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Emerson Fullwood Addresses the Future: Interview with the President of Xerox Channels Group

10 Aug, 2004 By: Dick Norton imageSource

Emerson Fullwood Addresses the Future: Interview with the President of Xerox Channels Group

It’s safe to say that the recent turn of the
century was unkind to Xerox. From the late 1990s to the early 2000s, the
one-time undisputed copier king experienced plummeting market value and had a
highly publicized run-in with the Securities and Exchange Commission that
resulted in millions of dollars in penalties.

But the corporation has since waved goodbye to
those trying times and is once again emerging as a player in the digital
copier/printer industry behind the leadership of CEO Anne Mulcahy and corporate
officers such as Emerson Fullwood, who was appointed president of the Xerox
Channels Group in September 2003.

Although Fullwood, who joined Xerox in 1972 and
has been a corporate officer with the company since 1996, is not a household
name like his boss Mulcahy, his new role has made him responsible for Xerox’s
sales of office products through print resellers, agents and dealers.

The 56-year-old North Carolina-native, who
appropriately was born in a town named Supply, was placed in the position to
capitalize on Xerox’s success with its color printer products, which are
primarily sold through the indirect channels.

And as Fullwood pointed out in the interview with
imageSource, “Color is really at the top of our minds at Xerox. 

Besides discussing the importance of color,
Fullwood (EF), along with Jack Lafferty (JL), vice president and general manager
of Xerox’s North American Dealer Channel, spent some time with imageSource
offering insight into Xerox’s position in the market and assessing the
company’s future.

So without any further delay, imageSource
(IS) introduces you to Emerson.

IS: The color printer market has been growing,
where do you see it in one, two and five years? 

EF: Color is really at the top of our minds at
Xerox.  In 2003 around the world we made a lot of good progress and in the first
quarter of this year we had a lot of progress. Here in the second quarter the
progress has been equally strong. In fact, our color multifunction activity is
up 45 percent. It’s been a clear focus of Xerox. The customers and marketplace
realize the real value of color and we believe the technology is moving forward.
We think this is a great growth market for us in two, three, four and five years

IS: Are we going to see a time when the color
market exceeds the black and white laser market and when do you think that might

EF: I think the black and white marketplace will
be around for quite some time to come. It will be some time before [color
exceeds black and white] because of economics.  A lot of technologies are moving
quickly and I think when that cost curve overlaps [and color becomes relatively
inexpensive] that’s when I think you will see it move in that direction. But I
think monochrome will still be a huge market and color will continue to be a
growth market.

IS: Some dealers around the industry were sort of
slow in getting into color, do you find that changing and, if so, how?

EF: We know that color is a rapidly exploding
segment of the marketplace and it started at both ends. It started in the
high-end production area and in the low-end printer area. We have very big plans
for our dealers to be engaged in the color spaces and move forward. This is an
area that they will play much more aggressively, but I think it does require a
little higher level of expertise and skill level. I think that will be built
over time with the channels.

IS: Does that imply that you are going to expand
the range of products that are made available to dealers? Frankly, some of us in
the industry have been critical that Xerox’s policies have limited the types of
products offered to the dealer channel. Are you going to expand those products
offered to your indirect channels?

EF: You are absolutely right; you and some of your
colleagues have been pushing us. You should know we’ve begun expansion already.
We started last year. One of the very first conversations I had with
Jack Lafferty is how do we begin expanding the
portfolio for the dealer channel. Jack added one product to the portfolio for
dealers. Since then we’ve added an even broader product line. Look at our road
map, we even have a whole set of products we are going to extend throughout the
dealer channel. The channel will be very important to Xerox in our focus on
revenue growth and our focus on capturing new revenue streams.

IS: How high up in black and white and color
products can a Xerox dealer sell now?

JL: Today it is up to 28 pages per minute for
digital black and white.

