Xerox’s systems group faced no easy task when it was created in El Segundo nearly two years ago in what Xerox describes as its most dramatic reorganization.
At a time when Xerox’s prospects were in question as never before, the 5,000-employee unit was charged with devising products, after a series of disappointments, and to chart a new strategy for Xerox in its quest to sell the cluster of products called office-automation systems. As a senior official put it last year, the new products were supposed to “cause people to say, ‘Hey, we really got our act together.’ ”
On Tuesday, Xerox showed the first fruits of those efforts at a slick New York news conference--and received mixed reviews. The new gear includes printers, personal computers, word processors, software and other accessories that are intended to gain Xerox a new foothold in the office-automation business while avoiding a head-on confrontation with such heavyweights as IBM and Digital Equipment.
The company’s fundamental strategy is to offer departmental office systems that exploit the appeal of Xerox’s copiers--especially the successful laser copiers--and their larger cousins, duplicators, officials said.
“Our strategy plays off our corporate heritage,” said Robert V. Adams, president of the El Segundo unit, during a press conference at a rented Lincoln Center theater. “We are not a data-processing company. . . . Our approach is to coexist in that world.”
Analysts said the office-equipment systems would be best suited for corporate departments that generate large volumes of written material that needs to be stored and printed but that do not need to have electronic messaging systems or to manipulate large computer databases.
Xerox also offered specific automation systems for engineering users and in-house corporate print shops.
The new computers and word processors are based on the same personal computer that is made by Italian manufacturer Ing. C. Olivetti and marketed by American Telephone & Telegraph as its model PC 6300. However, both rely on new software; the word processor comes with a keyboard designed to make secretarial tasks easy.
Xerox showed two new laser printers, based on a technology that enables office workers to easily create and copy so-called compound documents that include both text and graphics.
Xerox President and Chief Executive David T. Kearns speculated that the company’s office-automation business may account for half of all corporate sales by the end of the decade. “We don’t expect to be the leader in this business, but we expect to be one of the leaders,” he said.
Two-thirds of the company’s revenue now comes from sales of copiers and duplicators. Officials said that, while Xerox’s office-automation business is not profitable, its revenue was nearly $2 billion in 1984, compared to less than $800 million in 1982.
Edward White, an analyst with Dataquest in San Jose, said the products offer “nothing strikingly new, but the strategy is sound and I think it will help.”
White believes that Xerox can gain market share with a “second tier” of office-automation users--those who do not need such advanced functions as database manipulation or electronic messaging.
Other analysts have faulted Xerox for failing to integrate its office-automation systems with the medium-size computer processor.
Frederic Withington, an analyst with Arthur D. Little Inc. in Cambridge, Mass., said he was skeptical that Xerox could compete against major players without a central processor to integrate the departmental system. Kearns said the company “certainly must be looking at the idea” of adding such a processor to its product line.
Xerox badly needs a success in its office-automation business. After a 42% drop in earnings last year, the company Monday reported a 10% decline in first-quarter earnings to $114 million. To raise $175 million, the company recently sold and leased back a number of properties, including its Stamford, Conn., headquarters.