XEROX SPINS OUT 'GYRICON MEDIA INC.' TO COMMERCIALIZE ELECTRONIC REUSABLE PAPER - 'THE PAPER OF THE FUTURE'

New Company to Use PARC Technology to Create Digital Display Documents

PALO ALTO (December 6, 2000) - Xerox Corporation (NYSE:XRX) today launched Gyricon Media Inc., an independent venture that will use the power of electronic reusable paper to provide networked, reusable retail signs that can be updated with the click of a mouse.

The electronic signs can be used for in-store shelf displays, promotions and billboards and will be followed by an array of products in such areas as digital publishing and portable device displays. Gyricon Media Inc. is charged with commercializing Xerox's digital document display technology that is as portable and flexible as a plain sheet of paper. The company will initially use the technology to develop applications for signage and point-of-purchase displays found in supermarkets, department stores and other retail outlets.

Electronic reusable paper was developed at the renowned Xerox Palo Alto Research Center (PARC) and is supported by a portfolio of Xerox patents. Named after the technology that is the basis for electronic reusable paper, Gyricon Media (JYE-rih-con) will manufacture a new kind of document that, like paper, is thin, lightweight and inexpensive.

However, when combined with the appropriate electronics, the material is capable of displaying and changing text and graphics like a computer screen - and can be reused thousands of times.

"Electronic reusable paper is really the paper of the future. It will dramatically change the way people think about printing, and it will revolutionize the way that stores communicate prices, promotions and other information to their customers," said Bob Sprague, interim chief executive officer of Gyricon Media, and manager, Xerox PARC's Document Hardware Lab. "The company's initial products will be battery-operated signs and wireless solutions that provide retailers with an extremely powerful tool to capture customers' attention at the time they are making purchasing decisions."

"With electronic reusable paper signs, store shelves can be as dynamic as an Internet page," said industry analyst Amy Wohl, president of Wohl Associates, Narberth, PA. "Now, retailers can create new promotions on the fly - changing prices and advertising content to capitalize on inventory positions, competitive situations, weather, or other market dynamics."

The first commercial products are expected to be launched next year.

Headquartered in Palo Alto, Gyricon Media Inc. is operated by Xerox researchers who developed electronic reusable paper and a group of professionals who have direct experience in the retail signage software business. Xerox retains a majority stake in the company.

Gyricon Media is another example of Xerox's ongoing efforts to leverage its extensive research initiatives, develop research-based strategic alliances, spawn entrepreneurial spin-off companies, and license its rich portfolio of patents and inventions to other companies. Earlier this year, Xerox launched ContentGuard Inc., which provides digital document-protection tools and services, and Outride Inc. (formerly know as GroupFire), whose products will help people search, access and share information over the Internet.

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