IS: Segment three, four and five products that
produce up to 80 pages per minute, are you going to be opening up those classes
of products to the dealer channel?

EF: If you go back just a few years ago we didn’t
even participate in the dealer channel. Then we started with the segment one and
we’ve expanded that to segment two. In time, we’ll continue to expand our
portfolio. We want to do it intelligently. We just want to ensure we’re doing it
in a way that is good for Xerox and the marketplace.

IS: How should an independent dealer competing
against Xerox position itself? 

JL: Rather than looking at how to compete with
Xerox independent dealers they should look to join Xerox as it moves forward in
its channel and coverage expansion.

IS: Can dealers continue to stay in business in
the next couple of years if they are just selling boxes?

EF: I think it will be very challenging for
dealers to grow their businesses if they don’t learn to sell solutions in a very
effective manner. I think that is one of the challenges that the dealer channel
will face. I think if they can sell more than the box and can sell solutions and
can expand their capabilities, I think they will be a lot more successful. When
we talk to our customers and look at the marketplace I think they are looking
for a total value proposition. I think the challenge is who can give extended
functionality and who can provide better services and solutions to customers.
It’s not only who can capture the page, but also who can offer other value added
services in this marketplace.

IS: What is Xerox doing to promote the sale of
solutions and services through the agent or dealer channel?

EF: You should know that both the agent and dealer
channels are very important distribution outlets for Xerox. I think it starts
with how we train our channels to be effective in this market. We are investing
in training to ensure that we have an indirect sales force that can compete and
lead in this area in an effective way. Secondly, I think the products that we
bring into the market are much friendlier for both the customer and our
channels. We’re trying to ensure that we are developing and designing with
simplicity in mind, but with extended value add capabilities that help the
channel to sell more effectively.

IS: Could you give an example of what you have
done as far as simplicity and value add? 

JL: We have an equipment launch coming up in the
next quarter. Part of that launch will be a software package that is internally
Xerox developed that will, for the first time, facilitate the mystery of
scanning.  Scanning has been on a lot of products for a number of years and it’s
probably the most misunderstood capability and probably one of the highest
productivity elements of a multifunction device. So as part of our launch we
will provide a software package that will be a product for the dealer. It will
have a part number and it will work in conjunction with our products. So Xerox
will be taking the new equipment to the dealer, but we also will be bringing a
solution that will be a prepackaged product solution that will facilitate the
utilization of the devices in a scanning environment. We believe that with the
ease of use and the ease of installation of this capability on our equipment, we
will help the dealer become more interested in what we believe is a growing
market, the scanning market, and at the same time facilitate the education and
training of the BTA and the agent dealers in this vital productivity area.

IS:  Is Xerox doing anything in the agent or
dealer channel as far as financial rewards for solutions sales?

EF: I would say at this point our incentives are
focused on the placement of equipment. However, as we move to this new product
family [solution sales] it can easily be a part of any incentive we want to do
for a wide range of resellers. That’s not a problem. 

JL: Just let me add to that. We’re asking our
channels to lead with some of the most advanced functionality we have. We want
to provide solutions for our customers and the marketplace.

IS: What else are you doing in the future in the
dealer and agent channels?

EF: The whole small and
medium size businesses
which we believe our dealers are already focused on, is a very significant
space. It’s really the segment of the market we believe continues to grow
perhaps more so than the Fortune 500. As this segment grows we know that we have
to participate there and our market strategy will be increasingly focused around
it and how we can capture this kind of growth in this space. So, it’s an
important space today.

IS: Have you had a lot of turnover in the agent
channel, that’s what we have been hearing, and are you changing any policies to
lower the turnover? 

EF: We think we have a very attractive model and
program for our agents. It’s on par with the industry. It’s probably in line
with what you see in any channel model. We work very hard to ensure that we can
provide the kinds of tools for our agents so they can be profitable and know
where the sweet spots are and can manage both the cost side as well as the
revenue side of business. We don’t see anything that would suggest that turnover
has been exacerbated over the last few months. 

