Monday, October 24, 2011

Kodak and disruptive technology

While real estate and registry news are the two most obvious themes for this site, technology is a topic that's always of interest to us.  For that reason, a story on the future of Kodak in Friday's New York Times caught my attention.  If you're old enough to remember cameras in the pre-digital age, you were probably a regular Kodak customer.  I know I was.  For years, picking up some of those small yellow boxes of 35mm film was routine.  But at some point I, like everyone else, made the jump to digital photography and Kodak's core business - selling that 35mm film - melted away to nothing.  As the Times story says, "Kodak's phenomenal success in film would also be its undoing, making its managers complacent and slow to adapt to change." 

By the time that Kodak's leaders accepted the fact that their core product was doomed to obsolescence, the company had lost any technological edge it may have grabbed had it embraced digital technology early on (it was a Kodak scientist who invented the world's first digital camera).

Now, Kodak has staked its future on consumer inkjet printers.  Their spokesperson explains that the company has a "treasure trove" of inkjet technology and that such a strategy plays to the company's core competencies since it is at the "intersection of materials science and digital imaging science."  Unlike other manufacturers of inkjet printers that price the machines low and the ink high, Kodak is supposed to sell slightly more expensive machines but much more affordable ink refills.  Still, Kodak only has 6% of the consumer inkjet market while Hewlett Packard has 60%.

Despite the confident talk emerging from Kodak, if you Google the company name, many of the results are stories predicting the company's imminent bankruptcy.  I don't know about that but I am convinced that the technological world is moving towards smart phones & tablets and away from desktop computers with attached printers.  Right now, most of us are more comfortable reading from paper than from a screen, so I can understand why someone might say "there will always be a need for printers' but that's just a habit that will change over time.  All I know is that one last box of yellow film I have tucked away in a drawer at home is going to stay there because a decade or so from now it will be a valuable artifact of a bygone technology and a symbol of a once-great company that refused to change.


Craig H said...

I do believe photography remains a viable "print" medium, (how many people would invest in as many electronic displays as they prefer to have photos displayed around their home?), and that Kodak is at least targeting the one segment of the printing business that's got some legs toward survival.

Dick said...

That's true - I agree that there still is a market for tangible photographs. But whatever that market is, I believe it's substantially smaller than is needed to support a company the size of Kodak with all the infrastructure and overhead it's developed through the years. Back in the days of film, you had to develop the whole roll to find the one or two shots of the 24 that were worth keeping. With digital pictures, you just print those two and leave the rest in electronic form.

It's like newspapers: they can certainly derive revenue from their websites, but it's nowhere near as much revenue as they historically earned from their print products. A leaner organization could survive and thrive on web revenue, but newspapers have all the organizational baggage that came with print and they are unable to shed enough of it to become profitable in a web-dominated world.

Craig H said...

I think newspapers suffer less from print vs electronic than they do from the low barrier to entry for new competition. Truth be told, because the guy with the press in town didn't have to compete with anyone, the entire industry got lazy, inefficient and poorly focused on value. Now they are waking up to find that their coverage areas are being scooped because they didn't bother to cover them. (E.g. the Lowell Sun not listing local events, while is rich with them--who would bother to read the paper if the info isn't there???)

Newspapers will only survive to the degree to which they deliver valuable information. Right now, with their ridiculous cost structures and having laid off so many of their reporters, they have nothing to sell and huge costs to carry. It's astounding to me that they still can't figure that out. (For another example: The Sun's police blog isn't even RSS enabled).