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September 16, 1998

WHY IBM’S BLUE PRINT CALLS FOR XEROX

By CBR Staff Writer

We think Xerox Corp is the natural home for Blue Print, the printing systems business which IBM Corp has put on the block. Not only does Xerox have ex-Big Blue CFO Richard Thoman as president, but the document management company already has the channel, expertise and the sales force. Moreover the compelling reason is that it desperately needs new, competitive digital office products. Then there’s all that lucrative high-end service revenue on top. Most of Blue Print’s revenue comes from high-end products. Its systems print 10,000 check books a minute or print and fold a million bank statements a week or print books on demand. One fly in the ointment would be IBM’s AFP – advanced function printing – architecture, which can only work with Xerox’s own protocols through an inelegant kludge. The answer would be to bring them together to win a dominant position. By contrast IBM spin-out Lexmark’s laser technology is essentially a low-end play. Of the other contenders, Siemens might be interested simply to prevent the above from happening. Hitachi or Fujitsu probably don’t have the money or willpower to take this on this right now. Outsiders include Eastman Kodak which might be attracted by midrange printing stuff. Hewlett-Packard Co has the means and wherewithal and might see it as a way into data center. Which is why IBM probably wouldn’t sell the unit to it.

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