Solutions and partnerships are becoming recurring themes. Is this trend being driven by growth goals or customer demand? Open architectures are so critically important to playing in the solutions space that youve got to work with the people that are working with your clients already. The list of partners we have in our services space is mind-boggling right now. And our workflow space in terms of software partners, you know we have three tiers of partners we work with at different levels in the workflow space. But I do think its the ability to walk into a client location and immediately be able to fit with existing workflows. Thats one of the biggest advantages we have right now, being able to really deliver the solution in a way thats somewhat seamless to the customer.Well, first of all, its important we clarify that we talked about partnerships, alliances and acquisitions as extending our reach. Our No. 1 priority is our services business for extending our reach. We have an opportunity both from filling out our service offerings or extending our geographic reach to look at potential arrangements that could help us grow inorganically a little bit quicker than we could grow organically. Can you get more granular? I think the answer is no, we cant get more granular. I think what were doing is were saying it wont be something that would be incompatible or really put us into a new space. It would be to build on our existing capabilities today that would help us scale and develop additional presence in areas that we think we can really lead in the marketplace. Is it fair to say the new branding strategy that touts "Technology, Document Management and Consulting Services" opens up the possibility for other complementary products from Xerox? PARC [Palo Alto Research Center] does a lot of things. I think it does. I think we know our space. And we have a respect for building on the competencies of the company. So well stay within the perimeters of the document management space. But, for example, today were licensing consumer products like the 17-inch flat screen or the projectors. ... Were not going to spend a dollar of R&D on them, but if its a great product and the Xerox brands can make some money on it, well go for it. Speaking of billions of dollars, in 2001 you talked about cutting $1 billion out of cost and you did it. In 2002 you did it again. Where do you stand now halfway through 2004 from a cost perspective? Were about $2.5 billion out of the cost space, from 2001, so were not really focused as much on hardcore cost reduction. But were relentlessly focused on competitiveness and productivity. Is that because you reached the wall? Well, the wall certainly in terms of the blunt instruments. I think what were really focused on now is deploying the Lean Six Sigma for productivity purposes. Not only is it the lead behind the tools and competency we use with our clients, but its also internally the single biggest productivity enabler we have in the company. Lean Six Sigma is driving all sorts of productivity in the company. Well be well over $100 million this year just on the economic profit from the projects that have been initiated this year. Youre at about 60,000 employees today. No plans to lower that number by the end of the year? No. I think were a responsive kind of organization now, that where we see problems we address them, where we see opportunities we hired, I think, over a thousand people last quarter. Were hiring, were also finding productive opportunities where we can reduce headcount, so this is really an ongoing mission to hire where we need resources, and were hiring in services. Who do you view as Xeroxs top competitor today? HP. They clearly have ambitions to play in spaces that certainly face off with the Xerox competencies, like services. And even their attempt to acquire Indigo in the production color space, although I think weve been quite successful in our face-offs, but theyre tough, and theyre out there. And we see them more and more frequently, and were very focused on maintaining the best-in-class value proposition to certainly win in those face-offs. Check out eWEEK.coms Enterprise Applications Center at http://enterpriseapps.eweek.com for the latest news, reviews and analysis about productivity and business solutions.
You mentioned an acquisition strategy today. What areas of interest are there for Xerox?