds slower than expected; shuts down wide format and enters another era of layoffs…


2011 may be known as the “Year of the Rabbit” for some but not the great Xerox. Goliath is falling and I’m not sure who can catch his fall. The first 6 months of 2011 may be part of the rebuilding of American economics but for Xerox it has been nothing but a nightmare.


6 Month Stock History for Xerox (courtesy of Yahoo Finance)

Going into a new age Xerox’s CEO Ursula Burns moves full steam ahead having to announce some very difficult decisions at the end of the 4th quarter of 2010 that they would be moving ahead with a plan to lay off 2500 employees. Then early on in 2011 Xerox announced or rather whispered quietly that they were going to discontinue their wide format business in North America.

In an article named, “How Will Xerox’s Decision to Discontinue “Wide-Format” Impact Reprographers, Xerox Wide-Format Dealers, and Other Wide-Format Manufacturers? “ The writer gives an interesting view about the effects industry wide on this decision. None the less it was a difficult decision to arrive at and an even more difficult one to announce to their employees that have heard nothing but bad news for a long time. In an article written by Anthony Bianco and Pamela L. Moore back in 2001 for Business Week named, “Xerox; the downfall” the writers talk about the many rough decisions made over the years by Xerox executives and the timeline associated with those decisions.

So what’s next? How will Xerox reorganize knowing that they will be 2500 people light in the coming months? Who will they lean on? Where will the work load go? Well for months I have been hearing rumors on a big announcement coming from Global – Xerox’s rogue warrior.

I have talked about this subject on many occasions only to get my hand slapped by my presumptions. Although many of my predictions did in fact come true, some were slightly off the mark. But as anyone vested in my industry knows I have opinions based on what I see and hear on a local and national level and we are all subject to rumors.

Well the rumor on the street is that as Xerox makes good on its promise to lay off workers it is also going to restructure how they distribute the workload. What does this mean do you ask? Well I think in the short term Xerox customers are going to get a visit from their first cousins at Global saying, “Hi my name is Bob from Global Imaging Systems, a Xerox company I am just stopping by to introduce myself as your new rep.”

My assumption is that very shortly Xerox will be unloading assets sold by Xerox sales reps themselves only to find out that they are no longer with a job and that their assets have been given to a Global rep to manage as Xerox tries to cut the fat from their organization. This “live long enough to see a better day” strategy will have some interesting implications for their customers that signed up for “an elite manufacturer direct experience,” not a close imitation.

The other assumption is that many of these assets will be production print devices and not just workgroup systems. This also creates some interesting situations as not all Global offices have dedicated or specialty trained production teams. This puts a lot pressure on a workforce that is less disciplined as Xerox’s own. Global has been allowed to run a bit unrefined and now it will be dealing with an even greater share of Xerox’s business; business that Xerox itself sold.

So how will customers react to this news? Well it will depend on how they hear it and really it is a people business so it largely will depend on the rep that shows up to the door and the resources that he or she has at their disposal which will depend on the local branches culture and strength. Many of Global’s offices have or were very strong dealerships prior to the acquisition.

Does this leave opportunity for everyone else? Why of course with another great competitor in transition and weak it means that thousands of customers, potentially a 100 million dollars of assets will be up for grabs to those who are willing to bring to light the new risks associated with being a Xerox customer.

What used to be said, “No one ever got fired for buying a Xerox,” could now change to “No one wants to be the one to pull the trigger on Xerox as it could get them fired.” Only time will tell if any of this comes to fruition but one thing is certain. It is a dangerous time to choose the wrong vendor for your infrastructure as it is getting harder to choose a company that is solid.

With the holocaust in Japan leaving many manufacturers crippled both in their own capacity but also hindered in that their supply chain partners had suffered as well. This has left many deals wide open as “he who has the goods gets the deal.” As we have seen here in Houston Texas some decisions have been made to buy from people that “have inventory” without regard to who had the best price or gear.

This leaves one that is watching thinking that they have been watching day time soaps like “Days of our lives,” when in fact they were watching “As the copier turns.” It will be interesting to listen carefully to both Xerox and Global and see what they do in the near-term. It appears that big changes are coming and it is not good news for customers that invested in “Xerox dominance.”

Happy Selling…

Pirate Mike

1 comment:

  1. Maybe they should look at the "no brainer" strategy yet Ursula Burns keeps pushing ahead despite is showing a downward spiral.... MAYBE YOU WRONG URSULA AND SHOULD TAKE ANOTHER LOOK AT YOUR APPROACH TO THIS DEALER/DISTRIBUTOR STRATEGY. XEROX WAS DOING WELL UNTIL YOU STARTED YOUR STUPID STRATEGY............NOT WORKING. HOW MANY MORE PEOPLE YOU WANT TO LAY OFF BEFORE YOUREALIZE UR STUPID ERROR!!!!

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