By Franklin Paul
NEW YORK, Jan 29 (Reuters) - Xerox Corp. (nyse: XRX - news - people), on a high from its improving financial picture, is offering a wide range of new, pricey printers, but analysts suggest it may eventually reenter -- perhaps indirectly -- the consumer retail market.
Earlier this week the office equipment company debuted several new products including the Phaser 8400, a $1,000 color printer aimed at small- and medium-sized businesses.
Andy Slawetsky, a vice president of consulting firm Industry Analysts Inc., said that model brought Xerox a step closer to the lower end of the market, where consumers buy inexpensive printers attached to personal computers.
"We are just waiting for them to finally get back to retail," he said. "If they put those things in Staples and Office Depot, they would sell a zillion of them."
Xerox Chief Executive Anne Mulcahy told Reuters in a recent interview that Xerox was not looking to return to the market for less pricey machines for home offices, after leaving that market two years ago.
"I don't think that is where we are headed," Mulcahy said. "What we have been working at is setting up a core business that allows us to extend our reach. Our core is office, production (printing) and services."
Xerox, whose new signature DocuTech high-volume printers were unveiled earlier this week at less than $100,000, has made subtle moves toward less expensive models. These would include the Phaser and possibly desktop machines developed with personal computer maker Dell Inc. (nasdaq: DELL - news - people)
These inexpensive models would not be as profitable as Xerox's bigger, higher-volume printers. They would also face fierce competition in a market dominated by Hewlett-Packard Co. (nyse: HPQ - news - people) and Lexmark International Inc. (nyse: HPQ - news - people), Nos. 1 and 2, respectively, in the market for low-end inkjet and laser printers.
MULCAHY: MUM ON DELL
Stamford, Connecticut-based Xerox in 2001 exited the so-called SOHO (small office/home office) business as part of its plan to shed money-losing units. The business lost more than $80 million in each of the first two 2001 quarters.
Mulcahy said Xerox, which this week posted 2003 results with its biggest full-year profit since 1999, now has its eye on gaining share with high-volume "production" printers.
"I think we have defined the areas we want to grow in and they are well defined and based on real competencies for the company," she said. "They are not stretches for us."
Xerox will also continue to focus on its top-of-the-line iGen3 series, a $500,000 digital production press, other color printers, and services such as helping customers assess how they can reduce in-house printing costs.
But a new partnership with Dell may get Xerox back into the consumer market. Dell, which has been expanding in the market for products like printers and replacement ink, in January set a pact with Xerox unit Xerox International Partners, which sells components and finished printers and copiers to third parties.
"They haven't announced the details around their alliance with Dell, but I believe that will be their play in the retail market," said Andrew Johnson, managing vice president of Gartner Inc.
Dell and Xerox have been mum about details of the deal, and Mulcahy declined to give any.
"It is going to be a good partnership for Xerox and for Dell, but we are going to wait until we have something tangible to announce with them," she said.
Shares of Xerox slipped to $14.65, off 14 cents, or about 1 percent on Friday. Earlier this week the stock topped $15 for the first time since 2000.
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