Revenue

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenues disaggregated by primary geographic markets, major product lines, and sales channels are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Primary geographical markets⁽¹⁾:
United States	$	1,364	$	1,414	$	4,028	$	4,307
Europe	521		587		1,705		1,923
Canada	123		133		377		424
Other	192		218		585		643
Total Revenues	$	2,200	$	2,352	$	6,695	$	7,297

Major product and services lines:
Equipment	$	494	$	511	$	1,446	$	1,571
Supplies, paper and other sales	310		345		933		1,057
Maintenance agreements⁽²⁾	568		618		1,775		1,958
Service arrangements⁽³⁾	611		649		1,883		2,007
Rental and other	157		164		474		500
Financing	60		65		184		204
Total Revenues⁽⁴⁾	$	2,200	$	2,352	$	6,695	$	7,297

Sales channels:
Direct equipment lease⁽⁵⁾	$	200	$	175	$	484	$	507
Distributors & resellers⁽⁶⁾	301		324		949		1,043
Customer direct	303		357		946		1,078
Total Sales⁽⁴⁾	$	804	$	856	$	2,379	$	2,628

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(1)	Geographic area data is based upon the location of the subsidiary reporting the revenue.


(2)	Includes revenues from maintenance agreements on sold equipment as well as revenues associated with service agreements sold through our channel partners as Xerox Partner Print Services (XPPS).


(3)	Primarily includes revenues from our Managed Services offerings (formerly our Managed Document Services arrangements). Also includes revenues from embedded operating leases, which were not significant.


(4)	Certain prior year amounts have been revised to conform to the current year presentation. Refer to Note 1 - Basis of Presentation - Change in Presentation, for additional information.


(5)	Primarily reflects direct sales through bundled lease arrangements.


(6)	Primarily reflects sales through our two-tier distribution channels.

Contract Assets and Liabilities: We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advanced billings for maintenance and other services to be performed and were approximately $138 and $116 at September 30, 2019 and December 31, 2018, respectively. The majority of the balance at September 30, 2019 will be amortized to revenue over approximately the next 30 months.

Contract Costs: Incremental direct costs of obtaining a contract primarily include sales commissions paid to sales people and agents in connection with the placement of equipment with associated post sale services arrangements. These costs are deferred and amortized on the straight-line basis over the estimated contract term, which is currently estimated to be approximately four years. We pay commensurate sales commissions upon customer renewals, therefore our amortization period is aligned to our initial contract term. Incremental direct costs are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Incremental direct costs of obtaining a contract	$	20	$	22	$	56	$	62
Amortization of incremental direct costs	23		25		66		72

The balance of deferred incremental direct costs net of accumulated amortization at September 30, 2019 and December 31, 2018 was $162 and $172, respectively. This amount is expected to be amortized over its estimated period of benefit, which we currently estimate to be approximately four years.

We may also incur costs associated with our services arrangements to generate or enhance resources and assets that will be used to satisfy our future performance obligations included in these arrangements. These costs are considered contract fulfillment costs and are amortized over the contractual service period of the arrangement to cost of services. In addition, we also provide inducements to certain customers in various forms, including contractual credits, which are capitalized and amortized as a reduction of revenue over the term of the contract. As of September 30, 2019 and December 31, 2018 amounts deferred associated with contract fulfillment costs and inducements were $13 and $12, respectively. The related amortization for the three months ended September 30, 2019 and 2018 was $1 and $0, respectively and $4 and $3 for the nine months ended September 30, 2019 and 2018, respectively.