During a recent international press and analysts conference in New York, Xerox chairman and CEO, Anne Mulcahy took some time for questions with visiting journalists from emerging markets. The strategic value of these markets to Xerox can be gauged by the fact that it has formed its own Developing Markets Operations (DMO) focused exclusively on territories such as South Africa, Latin America and Eastern Europe. Mulcahy discussed the importance of developing countries to Xerox, as well as some of the major trends she sees emerging in the printing and document management space. Mark Davison reports.
As more mature markets such as the US and western Europe reach almost saturation point in terms of technology, more and more IT firms are turning their focus to developing, or emerging markets.
Countries such as China, India, Brazil and even South Africa are increasingly being viewed as future growth hotspots, many of them already showing double the growth of their western counterparts.
Anne Mulcahy, chairman and CEO of Xerox, says that the company recognised this fact quite some time ago and has geared itself towards servicing these potentially lucrative markets.
“Developing markets are really becoming more important to us,” she says. “There is great growth in these regions, great innovation and we’re very pleased with the progress we are making.
“They are of strategic importance for Xerox and we’re investing in the right portfolios, the right relationships to be a great partner with regard to both technology and services.
“We believe there is a lot of opportunity and we can participate if we listen and respond to our markets here individually.”
Mulcahy says she has great expectations for developing markets over the next few years, especially in terms of revenue contributions within the company.
“Today, developing markets represent 11% to 12% of our revenue yet they are growing almost twice as fast as developed markets,” she says. “I think the Developing Market Operations (DMO) will become a bigger and bigger part of our revenue portfolio. Some of the markets within it are slow, some are very, very fast but, in general, they are growing twice as fast.
“If you do the math, in three to five years time they should be contributing 20% to 25% of the revenue of the whole company.”
On the question of the so-called digital divide that plagues many of these nations, Mulcahy is forthright.
“It is a huge problem for all of us and one where government has a role, and where business has a role to address – for sure,” she says.
“We have a community engagement effort around the world and the foundation of that focuses on education, specifically on science and math.
“Part of our culture is social responsibility – community, environmental, regulatory and governance – and we’ll approach this by asking questions locally,” she adds. “But it is definitely part of what we expect to do in every country that we do business in.
“We have a role to play in bridging the digital divide. Business must be part of the solution and not be seen as creating more of a gap.
“A local approach is always better than one size fits all,” Mulcahy says. “We work very hard at not being just another big company and we have a lot of initiatives that are, in fact, being replicated [by others].”
In terms of technology trends, Mulcahy says that while printers or standalone devices are still contributing healthy revenues, there will come a time when they are surpassed by multi-function printers (MFPs).
“Around $1,5-billion of our total $16-billion revenue still comes from printers, but that doesn’t mean that’s the only way we serve that part of the market – there is a lot more revenue from MFPs,” she says.
“Over time, MFPs will replace standalone devices, but printers are still important – they are important to your [developing] markets. But you will see us focusing more on MFPs which, I think over time, will be dominant.”
Colour output and the proliferation of colour devices through retail outlets is another area which Mulcahy says Xerox is watching with interest.
“Colour pages are everywhere,” she says. “There is a lot at the consumer level, but there is also a lot at the high-end, the graphics and communications companies.
“We want to participate everywhere in our portfolio and one area where we’re maybe not as present as much as our competitors is in retail.
“We are looking at retail differently,” Mulcahy says. “We know that in some territories we have to be there, so we are looking. We’re not shutting down our options to be in retail, but we don’t want to make it mainstream. We want to go through channels, but will look at opportunities where they are relevant for retail.
“We understand there are regions where retail is very important,” she continues.
“We understand and are looking with the developing markets team where we have to be a partner with retail. We will have a product portfolio in these situations – we need to be where the customer is buying.
“This is not such an issue in north America, but in other parts of the world we are open to retail as a distribution channel.”
So where does Mulcahy see the market in five years time?
“I think we’ll see less and less standalone, inkjet-based devices,” she predicts. “There will be more work-group, network capable devices than standalone.
“MFP devices are becoming more powerful and more economic and will be a great choice.
“Everything will be driven to be on the network and I think we’ll see a lot of distributed devices – but not on every desk.
“I still see the high-end being centralised,” she says. “Connected via Web-based technology.”