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Services and SMB

Jim Firestone

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Today’s Discussion

Services and SMBGrowth Markets

Customer Segment Dynamics

Leading with Services in Large Enterprises

Expanded Distribution for Small / Medium Business Customers

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Growth Markets by Geography

Data Source: Xerox Internal Analysis

Large Enterprises$48B

Graphic Communications

$25B

Small / Medium Businesses

$44B

$117B$117B

LargeEnterprises

45%

SMB30%

GraphicComm.

25%

LargeEnterprises

38%SMB42%

GraphicComm.

20%

LargeEnterprises

33% SMB54%Graphic

Comm.13%

NorthAmerica

$57BEurope$45B

DMO$15B

20052005

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Customer Segment DynamicsGrowth

OpportunityKey

DriversXerox

Approach

Services-Led Account Management

IntegratedGlobalExpert

Large Enterprises

Services

$21B

Infrastructure Cost Reduction

Business Process Improvement

Global Leverage

Graphic Communications

Digital Print Ready“Eligible Offset”

$17B

New Business of Printing

New Digital Workflows

New Business Models

Dedicated Segment Management

‘Right’ Solution

Color

Simple, Easy, Low Cost

Broad Distribution

Expanding Products & Services

Expanding Touch Points

Small / Medium Businesses

Share Gain

$44B

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Leading with Services in Large Enterprises

BusinessProcess Services

BusinessProcess Services

Office ServicesOffice ServicesDocument

Outsourcing and Communication

Services

Document Outsourcing and Communication

ServicesOutsourcing of output management devices Enterprise-wide, global approach Integrated to core business processes

Outsourcing across high-volume production environmentsCommunications engineering & consulting

Digital imaging and repositoryGlobal delivery networkBusiness process re-engineering

Integrated global sales and delivery operationsWell-defined offerings

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Xerox Global Services Dashboard

16%

16 Mega

Strategic Focus Areas

Dashboard Metric 3Q YTD 2006

Drive mega deals & enable total signings

% YOY Signings Growth

# Mega Deals

57%Penetrate major accounts Services % of Total

$2.3B

5%

Build a profitable portfolio of annuity services

Annuity RevenueYOY Growth

1Scale the business through acquisitions Acquisitions Completed

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Imaging Hardware– Onsite, Offsite, Near-Site,

Hosted

Platforms

Integrated Global Network

Hot Springs,

AKEbina,Japan

Venray, The

NetherlandsMitcheldean,

UK

Madrid, Spain

Sao Paulo, Brazil

Tokyo,Japan

Singapore

Investments in Growth - Organic

Process– Lean Six Sigma– Lean Document Production

Services Software– Office Services– Imaging Software– FreeFlow

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Investments in Growth - Inorganic

Xerox Litigation Services

Litigation Support ServicesUnique combination of scalable and high-performance discovery management technologyExperienced discovery consultants and professionalsServes Fortune 500 & leading global law firms

Pre-Discovery Core Discovery Management Services Post-Discovery

• Consulting Pre-Discovery Process

• Records Management

• Forensics * (Litigation)

• Paper Discovery

• Electronic Discovery

• Subjective/ Bibliographic Coding

• Filtering & e-conversion

• Filtering & e-conversion

• XLS Hosted Repository Review Tool

• Document Production (Blowback/ Data Load)

• XLS Outlining Tool

• Testimony

• Testimony• Archive/

Database

Summons & complaint

Discovery begins

Data collection

Data preparation

Data conversion/

filterContent review

Data production

Witness preparation

& dispositionDiscovery

ends/pre-trial Trial

* In collaboration with strategic partners

Xerox Litigation Services Discovery Management

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Xerox Litigation ServicesVideo

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Growth from SMB Customers

Building out product range in offerings

…increasing product line availability

Color MFPs Color Printers Mono Printers Entry Mono MFPs

* Products in N.America. Products vary by region.

Products offered by indirect channels 31*

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Affordable Color for SMB Customers

Phaser 3124 Mono Laser Printer

Phaser 6110 Color Laser Printer

Phaser 6110 Color Laser MFP

Just announced: Product launches < $1000

…expanding products at the low endPhaser 3428 Mono Laser Printer

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Bringing Solutions to the SMB Opportunity

Value-added document solutions available through channels― Xerox Office Productivity Assessment (XOPA)― DocuShare

Print management solutions for resellers― True cost per print― Predictable costs, greater choice, easy to manage― Launched in Europe in 2003; U.S. in 2006

Pre-packaged services for agents and certified channel partners― Office services SMB fleet management― Imaging express― Turnkey production centers― Launched in U.S. in 2006

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Growing Install Base in SMB

Developing MarketsAggressive go-to-market model changes― Significant YOY growth in installs― 78% of total equipment sale revenue through indirect channels

EuropeBalanced go-to-market model changes― Pan-European “SMARTer Distribution” partners― Piloting new distribution partners, e.g. B2B retailers, e-Tailers

North AmericaSteady go-to-market model evolution― Expanded partner sales coverage― “Solutions Advantage” program expansion

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In Summary...

Xerox is well positioned to capitalize on Growth OpportunitiesXerox Advantage =

Large Enterprises

Services-Led Account ManagementOrganic & Inorganic Platform Investments

Increased Wallet Share

Graphic Communications

New Business of PrintingSegment Management Focus Market Creation

Small / Medium Businesses Expanded Distribution and Offerings Share Gain

ResultsCustomer Focus x