Xerox North America President Russell Peacock said VARs that partner with Xerox can make better margins on managed print services than those that partner with HP. And despite HP's market dominance in printing and imaging, he said, Xerox is the one leading the way on managed print services and the software and annuity models that will define the market going forward.
"I think we've got a mature set of competencies and tools that we can leverage," Peacock said in an interview with CRN editors at Xerox's midtown Manhattan showroom this week. "I'm not sure the HP legacy is as rich. They clearly want to leverage EDS, and you know, prior to EDS being acquired, EDS worked with Xerox's Alliance Partner Prorgam. We were working with a number of deals and I would conclude from what I know that we were a long way ahead of where EDS was."
Peacock ascended to his new role in February and became a corporate senior vice president. He's been with Xerox since 1982, and the channel is a specialty -- for many years prior to his new role he was head of Xerox's North American channels group.
Peacock is taking over the helm of Xerox's North America business at a most interesting time: Xerox has a new CEO, with Ursula Burns having taken over for Anne Mulcahy in July 2009; managed print services and many of the annuity models starting to dominate the printing and imaging channel have finally taken hold for many VARs; and Xerox itself is positioning to become a services powerhouse, having finished its acquisition of Affiliated Computer Systems for $6.4 billion in February.
Last week, Xerox also reported first-quarter earnings that handily beat analyst expectations, with the ACS acquisition catalyzing a 5 percent year-over-year growth in quarterly revenue.
According to Peacock, Xerox saw the managed print services train waiting at the station long before many of its competitors, and PagePack, Xerox's managed print services suite, is now in its third iteration.
It's here where VARs are growing with Xerox, Peacock said, thanks to annuity services models on top of hardware and software sales. And that's translating into better margins for partners than they can get with its leading competitors in the space, he said.
"I'd be very surprised if that is not the case," Peacock said, when asked if VARs can make better margin with Xerox's managed print offerings than HP's. "In building this spectacular array of value-added resellers around the globe, HP resellers have become highly dependent on HP and their business model is very mature. You know that adage about no one ever being fired for buying IBM? In the printer area it has been true for a long time for HP. That's great for HP, but it also means, if I'm interpreting the messages I get from resellers, resellers are saying: 'Give us an alternative to HP.' "
There's more money to be made with a print and imaging vendor that understood the managed services piece and brought channel opportunities to bear faster and more efficiently than others, Peacock argued.
"These guys say, HP runs their business model pretty tightly and there's not an enormous margin opportunity [in] working with HP," he said. "The success we've had so far at Xerox is born of great tools and services that work, and yes, we believe that there are a few extra points of margin for customers in there as well."
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