FRAMINGHAM, MA, MAY 31, 2011—Two recent acquisitions suggest that a quiet struggle may be brewing between Xerox and Hewlett-Packard in the area of outsourced managed print services: a struggle that could soon break out in a full-fledged strategic battle.
The day after HP announced its plan to buy Salt Lake City-based Printelligent–a company that offers infrastructure, software and workers to be coordinated with HP's existing sales channels and broader services for small and medium-sized business clients–Xerox made an announcement of its own.
Xerox, identifying itself the market leader in managed print services, said it would expand the business by adding British print consultancy and software company NewField IT as a wholly owned subsidiary.
Neither HP nor Xerox talked about the value of the acquisitions of their privately held targets—as is often the case when the target isn't publicly traded, and the purchaser's strategic plan is still being formulated.
But despite their reluctance to quantify the latest deals, both acquirers were clear that their acquisitions fenced out the managed print territory for expansion.
'Software Suite' for Printing
On Printelligent's website, the company said it did business in more than 700 cities in 39 states, managing about 500 million printed documents annually for clients. NewField's available information was sketchier on its website, however, not mentioning its reach, volume of work or employment levels, for example.
Xerox did tout NewField's Asset DB operation, a "software suite" that creates visual maps of office floor plans to help optimise printer and copier use throughout the workplace. "By combining this visual mapping with a database that tracks usage patterns of document devices, workplaces small to large are better able to monitor and manage the use of the devices and their overall print-related costs," Xerox said in its news release. Xerox said adding NewField IT's services to its existing Xerox managed-print offerings would help client companies "capture cost savings and efficiency benefits of MPS faster than ever before."
Last year, Xerox noted that its MPS client list included such global giants as Dow Chemical, Fiat Group, Ingersoll Rand, and Procter & Gamble. But it pointed out that its offerings extended well into the small and mid-sized business arena through a network of channel partners that built branded MPS programme for clients with Xerox support and training.
"Xerox pioneered the MPS strategy and we continue to set the bar for strategy and execution," Stephen Cronin, president of Xerox's Global Document Outsourcing business, said last year. "Our approach goes beyond simply managing print—it's a joint venture with the client to create opportunities that align with their present and future business goals." And he specifically noted the emphasis on mobile print, conducted through Xerox and the P&G Innovation Council.
Narrowing the Field
One publication that follows the managed print services business, MPSinsights, noted that the acquisition activity "really narrows the field of software vendors and raises the value of the independent vendors remaining on the field." The article on the two deals in MPSinsights suggested that more acquisitions may be in the offing, either by the two big companies, or others in the field "The question is," said the article, "who is next?"
Among the other questions MPSinsights posed: "How will Xerox's acquisition affect independent MPS consultants? Asset DB was almost becoming an industry standard tool for discovery—will that continue under Xerox ownership?"
For its part, Xerox suggests yes. "NewField IT's Asset DB is a user-friendly software, which speeds up some MPS implementations by up to four times, Stephen Cronin said in the latest press release. "This will accelerate the return on the MPS investment for all our clients, helping boost business growth as they reinvest the costs savings into other areas of the business."
Besides Xerox and HP, Ricoh and Canon are major players in the MPS field, which Gartner, among others, has identified as a growth market—one that is attracting a lot of competition. In fact, some see the battle for outsourced print services as essentially a four-way struggle, with each of the top companies looking for a new edge. The activity by Xerox and HP highlights not only the stakes, but the directions that the leaders are taking to win their bets.
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