Xerox: Inflexible and Out of Touch

What an excellent, in-depth--and sad--story about a company I once loved ("Downfall X," Cover Story, Mar. 5). I enjoyed a successful career at Xerox Corp. from 1969 to 1976. [Chairman G. Richard] Thoman is right: At Xerox, you must be "liked" to succeed. This is true for insiders as well as outsiders. Even when I was at Xerox, the "liking" was more important than the results. Because of this, Xerox lost a lot of talented men and women.

It is amazing to me how many former Xerox employees are currently in top management at successful corporations.

C.J. Knegten

President and CEO

Nu-Deluxe Corp.

Buffalo Grove, Ill.

Over the past four years, I have had numerous dealings with Xerox employees while I was living in Rochester, N.Y., where the company still has a major presence. BusinessWeek mentions only in passing that, in the late 1960s, Xerox headquarters was lured away from then high-tax New York State to greener pastures in Stamford, Conn.

People who have grown up in the Xerox management culture have often been recruits from nearby New York City firms. They do not have their fingers on the pulse of what is going on back in Rochester, where most Xerox products are still produced.

One way to help bring the company back to financial health would be to return its head office to Rochester. This would weed out those Stamford managers who view Xerox only as a job and who often view assignments in Rochester as exile in Siberia.

Brian Donovan

New York

It is common knowledge that Xerox failed to commercialize innovations made at its Palo Alto Research Center. It is less well-known, however, that Xerox also lost its leadership in the 1970s in the most critical part of analog copier technology. About 60 PhDs (I was one of these) hired in the late 1960s-early 1970s to make a quantum leap in imaging technology failed to come up with useful inventions.

Meurig W. Williams

Bradenton, Fla.

As someone who has been a Xerox supplier since 1970 and a Hewlett-Packard Co. supplier since 1990, let me tell you that the difference between them is night and day. Xerox always beat up on suppliers and ignored their ability to increase value with new ideas and new products. HP, while no slouch in obtaining competitive pricing from suppliers, is always willing to work with suppliers to create new products, and it shares in the resulting benefits.

Xerox is the ultimate unchangeable Old Economy company. And therein lies the reason for its downfall. Innovation is what reduces costs--not bludgeoning suppliers into bankruptcy.

James Seeser

St. Louis We take exception to certain arguments put forward about the new Airbus A380 in "Giving 'em away?" (International Business, Mar. 5). Airbus is not giving "extraordinarily generous terms to early buyers of the A380." And the values quoted are off the mark. In fact, the Airbus terms are typical for launch transactions at this stage of a new program, and the concessions made remain in line with established expectations. Because Boeing Co. has long enjoyed monopoly pricing on the 747 program, airlines are finally benefiting from pricing levels in the large-aircraft category that competition has already brought to other segments of the aircraft market.

This is why the terms and conditions offered to early customers in no way impair the profitability of the A380 program, nor will they affect our future customers. Airbus is most certainly not "giving customers the option of canceling orders 12 months before delivery without customary penalties." Airbus is not offering 40% airframe discounts, nor is it offering purchase agreements with as little as $500,000 downpayments.

Airbus is a profit-making enterprise and must justify its business decisions to holders of its publicly traded shares on purely commercial grounds. The A380 program is on target to generate a 20% internal rate of return.

John J. Leahy

Executive Vice-President

Airbus Industrie

Blagnac, France

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