The subject of the sentence is a noun phrase-- the noun "generation" plus the prepositional phrase "of sophisticated copy machines." In a noun phrase, the verb goes with the main noun (as opposed to the noun in the prepositional phrase), so "a generation of machines is capable..."
Another example: A group of small children was playing baseball in the street. In this example, "group" is the noun, while "of small children" is the prepositional phrase modifying the noun.
Hope that helps.
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