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Will Xerox's $6.4 Billion Bet on the Cloud Pay off?

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imagesXerox (s xrx), the document management company, said today it will buy Affiliated Computing Systems (s acs) in a cash-and-stock deal valued at $6.4 billion. The combination of the two companies highlights the convergence of corporate documents and the cloud as with the ACS buy, Xerox will now manage not only both paper and digital data, but corporate data centers and other IT services. The trend is clear as hardware vendors look at the large-scale computer outsourcers and see in them a captive audience of customers for their gear, but also a growth opportunity in delivering data and information technology assets via the web.

Last week Dell (s dell) said it would buy Perot Systems (s per) and the year before HP (s hpq) purchased EDS, another outsourcer. Both moves were efforts to get deeper into the cloud, providing everything from software to infrastructure as a service. The former copy giant is going at it as well. The AP quotes Xerox CEO Ursula Burns as saying that revenue from services at Xerox will triple to an estimated $10 billion next year from $3.5 billion in 2008. Now that most of our corporate information is digital, and corporations are eying the cloud as the home of their digital domains, the idea of document management and data center management is combining to become data management. Xerox sees this and knows that data is really where the value lies for most organizations.

7 Responses to “Will Xerox's $6.4 Billion Bet on the Cloud Pay off?”

  1. Hi,

    Can’t agree largely with jason and slim.

    Might there be problems in integration? Sure.

    In the long-term, however, we are moving A) to the cloud, and B) XErox (+ACS) do have expertise in cloud-based and Document Management Services.

    What do people expect of companies like Xerox, Dell, etc. to let happen? for all hardware to come from China and just let everything be hosted/managed by, Cisco and Google.

    Service supply always has more profit-margin than hardware sales, and managed/cloud services are the future; Xerox, etc. see that future, and are simply positioning themselves for it.

    Yours kindly,

    Shakir Razak

  2. Will this bet pay off? Well, I’m not a betting man, and Xerox and ACS are not organizations that take this sort of move lightly. But I can tell you this much: there is huge market opportunity and real demand from enterprises and governments for the services we can now deliver on a global scale. As you point out, it’s all about the data, the information. In this case, what we can now do better than anyone out there is manage that information more efficiently, reducing costs and improving processes. It’s worth clarifying that while ACS IT services will be significantly bolstered by Xerox’s global presence and technology, this deal is much more than a simple infrastructure play. Simply put, Xerox/ACS is the only combination that truly focuses on business process and document management. The combination is powerful in that ACS has Business Process Expertise and Xerox has technology that deals well with both structured and unstructured data – the keys to working in the “cloud”.

    Paul Hartley, Corporate Business Strategy at Xerox