Xerox - HP - EDS

With most of the focus on the IT side of this acquisition some missed the fact that one of EDS's largest clients is Xerox.

From this recent post - "...Although HP's recent announcement to acquire EDS for $13.9 billion (£7.1 billion) may have sparked talk of consolidation in the IT services industry, spare a thought for the impact of this deal on Xerox, a long-standing EDS partner. With HP aggressively looking to widen its footprint in the corporate printing space as part of its Print 2.0 strategy, the acquisition of EDS will help it make further inroads to compete with Xerox Global Services (XGS), currently a $3.4 billion (£1.7 billion) organisation and a key growth engine for Xerox..."

and

"...HP is Xerox's most notable competitor in the MPS market, offering assessment, optimisation and management of the document output environment. Although HP has been ramping up its MPS portfolio, it currently lacks the document lifecycle and workflow and document outsourcing capabilities ... Another key differentiator is multivendor support capabilities—Xerox claims to have approximately one million competitive devices under ...(outsourced) management, made possible by its multivendor trained support staff. Also, Xerox's higher penetration in the high volume production and copy centres gives it the ability to better manage and optimise environments using these devices..."

It will be interesting to see how this all ends up.

Leasing Your MFP Fleet -

I have been running into more and more opportunities with I.T. folks who do not understand leasing.

**** THIS IS NOT LEGAL ADVICE ****

**** THE FOLLOWING REFLECTS MY OPINIONS ****

I am currently researching for an in depth analysis of the leasing process from the end users' prospective - and it isn't pretty.

Because the subject is so vast and complicated, I have decided to post portions of the final white paper.

First off, I am familiar with leasing and all the "gotcha's" that contracts carry. I have seen, all sorts of leasing agreements in business technology and the Uniform Industry and I have been very fortunate to work with some of the most honest and open agreements in each industry.

For you I.T. folks, or anyone else who may not be familiar with leasing - here is a "Primer".

Leases are used to defer payments over time. If a company wants to avoid a significant capital outlay a lease is a great option. In addition, because the technology changes quickly, copier leases often include provisions to trade up to a newer model, allowing you to upgrade without buying anew.

You are paying extra for the ability to "pay over time".

For instance, if the purchase price of a machine is $20,000 and you would like to pay a monthly payment for 60 months, the monthly payment is NOT $20,000/60 or $333.33. The monthly would be closer to $586.00/month. If you multiply this out by 60, your total "cost" for the unit, over time, is $35,160.00 - this to say that you would be paying $15,160.00 for the service of paying a known monthly figure for a determined period of time.

The Vendor or Supplier does not usually make more profit on a lease vs. purchase. Although some vendors or dealers add “points” to the lease rate. This increases your monthly and adds to their profit margin.

After a client signs a lease and after the equipment is delivered and accepted, the leasing company cuts a check directly to the Vendor for the purchase amount of the equipment. You, the Customer now have a direct relationship with the leasing company for the equipment. You are establishing a "revenue stream" for the leasing company based on the equipment payment portion of the lease; when service is bundled into the payment, you are also working directly with your service provider, usually the copier dealer.

In a nut shell - When you sign a lease, you are forging a commitment to pay at least the dollar amount on the lease for the number of months stated. There is no other way to envision this agreement - there are no easy or painless methods of terminating a lease early once you "sign on the line which is dotted" - no matter what the circumstances. No matter what the "trusted" copier sales person tells you, you can not get out of the agreement easily and without paying for the privilege.

-- More to follow ---

A Return to Edgeline

Managed Print Services is Hot, but Edgeline is Hotter. Getting back to Edgeline.

To authorize by PIN or LDAP or Exchange, that is the question.

One of my recent installs required print, copy, scan and fax rights by authorization(login).

I know authorization is nothing new when it comes to connected copiers - I have worked with hundreds.

Yet imagine the impact on the end user in terms of the degree of "hassle" involved with walk-up copying.

- Example:

Copier sales person - "...it's easy, simply log into the copier the same way you do you computer at you desk"

I.T. guy - "...sure, our end users are familar with their login, and they don't need to remember two different accounts..."

End User(usually at the Executive Level) "...you mean to tell me, I need to log in completely, with my password, every single time I want to make a copy??? Forget that..."

Well, for this client, we decided to use the four digit employee number as the PIN. And each PIN has different rights, some can copy in color, some can not. Some users can scan back to a folder, some can not, etc. And all activity on the system can be tracked by PIN. That is to say, ALL printing, copying, faxing, scanning activity.

The four digits work much better then the network login. And with Edgeline, all the PINS with rights, can be copied or set remotely.

HP to acquire EDS for $13.9 billion

That's FOURTEEN BILLION...

HP said the deal, which has been unanimously approved by the HP and EDS boards of directors, will close in the second half of the year. HP expects that the addition of EDS will more than double HP's services revenue of $16.6 billion in fiscal 2007. At the end of 2007, HP and EDS had a collective services revenue of more than $38 billion and 210,000 employees, doing business in more than 80 countries, HP said.

