Revenue

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

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,
	2020		2019		2020		2019
Primary geographical markets(1):
United States	$	1,062	$	1,343	$	3,101	$	3,955
Europe	480		521		1,317		1,705
Canada	94		123		278		377
Other	131		192		396		585
Total Revenues	$	1,767	$	2,179	$	5,092	$	6,622
Major product and services lines:
Equipment	$	419	$	494	$	1,054	$	1,446
Supplies, paper and other sales	232		290		622		862
Maintenance agreements(2)	443		567		1,338		1,774
Service arrangements(3)	486		611		1,512		1,883
Rental and other	132		157		396		473
Financing	55		60		170		184
Total Revenues	$	1,767	$	2,179	$	5,092	$	6,622
Sales channels:
Direct equipment lease(4)	$	151	$	200	$	388	$	484
Distributors & resellers(5)	245		301		604		949
Customer direct	255		283		684		875
Total Sales	$	651	$	784	$	1,676	$	2,308

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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. Also includes revenues from embedded operating leases, which were not significant.

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

(5)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 $130 and $137 at September 30, 2020 and December 31, 2019, respectively. The balance at September 30, 2020 is expected to 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 of the post sale services arrangement, 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,
	2020		2019		2020		2019
Incremental direct costs of obtaining a contract	$	15	$	20	$	43	$	56
Amortization of incremental direct costs	19		23		60		66

The balance of deferred incremental direct costs net of accumulated amortization at September 30, 2020 and December 31, 2019 was $145 and $163, 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, 2020 and December 31, 2019 amounts deferred associated with contract fulfillment costs and inducements were $12 and $13, respectively. The related amortization was $1 and $1 for the three months ended September 30, 2020 and 2019, respectively, and $3 and $4 for the nine months ended September 30, 2020 and 2019, 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.