PBI's postage meter business is very profitable because it provides a convenient way to put postage on large volumes of mail, a service that is demanded by almost any business. It is also profitable due to the fact that postage meters, which essentially amount to money-printing machines, are very heavily regulated by the government. This regulation is a huge barrier to entry into the market, and contributes to the virtual monopoly held by PBI.
However, the businesses that PBI is now expanding into - document management, information intelligence, legal services and many others - are not regulated by the government, and therefore there are no barriers to entry giving PBI market dominance. PBI is forced to compete with other firms that have been specializing in these businesses for longer and therefore are much more established and experienced. PBI's success in these expansions depends on its ability to make acquisitions of companies that are strong and established in their respective markets.
PBI biggest source of revenue is its U.S. Mailing division, which represents its domestic postage meter business - U.S. mailing provided 38% of revenues in 2007.
The company's 85 acquisitions since 2000, along with its international postage meter operation, make up the rest of PBI's business. PBI divides its offerings into two main sections, Mailstream Solutions and Mailstream Services. The divisions within each of these groups are as follows:
|Revenue (USD in millions)||2007||2006||% change|
|Mailstream Solutions subtotal||4365||4141||5|
|Mailstream Services subtotal||1765||1589||11|
Total revenues for 2007 were $6.129 billion. Revenues have grown steadily since 2003, although the 6-7% gains in 2006 and 2007 showed a slight slow-down from the 8-11% gains that the firm saw from in 2003-2005.
The lack of growth in the postage meter market hurts what has, until now, been PBI's most profitable business segment.
PBI's U.S. Mailing division, which best represents PBI's original core postage meter business, accounted for more than 38% of the firm's total revenues - it posted revenues of more than $2.34 billion. PBI controls 80% of the domestic postage-meter market and 65% internationally.  High barriers to entry faced by potential competitors protect this market share; since postage meters essentially print money, there is very high government regulation of the industry.
However, growth in this division's revenue is stagnant - it actually dropped 0.17% from 2006 to 2007.  This lack of growth is due to the fact that the use of computer technology has greatly increased over the last few years, and as a result, businesses are increasingly using internet advertising as a less expensive substitute for brochures and catalogs sent through the mail.
PBI's growth strategy undermines its competitive advantages.
The rise of e-commerce has significantly decreased the demand for PBI's postage meter services, so PBI has reacted by rapidly expanding into other areas (see list of divisions in business overview above). Although PBI has invested in its own research and development ($186 million in 2007 ), this expansion has largely been accomplished through $2.5 billion in acquisition since 2000. These purchases have included a wide variety of companies, including MapInfo (location intelligence), Digital Cement (customer relationship management), Ibis Consulting, Inc. (electronic legal discovery services), Group 1 Software, Inc. (mailing efficiency software), and many others.
PBI does not have any competitive advantage or market dominance in these areas as it does in its postage meter segment. Other companies, dedicated to these other markets, are much more established in their respective areas. Therefore, the success of this strategy will depend on PBI's ability to acquire strong companies that are already well-established in their markets. All of PBI's divisions (except U.S. Mailing) grew in revenues in 2007, including 71% growth for its software segment (see breakdown above), so the growth strategy has been performing well so far.
The introduction of shape-based postage pricing increases demand for PBI's services.
The US Postal Service changed its postage pricing system on May 14, 2007. The most notable change included was a transition from purely weight-based pricing to a new system that took the shape of the piece of mail into account as well. 
This increase in the complexity of postage rates is a positive force for PBI because customers will want to take advantage of PBI's offerings - such as its Shape Based Sizing Template that assist in computing the exact postage necessary for any given piece of mail. The firm offers mail-folding equipment as well, which will also become more popular under the new regulations because they will let customers fold mail to meet the most cost-effective sizing standards.
As mentioned above, the postage meter business is highly regulated by the government because the meters essentially print money. Only four companies other than PBI are licensed to produce and sell postage meters in the U.S;  their 2007 revenues and revenue growth are listed in the following table:
|Company||2007 Revenue (USD in millions)||% Revenue Growth Since 2006|
|Pitney Bowes Inc.||6130||7.0%|
Note 1: Neopost and Francotyp Postalia figures were converted from euros using the 12/31/2007 exchange rate of 1.4603 USD per euro. 
Note 2: Data-Pac and Hasler Inc. are not public companies, so revenue data is not available.
The data above clearly shows PBI's dominance in the postage-meter market - its 2007 revenues were more than 4.5 times those of its nearest competitor.
However, analyzing Pitney Bowes' competitive position in markets other than its core postage-meter segment is more difficult because the other companies in these areas are generally more specialized than PBI, focusing on just one or a few of the many areas PBI is involved in. PBI's strategy to compete in these markets involves some internal R&D, but predominantly revolves around acquiring smaller companies that are already leaders in their respective specialties.
That said, the following table compares 2007 revenues and revenue growth between PBI (in its non-meter segments) and the companies that could best be considered its competition in those areas:
|Company||2007 Revenues (USD in millions)||% Revenue Growth Since 2006|
|IKON Office Solutions (IKN)||4168||(1.4%)|
|Iron Mountain (IRM)||2730||16.2%|
|Pitney Bowes Inc.||2714||14.7%|