Friday, February 26, 2016

Xerox, HP, Lexmark : The Greatest Transformation of a Niche Since the 70's Auto Industry

Remember transformations of the Past -

  • The great computer dealership purges of the 1990's - Inacomp to Wal*Mart
  • The music industry - vinyl to CD to MP3 to streaming
  • The auto industry, 1970's, from V8 to 4cyl, from 400 HP to 100 horses running through front wheels
2/2016 -

Look what is happening to Sharp - the copier side of Sharp is viable and profitable - is it far fetched to see another 'spin-off' or will the imaging division continue to be a profit center for the whole?  Is an investment of $450M good money after bad ?

Lexmark has gone from the "long cool woman in a black dress" to having her parts examined separately.  Recent augmentations appear more valuable than the core.

HP just reported,

"...Printing remained challenged in the quarter with net revenue of $4.6 billion, down 17% year-over-year as reported or 11% in constant currency, with declines in all regions."

Turning to Supplies, revenue was down 14% year-over-year in Q1 about 400 people exited the company globally as part of the restructuring activities announced in September...we are accelerating the program and now expect approximately 3,000 people will exit by the end of fiscal 2016 instead of over three years."

Last year, Q1 2015, HP reported a 14% decrease print revenue.  Two years of down numbers?  How about 4 years?

Xerox -

In an article written by Stephen Hays, the chairman of Brighton Securities, George Conboy is quoted saying Xerox...

"is steadily on a downward path, especially in its equipment business. The demand for its technology is falling by the day. Though the company may not be staring at bankruptcy in the near future it is, however, facing a situation where it is slowly moving away from maneuvering paper documents and making copies. Meaning, Xerox Corporation (NYSE: XRX) is steadily shifting away from its equipment business as there is lesser demand for its technology..."

Outside pundits see, why don't our own?

Some might say the auto industry transformation was greater in scale and scope than our copier confluence but consider this: no other segment of business, lest IT, has had more impact in the business world that printing and copying.

Nothing in history compares.

Chevy Citation, anyone?

How can Lexmark, Xerox and HP change to remain relevant?

The car of the year in 1980 was the Chevy Citation.  A front wheel drive, side mounted radio, "Accord killer".  Parts fell off, transmissions locked and a generation of customers scrambled toward Toyota.

The OEMs continue to produce more of the same:

Is ink in the office akin to front wheel drive?
Is MPS the independent channel's CD?
Is managed services the next 5.25" floppy?

Either way, slow down and consider what is unfolding before our eyes - the greatest shift in business communications since the typewriter.

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