XEROX: BOOK-IN-TIMEMBAM 619: Strategy

February 6, 2008Sarah Gay, Gaurav Gupta, Samir Mohan,

Sandro Olivieri

PEST: P & E

Political:

Federal government appeared likely to increase funding for libraries and the arts.

Economic:

US economy was beginning to recover during the mid 1990’s

PEST: S & T

Social:

Higher enrollment levels in schools and colleges.

Concerns about the aging U.S. population.

Technology:

Rapid changes in office technology.

The printing process is becoming more automated and computer controlled.

PEST ANALYSIS

Nature of Change Potential Impact of Change

Opportunity or Threat

Strategic Response

PoliticalFederal government appeared likely to increase funding for

libraries and the arts.

Libraries will be looking to increase their

book reserves

Opportunity: Increased need to

publish new and old manuscripts.

Explore discounts for federal institutions.

Economic Economy is recovering from the recession of the 1980’s

Increased consumer and government

spending.

Opportunity: Increase in retail spending.

Social

-Higher enrollment levels in universities.

- Concerns about the aging population

Increase in medical and health-care related titles

and textbooks.

Opportunity: Increase in demand for specialty titles.

Make it possible to print short runs of

specialty titles.

Technology Increased technology Increased electronic publishing.

Threat from IBM and other companies to do

small run printing.

Partner with retailers and market the lower

cost BIT printers.

PUBLISHING INDUSTRY VALUE CHAIN

Papers, printing presses, ink, manuscripts

Publishers

Wholesalers

Retailers

Customers

PUBLISHING INDUSTRY CHANGES

Publishing industry is moving from a literary focus to a profit focus.

The printing process is becoming more automated and computer controlled.

The book market is growing at 5% a year.

Publishers CustomersWholesalers Retailers

5%

Value Added

2%

5%

Profit

Value Added

Profit

Value Added

Profit

PUBLISHING INDUSTRY VALUE CHAIN

Publishers COGS•20% manufacturing costs•20% covered royalties, rights, etc.•30% covered sales and marketing•25% covered book return costs

Publishers CustomersWholesalers Retailers

5%

$14.63

2%

5%

$0.77

$2.00

$0.35

$6.00

$1.25

$25 BOOK W/ WHOLESALER

$25.00

VALUE CHAIN: VERSION 1Major Expenses for Publishers•$3.08 = manufacturing costs•$3.08 = author royalties, rights, etc.•$4.62 = sales and marketing•$3.85 = book return costs

Publishers CustomersRetailers

5%

$15.77

5%

$0.83$7.15

$1.25

$25 BOOK WITH NO WHOLESALER

$25.00

VALUE CHAIN: VERSION 2

Major Expenses for Publishers•$3.32 = manufacturing costs•$3.32 = author royalties, rights, etc.•$4.98 = sales and marketing•$4.15 = book return costs

BOOK-IN-TIME PRINTING

Target Audience for BIT printing: Anyone looking to print less than 1200 copies of a “book” (book may include training manual, instruction book, out of print manuscript, etc.)

Pitch: Earn profit on books that were previously too expensive to bring to market on a per unit basis.

Sell products that are out of print at a cost of $6.90 a unit.

Over 1,000,000 titles go out of print every year in the United States. Worldwide, over 20,000,000 titles a year go out of print because of low demand.

No need for shelf space - print as you need it.

XEROX B-I-T POTENTIAL BUYERS

ThenewBook‐On‐Demandmarketwills5llneedanintermediarytohandlethedigitalmanuscriptsandshopthemtotheownersoftheBook‐In‐Timeprin5ngequipment.Theintermediarycouldbe:

Thepublishersthemselves

Poten5ally,ariseofindependentauthorsshoppingtheirmanuscriptsdirectlytoAmazon.comthroughaniTunesmodelofindependentdistribu5on

THE NEXT STEP: PRINTING

• FedexKinko’s and other office supply stores

• Upon purchase of content through Amazon or another e-tailer, option to print at local office shop

• Boutique printing houses

• Small run zines, programs, pamphlets

• Major retailers – Barnes & Noble, Borders…

• BIT installations at the distribution centers could still ensure a 24 to 48-hour turnaround.

• Major and Mid-Sized corporations

• Printing of training materials, advertisements, and other materials office

Publishers CustomersWholesalers Amazon

5%

$13.93

2%

5%

$0.73

$2.00

$0.34

$2.00

$1.00 $20.00

VALUE CHAIN: AMAZONMajor Expenses for Publishers•$3.08 = manufacturing costs•$3.08 = covered royalties, rights, etc.•$4.62 = covered sales and marketing•$0.31 = covered book return costs (now only 2%)