When Canon entered the copier business in the
1970s, it changed the logic of how to run a copier business. The company
successfully expanded its photocopier business in the USA by using
The dominant player, with a 93% market share in
1970, was Xerox, which offered a very broad range of copiers, with frequent
introductions of new models. These machines were costly, so the traditional
leasing machines, which included service agreements and paper supplies.
Sales were conducted through an extensive direct-sales organization which
typically targeted central staff functions, because the Xerox concept was
based upon centralizing copying with its big machines.
Canon entered the market with smaller, cheaper
machines for decentralized copy locations. These products were distributed
through office-product dealers, who were also made responsible for service.
Canon thus avoided the cost of establishing a large sales and service
network. Copy machines were simply sold, not leased, so Canon also avoided
the cost of leasing.
Canon later became the
of the small offices
market that has been ignored by Xerox, by aggressive sales to this segment
with a new line of products called personal copiers. Xerox had difficulties
in responding because its business set-up (cost structure) was designed for
a specific type of business and could not easily be changed.