IS: With the solid ink technology you guys have,
will we ever see the day when Xerox offers that technology to other companies on
a license basis?

EF: Technology, quite frankly, is our competitive
advantage. You never know what the future holds, but we don’t have any intention
of giving away any of our technology.

IS: The 600-pound gorilla has always been HP, can
anyone over take HP in the printer, color, MFP market?

EF: I think you know in terms of the MFP market
that we do lead the market. They are the gorilla in terms of the printer market.
We’re making good progress, in particular, in the color market. We do believe we
can make substantial progress against HP. Every day we are winning big deals. We
do believe we can compete very effectively against HP.

IS: What strategies is Xerox using to compete
against HP? How are they winning these big deals?

JL: All Xerox channels, direct and indirect, carry
Xerox monochrome and color printers. Therefore, Xerox has extensive coverage in
all market segments and all market sizes.  This growing presence has increased
our ability to win and compete effectively against HP.

IS: Are there one or two things you are doing
specifically that will make you more competitive against Ricoh or Canon? Why
would an independent dealer want to pick up more Xerox products?

EF: First and foremost, the Xerox brand is very
strong across the world. Customers identify with the brand and the channels.
There is a lot of respect and a lot of affinity for the Xerox brand. We will
continue to invest and continue to make sure the brand is well positioned around
the world. Secondly, even in the tough moments we had in the last three to four
years we continued to invest heavily in our product portfolio. We will continue
to bring a number of products [both hardware and software] to the marketplace.
We design and develop better products than any of our competitors. We’ll be a
powerful company moving forward.


We came away from the interview with a few
thoughts on how Xerox views the copier/printer market, the dealer’s role in that
market and what Fullwood’s comments mean to dealers.

  • It
    will be very challenging for dealers to grow their businesses if they just
    sell hardware and shy away from software solutions. We conclude two points
    from these comments: as hardware margins shrink, it becomes harder to sustain
    the traditional dealer business model; and as IT managers become more integral
    to the purchasing decision making for multifunctional devices, the dealer will
    need to be perceived as a solutions provider in order to be considered as a
    viable MFP seller. As Fullwood pointed out, it’s all about extended
    functionality, not just about capturing the page. Dealers can get to the IT
    managers by training the sales force to sell simple software packages, or by
    having the sales force do a paper flow analysis or equipment needs analysis as
    part of their approach to the customer.

  • Fullwood stressed training as a real effort in Xerox’s partnership in indirect
    channels. It says to us that all dealers need to stay abreast of technology
    and invest in training for their sales and service staffs. Dealers should take
    advantage of every course offered by the manufacturers to improve their
    representatives’ knowledge. Dealers might also want to consider sending their
    reps to programs that give certifications in systems such as CDIA. Some
    manufacturers let a dealer use co-op funds to help offset the expense of this
    training. At a time in the industry when systems change fast, it’s the
    intelligent dealer who keeps his/her reps current.

  • Color is the growing market for the next couple of years. Fullwood said the
    black and white market will remain sizeable, but growth comes from color.
    Every indirect channel at Xerox will be selling all color products—printers,
    copiers and MFPs. This would imply that there’s money to be made in every one
    of these product areas and every dealer should be active in these markets. The
    dealers who have enjoyed the most success in color are those that make selling
    that hardware part of their sales representatives’ quotas.

  • Fullwood’s comments about launching a scanning software package as a product,
    we think that is a great idea even for individual dealers. Make these
    solutions products carry a quota for your sales representatives, just like
    they carry a quota for hardware. Making it simple for the salesperson to
    understand a software package such as scanning will make them more successful
    in getting to the IT people who are the real decision makers for
    network-connected technology.

It seems that Xerox is back and ready to expand
its reach in indirect channels. It just remains to be seen how they will
continue to execute in these channels.

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