The challenge facing Xerox and its management is complex, challenging and probably not unique. The company had been dependent on its highly trained sales force to turn a profit on their existing products and had not focused on new product opportunities until the development of its "Book In Time" product. This revolutionary product presented some new opportunities for the company. One of the significant advantages this product yielded was its costs. The Book-in-Time equipment allows for a publishing company to produce a 300-page book for $7, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20 % (including the paper and binding the book), would create the possibility of an increased profit margin.
Another advantage that the Book-in-Time solution provided by Xerox is that is one of the most efficient solutions for publishing companies running on-demand, short-books. Clearly publishing and or printing companies that may have achieved economies of scale with large print runs would be threatened by the Book-in-Time solution that able to provide a significant cost-advantage on low print run books.
Furthermore, if we look at Table E, providing an analysis of the on demand conversion potential, several long-runs can be targeted by the equipment Xerox provides. Subscription references, for example, have a 100 % conversion potential (on the other hand, they only have 1 % of the overall market). College textbooks, the university press and professional textbooks all have a 50 % demand conversion potential.
So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into consideration the conversion potential, in addition to the actual number of books. In this sense, we may estimate the on demand market to around 600.000 books per year.
Basically, Xerox has two separate options at... [continues]
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