After posting the Forbes article in the last post, I went downstairs to continue perusing the issue that came in the mail the other day. I now get most of my info on the web, but Forbes is worth subscribing to. I flipped through a few more pages and voila' <SP?>, another great article.
forbes.com
Razors With No Blades
By John C. Dvorak
AS DIGITAL PHOTOGRAPHY MOVES AHEAD, unstoppable, Kodak faces the inevitable death of its core business--film. The company insists film isn't dying and says sales of disposable "single-use" cameras are flourishing. That kind of denial poses the threat that, someday, Kodak could go the way of Polaroid--into the tank.
Digital imagery is based on semiconductors, which get forever cheaper and smaller; that's why the film business will dwindle into a small niche market someday. For Kodak and all companies on the brink of technological upheaval, the hard part is figuring out what to do--and how soon to do it. Kodak's departing chief executive, superstar George M.C. Fisher, knows this all too well. He joined the old-line film maker in 1993 from wireless powerhouse Motorola, and he soon set out to push Kodak into the digital future.
Too soon. He spoke grandly of a day when Kodak might enable customers to e-mail digital images over fiber-optic lines rather than send photos by mail. Fisher hailed the Photo CD concept, by which people could store their snapshots on a CD-ROM disk. It sounded great but it was far ahead of its time and was too expensive.
This was followed by an early kiosk scheme for people to get their film developed electronically. But it relied on using Microsoft photo-editing software, and at the time Microsoft wasn't good at it. Adobe was the obvious choice; Fisher was making panicky decisions.
By some estimates Kodak spent over $250 million in pursuit of Fisher's digital vision, all for naught. While he focused hard on digital, Kodak lost ground to Fuji in the film business. Fisher, 58, said in June he will step down as chief executive at year-end and stick around as chairman for only a year. He will be succeeded as chief executive in January by his number two, Chief Operating Officer Daniel A. Carp, 51. Carp is a film guy, not a digital visionary. Redirecting Kodak's future will become Carp's problem.
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Kodak faces the death of its core business. It must dive into digital cameras--perhaps even merge with a Canon or Nikon.
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What to do? Kodak must dive into making digital cameras--perhaps even merge with a camera giant such as Canon or Nikon. Yet Kodak seems uncomfortable with this new role. It has made cameras for much of its history, but they have always tended to be "Brownies" and other cheap models in the razor-and-blades theory of marketing: Give away the razor and people will buy lots of profitable blades.
Kodak can't seem to get that to work with digital cameras. They rely on reusable memory, not film. The pictures end up on hard disks or CD-ROMs or get printed out. CD-R blank disks could be the razor blade, and Kodak has sold them. But the numbers aren't good. They cost less than $1 each--and a CD-R will hold 650 to 6,500 snapshots.
The company does sell a line of well-received digital cameras, mostly subcontracted from Chinon in Japan. The Kodak 280 and 290 are the most functional and easy digitals available. But there still is no film. It's like Gillette selling a razor that will never need a blade.
For now, Kodak, burned by Fisher's first foray into the digital age, will keep the focus on film. Bruce Swinsky, 52, president of Kodak's consumer imaging division, made that clear in a recent speech to the Photo Marketing Association. Digital photography threaten Kodak? Nonsense, he said. "It reminds me of people who saw electric razors as the end for Gillette wet shaving. And television as the end of the motion picture industry."
But the digital future beckons. Kodak has altered its Photo CD strategy to produce a Picture CD at just $9 a disk and the Picture Disk, a floppy holding 28 shots; that will tap into the growing appetite for e-mailing pictures. Kodak also has PhotoNet, a Kodak Web site for viewing, ordering and showing snapshots to your pals in Indiana. And Picture Playground lets you manipulate your images on-line so Kodak can print them out with special effects.
This hybrid notion of sticking to film while tiptoeing into digital will keep Kodak from collapsing in the short term while it seeks out a long-term strategy that works. To survive, Kodak should transform itself into a serious camera and software company, leveraging its brand name. Cameras, software and services can and should eventually take Kodak into the future. I hope the company isn't serious in thinking that film is going to be around forever--because it simply isn't. |
