Word: kodak
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When the current downturn ends, though, the $14 billion-a-year image maven faces a much more serious threat on the digital horizon. As prices for digital cameras continue to fall, consumers will abandon film in greater numbers. That means Kodak's high-margin film franchise, which brings in about a third of the company's profits, will bear the brunt of the switch. So even though Kodak has lost some market share over the past few years in a brutal price war launched by Japanese rival Fuji, it still captures a commanding 65% of a sunset business...
...this new digital arena, Kodak isn't the yellow monster. It's just one of the pack, which ranges from such tech titans as Sony and Hewlett-Packard to brash online photo start-ups like Shutterfly, Photopoint, Ofoto, Zing and Snapfish (see box). Says Eva Manolis, co-founder of Shutterfly: "We're driving our business by hope of gain rather than fear of loss...
...Kodak has a lot to lose. More than 4 million digital cameras were sold in the U.S. last year, a number that is expected to nearly double in 2001 and outpace the stagnant, traditional camera market within a few years. Consumer appetite for film in the U.S. has almost peaked, at slightly more than 1 billion rolls a year. Indeed, much to the dismay of some amateur enthusiasts (including, perhaps, Paul Simon), Kodak is quietly phasing out much of its trademark Kodachrome line of film...
...make up for that potential lost revenue, Kodak has to persuade people to turn pixels into paper. This week it is rolling out a new digital camera-and-software system, dubbed EasyShare, that is intended to eliminate the hassle and confusion of uploading photos to a PC and the Internet. Meanwhile, the company is busy partnering with hardware makers like Lexmark to offer Kodak-brand printers and scanners for the home, where most digital prints are now made...
...Kodak's troubles exemplify the difficulty that any company has in handling paradigm shifts caused by technology. It has plowed billions of dollars into the digital business, which by 2005 should account for almost half its revenues. But its digital-camera division has yet to enter the black. "If you look at the hardware business alone, you'd probably never get into it," says Willy Shih, head of Kodak's Digital and Applied Imaging unit. Kodak is the worldwide leader in film cameras and has lately produced some sleek units. But in digital, Kodak trails Sony...