Well, this certainly illustrates the level of HP's commitment to market domination

I found this statement by Peter Cohan, "...I think HP's most profitable business, printers, might be able to make better use of the $12.8 billion in capital. This Imaging and Printing Group earned a 13% estimated net margin. It grew a mere 4% to $7.3 billion in revenue and given that this unit is by far the most profitable in HP's stable of businesses, this would appear to be the best place to invest for future growth.

Now may be a good time to sell HP stock. Mark Hurd came into HP as a nuts-and-bolts operator. This deal suggests that Hurd has run out of growth options and that HP can't grow earnings through more cost cuts. I have no doubt that Hurd could cut costs once EDS has been integrated..."

This follows what Hurd said back in March, ""We are shifting our portfolio to drive growth and are aligning our portfolio to margin rich opportunities for investors," he said. "We continue to look for opportunity [for higher gross margins] in software and in services."

What does this mean for IPG, if anything? I don't know yet, but IKON sure as heck would not cost FOURTEEN BILLION dollars...

IKON Introduces New Printer Line

They are Ricohs with IKON labels. The Ricoh lasers are very good laser printers.

"While our customers utilize multi-function devices in the office and production environments, there is still a robust demand for single-function printers to complement these devices and meet workflow demands," explains Mike Dane, Vice President, Product and Services Marketing, IKON Office Solutions. "We created the IKON BusinessPro printer line to allow us to be a 'one stop shop' for customers by providing them with affordable, value-packed printers at three different price points, designed for a range of business environments." Centre Daily Times

Interesting, huh? Ricohs not HP's. Very interesting.

Well, been there, done that, got the T-shirt.

This has been in the works for almost a year - Ricoh has got to love it, and IKON can fill a market niche - I just wonder how well the copier techs are going to translate from copier to laser printer service.

And I wonder how much the CPC service will be on the Ricoh's - but I really wonder if any of the IKON reps will actually jump on this product and sell it.

Edgeline Success by being Green

Monterey Bay Aquarium Research Institute and Newcal – Saving the World One Printer at a Time

NewswireToday - /newswire/ - San Francisco, CA, United States, 04/09/2008 - Using HP Edgeline solutions from NEWCAL Industries, the Monterey Bay Aquarium Research Institute (MBARI) is taking another step towards saving the planet – one printer at a time.

...When it came time to replace one of MBARI’s copiers, Erin Lamb, Purchasing and Accounting Specialist, remembered the research institute’s goal of implementing innovative technology to reduce human impact on the environment. “We had done some research on other solutions, but nothing compared to HP’s Edgeline. We know we’ve made an eco-friendly choice and we anticipate cost-savings because the Edgeline doesn’t use as much power or ink as our previous copier.”...


Wow!

Opinions, Everybody's Got One

"...Xerox has shifted from selling copiers..."

I ran across this little Opinion from the L.A. Times - Here is an excerpt:

Conservation leads to innovation

By Gary Gardner, May 9, 2008

"A green industrial revolution?

...Does it matter if some staples..."(as in bread, milk, etc. not staples that hold pages together) "...run out...will the same ingenuity that produced oil refining in the late 19th century and the "green revolution" in the late 20th century save us again in the future?...

...Consider the idea of businesses offering services instead of goods in today's economy. Xerox has shifted from selling copiers (goods) to leasing them (a service), which gives the company, as perpetual owner of the leased machines, a strong incentive to manufacture them to be refurbishable. This greatly extends the life of materials and reduces waste..."

Well, if you read the above statement, what do you think?

When did Xerox stop manufacturing copiers?

When did leasing equipment (ANY equipment) become an act of “conservation”?

And didn’t Xerox sell off its leasing interest years ago? Xerox is not a “…perpetual owner of the leased machines…”. The leasing company owns the machines. This is the most basic, simplistic concept of leasing.

Also, these plastic, over-heated machines, which are designed with built-in serviceability, have an expected life of around 36 months with new machines hitting the market almost every 3-6 months.

The author's belief that copier companies have a "strong incentive to manufacture them to be refurbishable..." is naive and misguided. And unfortunately, naivety is a characteristic of the Greenie ilk.

Xerox/Ricoh/Canon/Toshiba/Konica/Sharp or NOT interested in being a "...perpetual owner of the leased machines..." they are interested in creating perpetual customers of new machines not used or referbed machines. And why would anyone be interested in “perpetual customers” ? The answer, of course, is to make more money and to increase profits – not save the world.

- Reducing costs can increase profit – again, a simple and basic micro-economic concept.

1. Managed Print Service programs reduce costs.

2. Lower energy consumption or machines that consume more intelligently reduce costs.

3. Printing on both sides of the paper reduces costs.

4. Reducing the redundancy of equipment (i.e. fax machine next to a laser printer, next to a connected copier) reduces costs.

These four issues reduce costs and impact the environment in a positive way. These four issues are customer driven and implemented to increase revenues, reduce costs and increase profits - CAPITALISM.

The Green movement is losing it's issue to it's arch nemesis - Capitalism.

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