By William Fellows
Xerox Corp has paid $950m for Tektronix Inc’s $725m color printing and imaging division, propelling it into second place in the color office print market slightly behind Hewlett-Packard Co, it claims, with a 30% market share.
Xerox says it’s buying the Tektronix unit for its highly regarded solid ink technology the jewel in the crown of the color business, and for its channel, according to Xerox EVP general markets operations Anne Mulcahy. Xerox believes that color printing is no longer niche and should be affordable for everyone. It’s certainly the most profitable part of the printer business, and this acquisition picks up the pace of that goal, it says. More than that Xerox is betting color printing ultimately will determine who ultimately wins in the printer business. The acquisition immediately doubles Xerox’s channel to 16,000 resellers worldwide.
Xerox is creating a new office printing business that will be run by Gerry Perkel, currently president of the Tektronix print group, combining products from both companies. The unit will be headquartered at Tektronix’s base in Wilsonville, Oregon, and have 6,000 employees; 2,400 of them from Tektronix. It will report to Jim Firestone, president of Xerox channels group which in turn in part of Mulcahy’s $6bn group.
Xerox launched itself into black and white printing two years ago and has some color laser and inkjet products. It will combine its laser products with Tektronix’s own color laser products although how and when that happens is still being decided, the company claimed. Xerox said it expects new products to be available in the second quarter of next year. With the Tektronix line it now has seven color products under $5,000 – more than its competitors, it claims. Xerox said it is now the second biggest supplier of black and white printers which can print at more than 35 pages per minute.
What Xerox really covets however is the market for high-profit office printers which can pump out large numbers of pages every minute. Tektronix’s solid ink Phaser 840 can print 10 color pages a minute and costs under $3,000, but the company already has systems in its labs churning out color pages at 100 pages per minute Perkel told ComputerWire. They’re regarded as production- class systems. Because the black and white solid ink print engines in the Phasers do not run as fast as engines in current black and white laser printers, Perkel said it still makes more sense to buy a color laser printer when a lot of black and white printing needs to be alongside color work. But that will change quickly, he believes, especially now Xerox’s black and white technology can be brought to bear. Which technology will dominate color print systems in future is still up in the air he said. Xerox says it hasn’t decided whether to retain the Phaser brand yet.
Xerox, a company that makes IBM Corp look sexy, is trying hard to shake off its image as an office equipment supply company while Tektronix has labored to get its technical savvy in color printing into commercial success. Perkel said Tektronix had spent large sums mostly in vain trying to get its identity established; now we have the brand, he said.
To try to satisfy some of its largest institutional shareholders, Tektronix said in June that it would split itself into two businesses to try and stimulate growth. The print business was to have been run by CEO Jerry Meyer and went to IPO on the back of the Tektronix name. Instead Meyer will head the $845m test and measurement business that Xerox is not buying and will retain the Tektronix name for it. Perkel said once Tektronix announced its plans Xerox became interested and IPO and acquisition plans were pursued side by side for sometime. Tektronix sold its video and networking business to Grass Valley Group Inc last month and its thin client unit to Network Computing Devices Inc last year.
Xerox says the acquisition will have no effect on earnings this year. Shares in both companies rose modestly after the news. á
