Revenue

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

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



	Year Ended December 31,
	2019		2018		2017
Primary geographical markets⁽¹⁾
United States	$	5,429	$	5,610	$	5,790
Europe	2,326		2,625		2,697
Canada	518		569		648
Other	793		858		856
Total Revenues	$	9,066	$	9,662	$	9,991

Major product and services lines
Equipment⁽²⁾	$	2,062	$	2,178	$	2,152
Supplies, paper and other sales	1,165		1,276		1,260
Maintenance agreements⁽³⁾	2,372		2,603		2,809
Service arrangements⁽⁴⁾	2,517		2,674		2,722
Rental and other	706		663		754
Financing	244		268		294
Total Revenues⁽⁵⁾	$	9,066	$	9,662	$	9,991

Sales channels:
Direct equipment lease⁽⁶⁾	$	672	$	699	$	718
Distributors & resellers⁽⁷⁾	1,343		1,445		1,502
Customer direct	1,212		1,310		1,192
Total Sales	$	3,227	$	3,454	$	3,412

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


(2)	For the year ended December 31, 2017, Equipment sale revenues excluded $44 of equipment-related training revenue, which was classified as Services under previous revenue guidance - refer to Note 1 - Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition.


(3)	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).


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


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


(6)	Primarily reflects sales through bundled lease arrangements.


(7)	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 $137 and $116 at December 31, 2019 and 2018, respectively. The majority of the balance at December 31, 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.



	Year Ended December 31,
	2019		2018
Incremental direct costs of obtaining a contract	$	78	$	84
Amortization of incremental direct costs	88		95

The balance of deferred incremental direct costs net of accumulated amortization at December 31, 2019 and 2018 was $163 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. Amounts deferred associated with contract fulfillment costs and inducements were $13 and $12 at December 31, 2019 and 2018, respectively, and related amortization was $5 and $5 for the years ended December 31, 2019 and 2018, respectively.

Equipment and software used in the fulfillment of service arrangements and where the Company retains control are capitalized and depreciated over the shorter of their useful life or the term of the contract if an asset is contract specific.