Xerox CEO Says Color, Services, Partnerships Are Keys to Drive Growth, Customer Value; New Services for Large Enterprises, Products for Small Businesses; OfficeMax Signs $18 Million Contract

At the company's annual briefing with industry analysts andresearch firms, Mulcahy introduced new assessment services andsoftware to help large companies increase the productivity of theirprinting operations by up to 40 percent and reduce costs by 20percent. For small and mid-sized businesses, the company launched itsmost affordable black-and-white office multifunction product yet -starting at $399 - and a competitive color laser printer priced at$499.

Xerox's leadership in color and services continues to drawcustomers. OfficeMax, one of the nation's largest office superstores,signed a four-year, $18 million deal that will put 1,280 Xerox colorproducts in retail stores across the United States. Following a reviewof competitive color systems, OfficeMax selected Xerox DocuColor240/250 color multifunction systems and Xerox CopyCentre(R) C2636digital color copiers to provide high-quality in-store printingservices.

In a five-year contract at Dow Chemical Co., Xerox is helping toupgrade global document management systems with about 3,500 new Xeroxcolor and black-and-white digital multifunction systems that willprovide greater reliability and cost savings.

Building on market successes, Mulcahy said Xerox is pursuing acombination of "new and reinvented" opportunities designed to betterserve customers and capture a bigger slice of an estimated $112billion market.

"We have new opportunities in document consulting services to helpcustomers take costs out and put value into business processes thatrevolve around paper and digital documents," Mulcahy said. "We arealso reinventing the fast-growing color document market throughsuperior digital color technology for small and medium-sizedbusinesses, large enterprises and print providers."

Color Growth

Mulcahy noted that Xerox's flagship iGen3(R) Digital ProductionPress is gaining momentum as the high-end digital color press ofchoice for commercial printing customers worldwide. More than 17 iGen3presses were sold over seven days at the Print 05 exhibition lastmonth in Chicago.

Xerox is the industry leader in color equipment sale revenue,according to research firm IDC.(1) The company has a No. 1 marketshare position in high-speed digital production color andblack-and-white cut-sheet systems that produce brochures, invoices,manuals and other documents on-demand.(2)

To expand its leadership position, Mulcahy said Xerox has placedtop priority on improving all kinds of customer interactions. A seriesof Xerox Lean Six Sigma projects has been launched to make it easierand more effective to work with Xerox. Global process improvements areunder way in areas such as account management, billing, and customersupport.

"Growth is not just about customer acquisition," she pointed out."It's about intense customer collaboration - providing Xerox people,processes and technologies to deepen relationships and solve realcustomer problems. By doing that better than anyone else, we canprovide an unbeatable, sustainable advantage."

Leading with Services

To better serve customers in large enterprises, Xerox is expandingservices designed to make the business of making documents less costlyand more efficient. Through new Production Optimization Services,Xerox is helping companies make the most of their digital and offsetprinting technology investments. Lean Six Sigma assessment tools andsimulation software help Xerox consultants identify inefficiencies inprint and mail operations, eliminating wasteful steps and automatingthe way documents are produced and distributed.

For example, First Data Corporation (NYSE: FDC), a $10 billionelectronic commerce and payments leader, turned to Xerox to streamlineits printing processes and facilities. Using a tool called LeanDocument Production developed in Xerox research labs, Xerox redesignedFirst Data's in-house print shop, increasing productivity andmaximizing how equipment is used.

"Xerox's analysis and recommendations helped First Data reduceexpenses and, more important, improve the quality of service we canprovide to our output services clients," said Tim Rosenthal, seniorvice president, Output Services, First Data.

Xerox's Production Optimization Services join other servicesofferings, including Xerox Office Services such as Office DocumentAssessments, fleet management and help desk support. The company'svalue-added services business is ramping up with nearly 100multimillion-dollar contract signings this year around the world.

Partnering for Growth

To advance its document management strategy, Mulcahy emphasizedthe growing role of partnerships to deliver Xerox technology andservices. Xerox is currently working with leading companies such asAccenture, CapGemini, EDS, Enovation and others to expand its marketreach. Partners also are increasingly involved in other areas,including research and development, product distribution andadministrative processes.

"It's partner or perish," she said. "Xerox does many things atworld-class levels and our investments are closely aligned with corecompetencies in document management. We bring that expertise topartners who are increasingly combining our capabilities with theirown offerings to deliver superior solutions to customer problems."

Xerox is working closely with Microsoft (NASDAQ: MSFT) to helpmanage more than 7 million of Xerox's customer transactions a day,involving office printing fleets at customer locations worldwide.Xerox people also are working with Microsoft engineering and softwaredesigner teams to ensure Xerox technology and services achieve timely,full interoperability with the latest Microsoft product releases suchas the upcoming version of SQL Server 2005 software.

As part of its alliance with EDS (NYSE: EDS), Xerox is deliveringdocument management technology and services to support outsourcingcontracts with large enterprises such as Barclays Plc in the UnitedKingdom and PPL Corporation, a major energy company in Pennsylvania.EDS also has expanded the use of Xerox Office Services at its ownfacilities around the world, including Europe, as well through FujiXerox in Australia and New Zealand.

From Large to Small

Xerox's new products for small and medium-sized businesses furtherbroaden the company's line of printers and multifunction systems soldthrough indirect channels. The Phaser(R) 6120 color laser printer,starting at $499, prints up to five pages per minute in color and 20ppm in black-and-white. The 20 ppm WorkCentre(R) PE220 black-and-whitemultifunction system, starting at $399, offers printing, copying,faxing and color scanning in one compact device.

Xerox has launched 49 office and production products in 2005 andwon more than 230 awards from independent testing labs and researchorganizations worldwide.

Customer Contacts:

For more information on Xerox products and services, visitwww.xerox.com or call 800-ASK-XEROX.

NOTE TO EDITORS: For more information on Xerox and productphotography, visit www.xerox.com/news. XEROX(R), Phaser(R) andWorkCentre(R) are trademarks of XEROX CORPORATION.

(1) IDC, U.S. and Western Europe combined 1H05.

(2) IDC, U.S. and Western Europe in high-speed digital productioncolor (60ppm or greater) and black-and-white cut-sheet systems (91 ppmor greater).