Monochrome Multifunction Market

and profit from hitting the mark!

Corporate Vision and Strategy

Streamline and digitize document-intensive business processes

Manage our clients’ key business processes

Sell value-added services into existing Xerox accounts

Establish a services centric business model

Production: Drive the New Business of Printing

Defend and grow mono-chrome leadership

Boldly lead in color printing

Gain share from offset

Unleash the power of digital workflow

Services: Deliver process innovation and managed services

Office: Lead the color & multifunction evolution

CoreCompetencies

Expand share in fastest growing segments.

Restore profitability by restructuring the value chain.

Lead migration to color in the office.

Technology

Brand Strength

Document Expertise

Global Direct Sales & Services

Mono MFP Market Overview

Market growth driven by MFP's• MFP market will grow from

59% to 68%; from ’03 - ’07

66% of market decisions are 11 to 30 ppm• 721K units expected to ship

in 2004; 60K per month

0

200

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800

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2003 2004 2005 2006 2007

K U

nit

s

Seg 1 SF Seg 1 MFP Seg 2 SF Seg 2 MFP

Seg 3 SF Seg 3 MFP Seg 4 SF Seg 4 MFP

Seg 5 SF Seg 5 MFP

US Digital Market Size ‘03-’07 - K Units

MFP 9% CAGR

Segment 1 & 2

Xerox 8% 6% 6% 11%

Canon 37 31 25 21

Ricoh 10 9 28 25

HP 11 13 1 4

SOHO exit reduced Xerox participation in decisions

Xerox growth has not kept pace with market Increased competition from traditional

vendors and a new entry - HP

Segment 1&2 Market Position

Segment 1 (11-20 ppm)

Source: Dataquest, Analog + Digital Copiers/Multifunction

1H02 3Q03 1H02 3Q03

Segment 2 (21-30 ppm)

HP’s Strategy Capture Every Page,

Attack Xerox on Every Front

Major Elements of HP’s Strategy

Are ALREADY Reflected In

Current Xerox Strategy and Direction

HP Targets: Office – copy/MFP/printing Production – Indigo Services – Total Print Management

HP Tactics:1. Focus on $24 Billion Copier Market2. Focus on Full Office Services3. Focus on Co-Existence of Printers

and MFPs4. Focus on Business Transformation

XCG Monochrome MFP Strategy Expand channels

• Establish harmony with traditional channels• Deliver growth in fast growing 11–30 ppm segment• Establish tighter linkage to IT environment

Strengthen value proposition to channels• Share in service and supplies revenue• Expand product portfolio

Intensify channel marketing focus• Integrate marketing activities with printers

and color• Invest in more demand generation • Increase public relations activities

Enhance product portfolio• Develop channel friendly products• Fill gaps to effectively compete

with HP

Monochrome MFP Technology

Streamline vendors to simplify platform offerings and optimize profitability

Enable Channel friendly products

Improve network functionality

Continue to improve product coherency, ease of use & reliability

Fax-Based Products

Fax-basedmultifunction

system

Designed for small business/workgroups ideal for any budget

Entry Level Mono MFP’s

Xerox WorkCentre M15/M15iBig office features in a small

office device

Xerox WorkCentre PE16A personal desktop multifunction device

ideal for any budget

Workgroup Mono MFP’s

Xerox WorkCentre Pro 423/428 Printing, Copying,

Scanning and Faxing that’s fast, versatile and easy…

What’s Coming…..

Expanded portfolio with industry leading features

Aggressive equipment, service and supplies pricing

Increase opportunity to expand reseller offerings/services

What is the Opportunity for our Channel Partners What is the Business Opportunity

• Xerox goal is to increase our Segment II share to 20% by FY 2006

What is the Channel Strategy• Develop a portfolio of Best of Breed

IT Focused Resellers with a strongincremental SMB account coverage

• Select 50 Resellers Feb 1,04• Expanded to >150 in Q3, ’04

Segment II MFP Partner ProfileSegment II MFP Partner Profile

Recruit Best of Breed Partners

Partner Profile

• “Document solutions as a practice”

• High local market touch

• Incremental market address

• IT Focused SMB market address

• Installed base Printers and/or MFPs experience

• Solution selling skills, e.g. conduct assessments and sell at enterprise level.

• Expert knowledge:

• Ability to do assessments

• Ability to sell Cost Per Page

• Networking expertise and technical support skills

• Customer support expertise and infrastructure

• MFP service capability

Building our MFP Business TogetherXerox is building a networkof Value-Added Resellers that can• Provide integrated solns to SMB customers• Monochrone and color printers and MFPs• Pre sales assessments and post sales service

and support

Xerox will provide our MFP Partners withthe opportunity for accelerated growthand enhanced Profitability

Establish the Xerox MFP Partner as theSMB Customers “channel of preference”for integrated solns.