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By Sonya Rabbitte, 21 March 2001 17:45

NEWS Cash strapped Xerox claims a $715m investment - or more than 40 per cent of total R&D budget - in a new range of digital colour printers will help it escape the fiscal mire which currently grips so many US tech firms. After axing 6,000 jobs and selling off $2bn worth of assets, Xerox is gambling on the fact that companies facing falling sales will turn to high standard colour printing as they try to capture new customers with colour brochures and publications, Speaking yesterday at a conference in New York, Xerox President and COO Anne Mulcahy, said the FutureColour range is an important development as Xerox undergoes its massive restructure. The FutureColour range will include printers capable of printing large numbers of colour documents at high speed, as well as printers that allow personalisation and targeted content. According to Mulcahy the investment is already proving worthwhile with 1,200 patents out on the technology, and revenue from colour printing doubling to $3bn since 1997. For arch-rival HP, which has this week released its own range of printers, Xerox's decision to target the colour digital market is something of a compliment. HP hardcopy marketing manager Peter Urey said: "At the end of the day we might be doing different things, but we have the same end objectives and you know you've made the right choice if someone else starts to do it." But HP spends about 23 per cent of its R&D budget on development of printers compared with the forty per cent Xerox has just ploughed in. And for a company that has a history of failing to capitalise on earlier inventions such as the ethernet, the mouse and the graphical user interface, it might not be money well spent. IDC research analyst Paul Whittington says that Xerox is right to make a foray into this new market, but he warns that it might yet again fail to successfully market the product. "They have to be careful. In the past they've spent a lot on R&D but have been beaten to market on the product. The digital market is fast moving, and Xerox is a monolithic corporation. That's held them back in the past." Test versions of the new products are due for release early next year, and according to Xerox, the range is expected to generate revenue by the second half of 2002.