Two Cents on Xerox’s Acquisition of LaserNetworks
Not even a week into the new year, M&A news came through the wire. Xerox announced that it had acquired LaserNetworks, a managed print services provider in Canada. In the past five years, LaserNetworks more than doubled its revenue and annually supported approximately 1 billion pages under MPS contracts.
Former president of LaserNetworks Brian Stevenson sat down with TIC and offered his two cents on what this acquisition means for Xerox, LaserNetworks and the industry.
TIC: What does the acquisition mean for Xerox?
Stevenson: Up to this point, Xerox had done exceptionally well in the production space in Canada (greater than 50 percent market share) and has been competing well in the A3 space (approximately 25 percent market share). The A4 space, however, had been a huge issue, with minimal traction and minimal market share for Xerox. This acquisition will double Xerox’s footprint in the A4 space in Canada and may provide it enough momentum to hold or grow its new position in this market. The second benefit is its access to key Canadian verticals, such as oil and gas, legal and financial/accounting. LaserNetworks has a dominant presence in these verticals, and I fully expect Xerox to exploit this opportunity.
TIC: What does it mean for LaserNetworks?
Stevenson: One of the greatest strengths of LaserNetworks’ has been its independence and its commitment to provide the best solution for the customer, whether it be HP, Lexmark or another solution. I would expect this to continue in the short term. However, being owned by an OEM automatically adds a bias to the “independent” equation. Mix in the expected Xerox corporate and sales training to the LaserNetworks sales team, and it becomes even tougher.
TIC: In terms of top MPS players, where does this position Xerox?
Stevenson: Xerox has picked up a lot of MPS knowledge with LaserNetworks, and there’s a major opportunity to leverage this knowledge into its existing direct business. If Xerox is successful transforming its direct business to this services-led, customer-centric model, it will certainly become the top MPS player in Canada. But that’s a big “if,” given the traditional “push” that occurs every month-end and quarter-end to sell more hardware.
TIC: How does it help Xerox play in the SMB space?
Stevenson: The service infrastructure at LaserNetworks covers all of North America and supports a wide portfolio of manufacturers. Xerox will be able to leverage this service network and immediately grow its “share of wallet” by placing non-Xerox-branded devices under management. In theory, Xerox should be able to offer this capability through both its direct and agent organizations.
TIC: Xerox started 2012 with this news. What do you expect to see further into 2012? More acquisitions? Who’s next?
Stevenson: I believe we’ll continue to see consolidation and expansion at the same time. The savvy MPS providers will continue to be on the radar of the OEMs as the OEMs seek to maintain existing revenues and further transition to a services-led model. I also see new entrants coming into the MPS space, as the barriers to entry have largely been eliminated. IT VARs, office supplies resellers, remanufacturers and strong independent sales agents will continue to come forward and pull share from the traditional direct OEM companies. It’s certainly an interesting time to be in managed print.
Brian Stevenson left LaserNetworks in May 2011. Today, he is the president of footPRINT Managed Services. FootPRINT is focused on helping business owners transition their companies to include a profitable MPS model. Similar to MPS itself, footPRINT Managed Services delivers these results faster and for less money than other alternatives. Stevenson has lived through the challenges and understands the best practices needed to improve the profitability and revenue growth of an MPS program.
Contact Brian at bstevenson@footprintmps.com.
Posted by Katherine Fernelius on 01/23/2012