Fuji Xerox to Terminate Technology Agreement with Xerox
On January 6th, Fuji Xerox announced that it’s decided to end its Technology Agreement with Xerox on the agreement’s expiration date, March 31, 2021, and has notified Xerox Corporation of its decision. The Technology Agreement provides for technology/brand licenses and sales territory boundaries for each company – the latter of which will no longer be in effect (see below).
Late last year, Xerox sold its 25-percent stake in Fuji Xerox for $2.3 billion to Fujifilm, which now owns 100 percent of Fuji Xerox. Xerox and Fujifilm had been joint holders in Fuji Xerox for decades, and Xerox had sourced much of its printer and copier hardware from Fuji Xerox. This move follows Fujifilm’s contentious bid to acquire Xerox and merge it with Fuji Xerox – a move thwarted by investors Carl Icahn and Darwin Deason.
Although Fuji Xerox is ending the technology agreement, it will still supply hardware to Xerox, noting: “The product supply agreement with Xerox Corporation will continue to be effective despite the expiration of the Technology Agreement, and Fuji Xerox and Xerox Corporation will continue to act as each other’s product supplier.
Expansion into Xerox Sales Regions
Fuji Xerox also stated: “Fuji Xerox is now strongly positioned to conduct businesses …in a more truly global manner.” Fujifilm has hinted in the past that it may expand into Xerox’s North American and European sales regions. Fuji Xerox also stated that while it has traditionally been engaged in the Asia-Pacific region, it will now expand, since it will no longer be restricted by the technology agreement, which limits it to Asia-Pacific:
“The decision to end the Technology Agreement will result in the removal of such sales territory restrictions from April 2021, paving the way for Fuji Xerox to expand its business worldwide under a new original brand.”
Also on January 6th, Fuji Xerox announced the “Fuji Xerox” name will be no more, and that Fuji Xerox will change its company name to “FUJIFILM Business Innovation Corp.” on April 1, 2021.
The company also stated: “It will also swiftly work to strengthen its document and adjacent businesses, and expand into new business areas. Fuji Xerox aims to foster innovation with the other companies in the Fujifilm Group by accelerating the market introduction of solutions and services that build on technologies related to the cloud, artificial intelligence, and the Internet of Things.
“Fuji Xerox is now strongly positioned to conduct businesses dynamically and with more liberty in a truly global manner,” said Kouichi Tamai, president and representative director of Fuji Xerox. “Today’s announcement of ending the Technology Agreement with Xerox Corporation opens doors for Fuji Xerox to, after April 2021, utilize our own technologies and synergize with technologies owned by other Fujifilm Group companies to produce/market products and solutions under our own new brand worldwide.
“Additionally, becoming a wholly owned company of FUJIFILM Holdings Corporation as announced in November (2019) enables us to make business decisions more efficiently regarding investing in new businesses, building alliances, and pursuing acquisitions with a worldwide perspective. These new exciting steps are for all our customers – both our current customers in the Asia-Pacific region as well as our future customers in the US/EU region. By continuously developing innovative products and solutions that improve efficiency, we will help them resolve their business challenges.”
During its bitter fight to merge Xerox with Fuji Xerox, Fujifilm threatened to expand into Xerox’s North American and European sales territories. Now it’s confirming it will do so. However, we should keep in mind that Xerox substantially “tweaked” printers and copiers for the North American and European markets, adjusting hardware to better suit the user culture for these regions – a user culture that it distinct from that of Asia-Pacific. Now Fuji Xerox will have to do this – as well as establish sales channels. And it will no longer be able to use the Xerox brand name.
For Xerox, although it will still be able to source hardware from Fuji Xerox after March 21, 2021, there’s isn’t any hard guarantee from Fuji Xerox that it will be able to continue to do so indefinitely. For Xerox, that may mean making a permanent manufacturer supplier a key priority – likely motivating it even more to press for an HP acquisition. Last, the termination of the contract also means that Xerox will no longer be restricted by sales boundaries, and will now be able to sell in Asia-Pacific; but like Fuji Xerox, it will have to establish new sales channels to do so.