How Fuji Xerox Saved Xerox

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How Fuji Xerox Saved Xerox
The Xerox story is a classic one of a once-
dominant company that lost its edge and
was overcome by new rivals from
unexpected sources. The difference this
time is that Xerox relied on a constellation
of allies to defend itself and ultimately to
regain leadership in its industry.
The story begins in the 1960's, when the
company's revolutionary plain-paper
copiers took the industry by storm and
made the name Xerox synonymous with
photocopying. Xerox revenues grew at a
record pace for an American business --
doubling every 10 months, from $40
million in 1960 to $1.2 billion in 1966.
Xerox patents on plain-paper copier
technology and the company's extensive
sales and service network sustained its
virtual monopoly in the field.
Beginning in 1970, however, new
competitors started chipping away at the
Xerox empire. Many of these competitors
came from Japan and produced high-
quality, low-cost machines. Some
developed new technologies that
circumvented Xerox patents; others
benefited from American antitrust
pressure on Xerox that led the company
to license its key technologies.(2) More
than 20 plain-paper copier vendors
operated worldwide in 1975; by then the
Xerox share of worldwide copier revenues
had plummeted to 60 percent, from 93
percent in 1971. Ricoh, the traditional
leader in the Japanese market, became
the top seller in the United States market
in 1976.
David Kearns, who was then Xerox's chief
executive, recalled the crisis his company
faced at the end of the decade: "The
Japanese were selling products in the
United States for what it cost us to make
them. We were losing market share
rapidly, but didn't have the cost structure
to do anything about it. I was not sure if
Xerox would make it out of the 1980's." 3
Initially, Xerox had done little to respond
to the rising tide of Japanese competitors
in the low-volume end of the business....
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