Xerox is selling its digital front end business to EFI, cementing a relationship that has grown closer in recent times. It retains, however, the workflow components of the Freeflow technology and will continue to develop these.
Xerox’s involvement in digital front ends dates back to the drivers for the first Docutechs and the digital front end developed for the DC40 in collaboration with Scitex. It has offered a digital front end for every mono and colour press since, while also offering customers the choice of an EFI Fiery.
With the development of the Trivor continuous feed inkjet press and the iGen5, EFI has been the provider. These and other machines require a different level of power, colour control and image management than early machines. The Trivor for example is a 150m/min machine printing at 1200dpi with the need to support 'every page different' printing.
EFI has proven capable of achieving this with its Fiery IJ and with the arrival of Nozomi, its inkjet corrugated press, and the Landa presses, it has the critical mass to continue to develop Fiery as a powerful as well as simple digital front end.
EFI has pledged to continue to support users of the Xerox FreeFlow Print Server, though in practice there will be a migration towards the Fiery DFE as machines are replaced.
The deal is valued at $22 million via a staged payments over the next 18 months, though exact terms remain undisclosed. It will add $5 million a year to EFI’s revenue, though the real value will be in being able to link the DFE with the range of MIS and productivity software applications that EFI offers. It was well underway before the recent EFI Connect event where EFI CEO Guy Gecht and Jeff Jacobson, his Xerox equivalent, shared jokes and observations in a fireside chat.
The deal increases EFI’s dominance of digital front end provision, though it has had less penetration at the high end where Heidelberg has its own DFE, as do the likes of HP, Kodak and Xeikon . This opens the way for EFI to expand in this part of the market even as at the entry level, developers are creating their own simple embedded Rips.
The move is a first for Xerox since the split into separate companies at the end of last year. It comes too as the company reveals the benchmark set of results by which its ongoing strategy will be measured.
Sales for 2016 were $10.8 billion ($11.5 billion) down 8% with net income of the ongoing business down 27% at $616 million ($848million).
In the presentation to mark the publication of the figures, Jacobson reiterated the three pronged approach to expanding the business. First is to expand the distribution channels for its office equipment and smaller printers. It will buy distributors and convert a multi product offering to focus on distribution and support for Xerox machines.
A new range of A4 printers will be launched in the next couple of months. Document outsourcing and managed print services for medium sized business is another growth area that is identified. Third comes production colour, where led by the iGen5, this was an area of equipment sales growth for the new Xerox.
Production colour is identified as a $5 billion market growing at 5% says Jacobson. Beyond this existing market is commercial offset printing and packaging, put at 12-13 times larger by the CEO that Xerox is looking at “Where if we can have technologies to get us into that space, that would help us a great deal”.
Xerox has sold its Digital Front End business to EFI and will use Fiery Rips on future digital presses. Fiery DFEs have already been developed to power the Trivor inkjet press and latest iGen5. Xerox will retain control over its FreeFlow workflow components.
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