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Technicolor Dreams
Technicolor Dreams
comments, called-out Anne Mulcahy has Xerox back in black ink. Now she’s trying to move it into reds, yellows and blues. The sleek Borgata casino in Atlantic City, New Jersey wants its young players and partyers to come back. To spur them, Borgata mails every first-timer in its reward program a rich-crimson-colored brochure within three days of his or her visit, offering generous freebies for a second stay. Borgata’s computers select from among 150 images to customize each glossy mailing based on what food the guests ordered, whether they got a mud-pack facial and how they bet. Spa lovers see softly lit images of bath salts; avid shoppers get pictures of a plush leather purse and chic driving moccasins.
When Borgata first sent out the mailing two years ago, 20% of recipients accepted the offers and returned to the hotel-casino. That is an astounding take-up rate–the typical direct-mail campaign is lucky to get 0.2% of recipients to make a purchase or accept an offer. It is a victory for Borgata. It is also one for Xerox, headquartered in Stamford, Connecticut, which sold the mammoth digital color printer that churned out the mailings.
Color persuades in a way that words cannot: Yellow conveys optimism, red makes people hungry, and green embodies health. (The language of color shifts with geography.Black means rebirth in Egypt, death in the West.)Studies conducted in the 1990s found that the addition of color to a document increases readers’ attention by up to 82% over black-and-white. Add personalized text or pictures, as Borgata did, and a marketing effort’s repeat orders go up by half, the average order size goes up by one-fourth, and revenue goes up by one-third.
“Customers know it’s more valuable,Longchamp Sacs Bandoulière,” says Ursula Burns, number two to Xerox Chief Executive Anne Mulcahy.
Yet color, already a staple in cinema, television, photography, publishing and cell phones, is surprisingly absent on the printed page inside offices. Xerox calculates that 96% of the 18 trillion pages printed worldwide are black-and-white. Burns’ goal is to bring color’s share of printed pages to 10% within three years. Xerox’s reputation as a rebounding tech titan depends on it.
Xerox makes five times as much revenue (up to 15 cents a page) and profit from a page of color as from a black-and-white one, since color means more ink, pricier machines and lucrative consulting services. One-fourth of Xerox’s revenue now comes from color, up from 15%in 2000. Color is a growth business, while the black-and-white copying business is in unstoppable decline. Xerox made $859 million in net income last year on $16 billion in sales, down from $19.5 billion in sales in 1998.
Mulcahy, 52, the Xerox lifer who took over the reeling company in 2001, overhauled it to avert a bankruptcy filing and restored its profits and respect the following year. She is pouring money into color research, sales and consulting. “It is a certainty that the world will convert to color,” she says. “The question is the pace.”
Xerox now has 250 consultants whose main job is to sell companies on color. (Mulcahy’s older brother, Xerox consulting chief Thomas Dolan, oversees this group; he joined the company in 1970, six years before she did.) Financial services is an especially ripe sector. Xerox advisers have redesigned brochures and forms for the British insurance firm Scottish Widows. They have colorized benefits-plan reports from U.S. retirement administrator Principal Financial Group and moved department store chain Dillard’s to digital color printers, cutting the cost of in-store signs by 82%. They also are adding color to mailings from Prudential Financial, Prudential Life and Direct Marketing Express, which works with Walt Disney World and the Miami Heat. Elsewhere the color commandos work with Dutch bank ING to add its trademark orange to Canadian customers’ statements and brighten up mail from MetLife and Genworth.
New ideas constantly spin out of the color lab in Rochester, New York. Researchers can now print several layers of color on a piece of paper to add texture and security features. One prototype use: a scalper-proof ticket with a shimmering, hologram-like “gloss mark,” which can be laid down instantly, showing the legitimate buyer’s photo.
Xerox’s heavy artillery in the color war is its commercial-strength iGen3 digital color printer, a half-ton beast that spews 110 pages per minute (see box, p. 94) . Digital printers like the iGen are rapidly replacing traditional offset jobs, with Xerox leading the way. In two years it has racked up $250 million in sales of a product that didn’t exist before. It has sold 500 iGen machines, each one starting at $500,000. The iGen is a major reason why sales of toner and services for digital office and production machines grew by 3% for the first quarter. Xerox now has 72%of the commercial digital production market; HPand Kodak split the rest.
Digital technology has transformed the economics of commercial printing. It used to be so costly to do color on a digital printer that when a customer needed, say, 5,000 color brochures, it was cheaper to use an offset press–even if doing so meant printing 10,000 and throwing out the excess supply. The iGen brought costs of digital way down so that it’s now cheaper to print just the 5,000.
Xerox’s rivals are just as drawn to such a payoff. “We’re only in the first-25th percentile of the market,” says William McGlynn, vice president of Hewlett-Packard’s digital printing business. Two years ago HP’s consultants persuaded the Subway sandwich chain to switch its European menus and signs from offset to HP’s Indigo printers.
John Lacagnina has three Xerox iGens and plans to buy four more in the next 12 months. His company, ColorCentric, situated near Xerox’s Rochester offices, handles customers like Lulu, which charges $20 for one color copy of a 100-page photo album.
Xerox runs an online nerve center from Rochester where 50 engineers monitor all 500 iGens across the globe. They call customers to let them know that a machine is about to sputter and when to expect the repairman. In the future Xerox plans to build in tiny cameras for diagnostics and to use algorithms to predict breakdowns automatically. And iGens may also come with light-emitting diodes andsensors that could tell, in less than a minute, whether colors are printing correctly, down to the tiniest variations.
The success of the iGen and smaller siblings could reverse a three-year decline in Xerox’s highly profitable business of selling toner and repairs, says Jay Vleeschhower, a Merrill Lynch analyst. But a price war with Minolta in smaller production printers will blunt these gains. Revenue in Xerox’s so-called digital production business–one of three divisions that make up the company–should rise 2%this year to $4.7 billion, but operating profit may decline 7% to $480million, forecasts Caroline Sabbagha of Lehman Brothers.
Mulcahy faces a tougher slog in the biggest of the three units (sales of $7.6 billion), the office business, where Xerox battles Canon, HP, Konica, Minolta, Ricoh, Lexmark and new entrant Dell. Xerox ranks second to HP in color laser printers and slipped a notch to fourth in office color copiers last year after Konica and Minolta merged, according to the Gartner research firm. Mulcahy has launched a slew of lower-margin office machines in recent years, hoping to reap profits in toner and services sales.
Office managers are still wary of color as an expensive privilege. So Mulcahy’s salesmen are out explaining that a single, networked high-capacity color printer can save them money, repair costs and hassle by handling color and mono, replacing all the printers in surrounding offices and cubicles. The machines can be password-protected so that only authorized designers can add a dash of color.
Xerox’s engineers have cut the cost of printing color in offices, taking it from up to 50 cents a page eightyears ago to at most 15 cents today. Mulcahy has devoted 550 scientists and 75% of her $750million research budget to finding breakthroughs in color, including efforts to make color machines lighter and smaller by using less material and fewer moving parts. Toner, once made only in peanut-brittle-like slabs that were crushed into powder, is now cultivated as petroleum-based crystals that go on more smoothly, allowing the machines to print two and a half times as many color pages per pound of toner. “Our manufacturing technologies are now at the molecular and atomic levels,” says senior fellow Peter Crean, manager of the Xerox color studio, where scientists work on new color ideas.
Color must become a staple of business communication for this comeback to work. Xerox’s Burns says it will. “Even if my generation and the one before me are used to making the shift from color to black-and-white,” she figures, “the generations after me are not.”
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发表于 2013-7-20 18:00
