CustomerEngagement

Jim FirestonePresident, Xerox North America

Looking Through the Eyes of Our Customers

Small / Medium BusinessesGraphic Communications

Central ReproductionDepartments

Large Enterprises

$102B

Production$8B

Office$60B

Services$17B

Customer Relationships are Key to Delivering Growth

LargeEnterprises

$40B

GraphicCommunications

$24B

Small / MediumBusinesses

$38B

Eligible Offset$17B

2003Source: Xerox Internal Analysis

The Large Enterprise Opportunity

Large EnterprisesGlobal and national accountsPublic and private sectorMajor vertical markets

FinancialHealthcareManufacturingOthers

Large Enterprise – Evolution of Requirements

Deliver industry leading output devices

Hardware cost and feature/function

Enterprise document spendAffordable color Output infrastructure cost

Optimize output infrastructure and affordable color

Workflow efficiencyUtilization of scanning function

Manage documents/ records by fully exploiting technology

Maximum returnProcess effectiveness

Re-engineer workflow/ business process

Business Partner

Valu

e Add

/ ROI

VendorFuturePast

Meeting the Needs of the Large Enterprises

$40BEligible Offset $1B

“Smarter document management to improveenterprise ROI.”

Unrivaled technology platforms and “Smart” document expertiseUnmatched, integrated hardware, software and services

Broadest digital portfolio with modular and open architectureLeading document solutions

Integrated account managementXerox Lean Six Sigma

Source: Xerox Internal Analysis

Services $16B

Production $3B

Office $20B

80% - Facilities management of $1 million+30% - Professional services billings of $100k+

Large Enterprises

Large Enterprise

…maximizes share of wallet

XeroxChannels Partners Customers

Integrated Account Management

Direct:Sales TeleWeb

Indirect:AgentsConcessionaires

EDS

Microsoft

Accenture

Others

CFO / CIOBusiness process ownersPurchasing

Single integrated account management team…

Large Enterprise Customer Success – Honeywell

Optimize Output InfrastructureApply ODA / Six Sigma tools to reduce assetsStandardize on Xerox print platformInstall global fleet of networked MFD’s

Web Based Document ManagementDocuShare as document management toolRepository for “Contract Life Cycle” management process

Honeywell Aerospace (NA): Turnkey project to manage entire tech pub production and distribution process

Electronic repository for print on demandReduce warehouse and inventory costAnnual multi-million dollar savings

The Graphic Communications Opportunity

Graphic Communications

Central ReproductionDepartments

Commercial printers

Quick print services

Service bureaus

Corporate central reproduction departments (CRDs)

Major Trends Driving Digital Printing

Turnaround Times are Getting Tighter!Run Lengths are Getting Shorter!

“Over 40% of printers cite shorter run lengths.”

“55% of printers cite turnaround pressure.”

Source: NAPL Source: NAPL

“Enabled 28% price premium.”

Color Pages are Growing!Variable Content is Growing!

“Industry production colorpages growing 35%” ’03 – ‘08

Source: Internal Xerox DataSource: InfoTrends / CAP Ventures - June 04

The NAPL 2002 – 2003 State of the Industry Report, National Association for Printing Leadership, Paramus, N.J.

Graphic Communications – Evolution of Requirements

Incidental short-run digital printing

Equipment entry price andrunning cost

Database management, workflow, business developmentOverall running cost

Mainstream print-on-demand

Past Future

Valu

e Add

/ ROI

Electronic workflows, linking complex jobs from start to finish Profit per job

Full personal communication and fulfillment capability

BusinessDevelopment

Partner

Meeting the Needs of Graphic Communications

$24B

EligibleOffset$15B

Production$3B

Office$6B

“Creating new business growth and improving ROI.”

Industry leading digital print and workflow platforms

Unmatched, integrated hardware, software and servicesIndustry leading digital portfolio

FreeFlow

Business development programs

Digital print expertise

Awareness with commercial printers up 16 pts from 27% in 2003 to 43% in 2004Graphic

CommunicationsSource: Xerox Internal Analysis

Graphic Communications

XeroxChannels

Direct:SalesTigersSpecialists

Creo

Ennovation

European premier partners

Commercial printers

Quick print services

Service bureaus

Corporate CRDs

Partners Customers

Most experienced digital sales force and business development support…

…to drive market expansion

Graphic Communications – PIXI* Award Winners

Sandy Alexander Sandy Alexander PromotionPromotion

TBC Color ImagingTeterboro, New Jersey

The Dance Company PromotionThe Dance Company PromotionHume ImagingToronto, Canada

Short RunDigital Color

*Printing Innovations With Xerox ImagingShowcasing customers who excel in the New Business of Printing®

Digital Books,Manuals,Magazines

Variable Data / 1:1 Marketing

CommunicationsThrough The Eyes of the EagleThrough The Eyes of the EagleCopy GeneralCorporationSterling, Virginia

The Small / Medium Business Opportunity

Small / Medium BusinessesLess than 500 employees

Law firms

Real estate

Churches

Local business

Small / Medium Business – Evolution of Requirements

Speed

MFDs / Printers

Media flexibility

Cost competitiveequipment

Expanded functionalityOutput infrastructure

Color

Network support

Software functionality

Workflow efficiencyPaper to digital conversion

Business process outsourcing

Records management

Simple Advanced

Valu

e Add

/ ROI

Meeting the Needs of Small / Medium Businesses

Office$34B

$38B “Affordable products that enhance productivity”

Strong Xerox brand synonymous with reliabilityBroad range of printers / MFD’s at competitive price points Superior color, solid ink and controller technologiesExpanding network of channels

Production /Eligible Offset

$3B

Services $1B

Strong Xerox Install growth – Q3 2004 YTDSegment 1 (11-20) ppm: +46%Color laser printers: +47%Mono laser printers: +43%Small / Medium

BusinessesSource: Xerox Internal Analysis

Small / Medium Businesses

XeroxChannels

Indirect:N.A. agentsEuropean concessionaires

DirectTelewebSpecialists

Small and mediumSimple and advanced

Partners Customers

Resellers / Value-added ResellersOEM

Expanding distribution…

… to reach more customers

In Summary…

Market creationLeading technology and business development tools

Graphic Communications

Greater share of decisionsBreadth of competitive offerings through expanded channels

Small / Medium Businesses

…customer engagement strategy will deliver growth

Services led, integrated account management and service

Large Enterprises

Increase share of document wallet