Xerox Spin Off

To: Mark Myers, Senior VP Corporate reseach and Technology

Attached please find the following report which would address the appraisal of XNE holding and a proposed business plan for Inxight.

Situation Synopsis:

Inxight is trying to utilize the corporate advantages of Xerox and flexibility of a new start-up to become the leading supplier of intelligent information access tools in linguistics and visualization software.

Inxight’s current strategy:

Inxight as one of XNE’s spin-offs competes utilizing its state-of-the-art technology and entrepreneurial software products to commercialize and supply software building blocks to OEMs It tries to build on Xerox’s resources and brand image.

Problem Statement:

Inxight should establish and define its position in Xerox’s organizational structure and decide how it is going to manage the spin-off in terms of incentives, financial resources, composition of board of directors and its business model.

Industry structure and trends:

Value chain is consisted of corporate ventures (CV), Venture capitals (VC), Software developers, OEMs, Final customer (Corporate/individual). (Appendix1: Value chain)

Demand has a cyclic pattern due to obsolescence of old products and ventures try to offer their products in the very limited window that software companies’ development process. In order to speed-up, software companies prefer to purchase the codes from ventures. OEM customers are much more demanding and try to produce software themselves when it reaches the maturation stage. So, venture companies need to keep developing new products and grow. Some competitors have focused on high-end and some on low-end software market niches either by licensing or selling to OEMs. Some companies even sell directly to big corporate customers or distribute in online resellers and mail order houses to reach to the final customer. There is a need to reach volumes to break down research costs. Inxight should decide how it is going to make value...