Kodak's Digital Rebirth
In its heyday, Eastman Kodak Company was an icon of innovation in photography. Some of us who worked there, knew that George Eastman chose Rochester, NY as the home for Kodak because it is the largest natural darkroom in the world.
Now, that its core film business is fading like an old photo, Kodak is fighting to transition to a leader in the digital image marketplace. Since it is difficult for large companies to decide to obsolete themselves in the marketplace, Kodak has missed a number of innovative opportunities in the past. That is why it has been so difficult to change Kodak's corporate culture from film-based imaging to digital imaging.
One of those lost opportunities
In the late 1950s, Kodak owned the paper copy business using a photo sensitive paper and monobath solution to create an extra copy of a document. So, when Chester Carlson, a physicist and patent attorney, came calling with the xerography technology, Kodak leadership turned him down....primarily because to build such a copier would be very expensive, require continuous service support and they had seldom heard of a customer who needed more than one copy at a time.
Carlson then went over to the Haloid Company, also in Rochester, NY, with his new technology where he was welcomed. Haloid then formed a joint venture with Battelle Development Corporation (BDC) in Columbus, OH, for 55% of the patient rights, to invest and develop the xerography technology resulting in three technical improvements. In 1962, Xerox Corporation (the new name for the Haloid Company with Battelle owning $350 million of Xerox stock) introduced the Xerox 914, a revolutionary new copier that cost $15,000 each. Prior to the product introduction, Joe Wilson, Haloid Company president, had come up with an innovative marketing approach for this new expensive copier that led to the success of xerography: Lease the 914 copier for only $100 per month and charge the customer an additional $.01 for each copy made on the machine. The result for Kodak was its paper copier business quickly vanished.
Today
Kodak has significantly reduced its film-based workforce while playing catch up in the digital imaging marketplace. One of those turnaround moves was the hiring of Antonio M. Perez from Hewlett-Packard when he lost out to Carly Fiorina for the top spot there. A few weeks after he joined Kodak as president on April 2, 2003, Perez was amazed when he was introduced to a new ink Kodak scientists had produced to yield photo prints with vivid colors lasting a lifetime. "It was the Holy Grail of inkjet printing, and they had it here," he recalls.
Ever since then, Perez and Kodak have been working on a top-secret plan to make a big entrance into the consumer inkjet printer business. On February 6, 2007, Kodak unveiled a line of multipurpose machines that not only handle photographs and documents but also make copies and send faxes. "This is a do-or-die product for Antonio Perez," says Charles LeCompte, president of Lyra Research Inc., an image research firm in Newtownville, MA. "If they want to make money in consumer imaging, they had to get into printing."
In revamping Kodak's business model, Perez hopes to position Kodak as the Apple Inc. of pictures. Kodak is building a portfolio of digital cameras, Web services and retail photo kiosks that will help consumers manage their collection of digital photos while the company is licensing its intellectual property in the high-end commercial printing market.
Sources: BusinessWeek, February 19, 2007 and Industrial Business Development at Battelle Corporation, Columbus, OH