Will The Innovative ColorQube Expand The Color Market And Xerox’s Revenue?
Angèle Boyd
May 07, 2009
Today, Xerox announces the ColorQube series , what it calls a "game-changing" large workgroup color MFP, with the goal of expanding the color market and growing Xerox’ revenue. The ColorQube 9200 series is a solid ink platform whose specifications and roll-out are as follows:
Black speed of 38-85ppm, depending on mode
Color speed of 30-60ppm (9201 model); 35-70ppm (9202 model); 38-85ppm (9203 model)
Monthly duty cycles of 150,000 pages/month (9201); 225,000 pages/month (9202); 300,000 pages/month (9203). The sweet spot is 12,000-15,000 pages, with 30% having some color.
Pricing at $23,000 for the 9201 to $29,000 for the 9203
A three-tiered cost-per-page plan designed to save most customers 62% on color pages compared to color laser (3 cents versus 8 cents for ink and toner costs respectively)
Extensive finishing options
90% less waste than a comparable color laser or 88 lbs vs. 815 lbs. (over 4 yrs. at 22k pages/mth.)
More media flexibility than laser
Very good print quality and color vibrancy, and 100% water proof inks. Laser still has an edge in print quality (e.g. photo paper and serious graphic arts).
The series is available now in North America with a gradual worldwide rollout.
All accredited Xerox channels that currently sell its A3 MFPs have access to the product, but the direct channel will move the highest share of shipments.
One compelling aspect of the ColorQube 9200 announcement is the color cost-per-page plan. Xerox’s Hybrid Color Plan is designed to drive increased color usage by reducing color cpp. The plan is a three-tiered pricing model - useful color, everyday color and expressive color (more details below). All are based on pixel counts in full color quality mode.
Useful color – approximately 1.2% of color coverage for 1 cent, about what a black-and-white page on any laser device is priced at
Everyday color – between 1.2% to 8% color coverage for 3 cents
Expressive color – more than 8% color coverage for 8 cents
Xerox indicates the majority of color pages users produce are either "useful" or "everyday" color. Since most color laser products charge at least 8 cents per page regardless of color coverage, this results in most users paying 62% more for color laser than ColorQube pages.
So that users can gauge what kind of color documents they typically produce, Xerox is providing examples of each document type in its marketing materials. They have also created a simple web-based tool for customers to calculate the ink cost savings with ColorQube compared to the average toner cost for competitive color laser devices. The ColorQube Cost Savings Calculator asks basic questions about the amount of color pages currently printed and at what cost per page, and projects monthly cost savings using the ColorQube 9200.
Another compelling aspect of the ColorQube is its environmental friendliness. 42% of U.S. companies say they have a green policy in place relative to hardcopy. 67% would switch hardcopy brands for better green policy compliance. With just ink sticks and 1 main CRU, the ColorQube produces very little waste, 88 lbs versus 815 lbs. for color laser over a 4 year period at 22k pages/month.
Will the ColorQube expand Xerox’s color business and the market? In 2008, Xerox was #1 with a 23% share of the dollar value of WW color device shipments (includes color laser, solid ink, page-wide array inkjet, and high-end color systems, but excludes traditional low-end inkjet). Less than 1 point of the 23% was solid ink. To ensure success, the risks that Xerox must mitigate against are:
The poor economy and the resulting decline in the market’s overall page volume and in color pages. Xerox’ latest earnings reflected this and showed a decline in color revenue ($1.6 billion in Q1/08 and $1.37 billion in Q1/09) and a slowdown in color page growth (32% in Q1/08 and 16% in Q1/09).
Not expanding its business if ColorQube sales are pocket swaps with Xerox color laser sales.
The response from color laser competitors (e.g. Canon, Ricoh, HP, etc.) and their channels who may respond by lowering their color cpp further so that ColorQube’s advantage is not as great, or by promoting overall cost savings for customers by rightsizing their total environment with lower-cost A4 color laser devices.
Given that until now, Xerox’s solid ink business is based on much lower priced A4 devices, Xerox has the potential to significantly increase its solid ink business and its share of its total color business. This is enabled with the much higher speed/higher priced A3 ColorQube. If ColorQube did no better than HP’s Edgeline (A3 page-wide array inkjet) which has had somewhat limited market success, and if Xerox’s color laser business continued the trajectory it’s been on, Xerox would double its solid ink business and increase solid ink’s share of its color business. Beyond the hardware revenue boost, ColorQube’s cpp plan will also increase the share of its pages that are color, boosting Xerox’s solid ink post-sale revenue and profits.
Ensuring simultaneous growth in its color laser business, rather than customer pocket swapping its color laser devices, will be enabled by Xerox’s trade-in offer for other laser brands. Also, Xerox has the color hardware portfolio breadth, services market share leadership, and the channel footprint to right-size customer environments from the mid-market to the large enterprise.
In summary, the ColorQube reinforces the Xerox brand as innovative and color as one of its key strategic planks, and opens doors to more customers (green focused and/or looking for lower color operating costs). Xerox expands the market ColorQube’s low operating costs. Nonetheless, until color hardware prices are nominally higher than black/white laser's, the adoption curve of color in the office will continue to be evolutionary and not revolutionary.
Original Post