Xerox and HP – Comparing Technologies & Synergies

A lot has been talked about Xerox’ intent to buy HP and the stock value created. But I have not seen reports comparing the technologies and device line-up and whether there are synergies to be found. However, this is the area that interests users and employees most. Let’s have a quick comparison by the main segments (and I know this could be 30 page report even without considering the PC business, but let’s keep it simple here) on where both companies stand.

Consumer & office print

Both companies still derive their main revenues from home and office devices. In the consumer space HP is the market leader with a range of device from hand-held micro printers to all kind of photo and small desktop printers. Xerox does not really play in consumer printing although a few devices might make it into the upper end. Likewise, in A4 office HP is the market leader with a strong line-up of inkjet and laser devices, while Xerox is a smaller player. In the A3 MFP space Xerox used to have an edge, but the market positions seem to even out. As one of the inventors of this category Xerox has traditionally a strong market position although several other strong competitors are vying for shares. HP tried to get into A3 MFPs for years with mixed success (via OEM products or pagewide inkjet for example), but after the acquisition of Samsung in 2016 HP has a much better market position now.

These markets are large by revenue, but unfortunately all are in decline.

Segment Xerox HP Comment
Consumer Not present Market leader  
Office A4 Minor player Market leader  
Office A3 MFP Among leading players Growing presence HP share increasing since Samsung acquisition.

Xerox: based on FujiXerox manufactured devices

Production Print

In contrast to office, production digital print has been growing in recent years, although not in all segments and the growth slowed. Still this is a strategic growth area for many vendors.

The lower end production segments performed flat in recent years. In light production colour Xerox is traditionally one of the strongest players and also in Mid/High production colour Xerox is among the leaders, especially after the success of the Iridesse. HP does not have offerings in both areas. The situation in Heavy production colour is more complex. For 15 years Xerox and HP had a head-to-head race for the market lead. More recently HP pulled ahead, especially on the success of the B2 Indigos. Sales of the Xerox iGen slumped however due to competition from inkjet and lower priced toner devices. With Xerox launching the Baltoro, a promising inkjet device, and more players having or about to enter this market the situation will remain dynamic. In continuous feed inkjet HP has an edge and a wide line-up as well, spanning from 2-up to 4-up devices. Xerox has a good presence with the Rialto and Trivor, but a bit more for the lower volume portion of the market and with somewhat lower placement numbers. By closing the Impika site in France, where the CF development was based, it will be interesting to see how this product range develops.

Segment Xerox HP Comment
Light production Among leading players Not present Xerox: based on FujiXerox manufactured devices
Mid/high production Among leading players Not present Xerox: based on FujiXerox manufactured devices
Heavy production Among leading players Market leader Dynamic market
CF inkjet Medium player Among leading players  
Monochrome Market leader Not present Declining noticeably

Packaging and Specialty

The biggest growth in print volumes is currently in packaging and specialty markets. Xerox showed some packaging print prototypes at drupa 2016, but besides some iGens used for folding carton there is little available in label and packaging. HP Indigo has been market leader for label printing for many years. In packaging the market is more complex, but HP offers solutions for folding carton and flexible packaging from HP Indigo and inkjet-based devices for corrugated. While the share of digital is still small compared to analogue print, growth in packaging has been rapid. There are more specialty markets in functional and decorative print, but these markets are even more nascent. Wide format printing should not be overlooked as a large market, although growth here is smaller. HP has traditionally been a strong player with a broad line-up, while Xerox essentially stopped marketing wide format printers. Finally, a market where big growth is predicted but which is still in its early stages: 3D print. HP has a range of Jet Fusion products available already and with Metal Jet a solution for metal in the works. This is where Xerox plans to become active as well after investing in a 3D metal print start-up early 2019.

Segment Xerox HP Comment
Label Not present Market leader  
Packaging Small presence Among leading players Variety of markets, digital still small
Wide-format Not present Among leading players  
3D print Prototype Range of solution Very early stages of market

Software & components

When comparing technologies and synergies from Xerox and HP software and components need to be considered as well, nit just the hardware. In software both companies have a comprehensive portfolio. It is difficult to compare feature by feature in the complete software portfolio. However, it should be kept in mind that software solutions are usually joined by hardware and hardware and software are developed in conjunction. Additionally, in ever more integrated production chains are software and workflow the main tools to increase efficiencies.

Both companies are producers of inkjet heads. HP has a long history in inkjet and deploys its page-wide technology of thermal inkjet across a wide range of devices. HP is among the largest producers of inkjet heads globally. Xerox follows a piezo-inkjet approach with a new generation of heads launched recently. Several Xerox devices use inkjet, but inkjet is less prevalent in the line-up of the company that invented xerography.

Finally

This is only a brief look at Xerox and HP by comparing technologies and looking at synergies or overlap. There is some overlap in the product portfolios, but a good number of areas would be complementary. Overall HP has an edge in segments that are growing. Xerox has an edge specifically in A3 colour document devices, but almost all of these devices are designed and manufactured by FujiXerox. After severing the ties remains some insecurity on how this business relation will develop.

Combining software would be a lot more challenging since both have their strengths and are entrenched in their markets. Software and hardware are intertwined and adjusted to each other. Bringing together two lines of software would be a huge undertaking and for many mergers it took years to get the software and workflow portfolios adjusted. HP and Xerox have different inkjet technologies and both technologies could be complementary in their strengths and uses. But since each inkjet head technology requires substantial investments it could also mean that one would need to be sacrificed in a combined company.

There is one big caveat to the Xerox market position however, when comparing technologies and synergies: Xerox is not covering the Asia-Pacific market. This is the turf of FujiXerox and after the ties severed Xerox needs to build up channels there first.

Carl Icahn, activist minority shareholder in Xerox and HP calls the proposed takeover a “no brainer”. When comparing HP and Xerox by technologies and synergies the situation is a bit more complex and while there are some synergies in technology, the risks are substantial. After the initial dust of a merger has settled the benefit of a combined company for their customers will define share prices and this needs to be substantiated in the discussion as well.

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