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September 25, 2003

Snapshot of the Times -- Kodak

Michael Blowhard writes:

Dear Friedrich --

Fascinating to read the piece about Kodak in today's WSJ by James Bandler. Did you have a chance to look at it? What the story boils down to is that Kodak, which still gets 70% of its revenue from film and film-based operations, is admitting that the consumer film business is dying. In the future, they'll be turning their attention almost entirely to digital products.

A few highlights from Bandler's informative article:

  • Over the next few years, Kodak will sell or close $1 billion worth of businesses.
  • The company, which has terminated 30,000 jobs since 1997, will probably shrink even more.
  • Kodak says that consumers are switching over from film to digital products twice as fast as was anticipated a mere nine months ago.
  • Kodak will make no more big investments in traditional consumer film products.

Bandler reports that Kodak is expecting to turn some of its attention to the home-printer market -- a risky move, given how competitive that field is. No word in the article about Kodak's motion-picture division.



posted by Michael at September 25, 2003


It almost makes you wonder if Kodak shouldn't have started a digital photography affiliate and just run the film business as a "cash cow" while it was still churning out products.

It's a tough business environment to be in, but my impression is that Kodak could never quite manage to leapfrog the developing technology and get ahead of the game. I wonder if they were held back by internal constituencies demanding investment in the "core" film business until it was too late.

Posted by: Friedrich von Blowhard on September 25, 2003 2:38 PM

That's what it sounds like, isn't it. Still, I feel for them. Imagine having this business that worked for so long, growing up in that culture, knowing it inside out. And having to admit to yourself that it's zooming into a brick wall. You've got the business around you, all the techies and engineers are probably film people, all the factories are oriented to film, the whole city of Rochester depends on you ... Wow. I'd hate to be in charge of a brand name at a moment like that -- when the digital tidal wave hits, it hits big and just sweeps right through.

I'm just guessing, but I'd imagine that their movie-film business has got a few years left in it still. I wonder how many?

Posted by: Michael Blowhard on September 25, 2003 3:04 PM

I am completely sure a big part of their problem was their internal emotional investment in film. After all, they spent over a billion dollars developing APS for a decade or so. At the same time they came out with some nice high-end professional digital cameras, but I doubt they would be able to compete with "real" camera companies like Nikon and Canon.

Let's not write Kodak off completely yet, at least as a business entity - it does own and a bunch of other digital photography related businesses. It seems to have also gone smart and partnered with many store labs in putting people's photos online as part of the film processing. Its new offerrings in digital enhancements are also interesting (the Picture Perfect option at CVS and other drugstores). It may well be able to stay around as a viable business entity for some time, but I cannot see how it could ever maintain the significant workforce it currently has, especially given that the workforce and capital are invested in the chemicals and factories to produce them.

The saddest part is that there was almost nothing they could have done to save those jobs -- there is noone really beating them at the film game (although Fuji comes awefully close)

Actually, I wonder how many people work for their photo paper division -- I would imagine that part of the company is doing quite well.

Posted by: Con Tendem on September 26, 2003 12:22 AM

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