Introduction
Kodak has undergone some difficult changes in the last couple of years. The company built a strong brand before the digital age came along even with stiff competition from the likes Fuji Photo Film Co. Outgoing chairman of Eastman Kodak George M. C. Fisher spent his entire five- and half-year tenure trying to push this company into the digital age When he was stepping down, Fisher declared that his digital strategy has worked and the company’s financial woes due to sluggish sales would be a thing of the past. His various strategic initiatives into the digital world predicted a boost in overall sales by 8-12% a year for the next 5 years.
Fisher claimed, “We have finally turned the corner; even though we do not have the results to prove it yet.” Certainly, analysts beg to differ. With companies like Sony Corp and Fuji Photo Film all fighting for a piece of the digital world market, Kodak will need some divine intervention to return to its former glories. (1999)
A Ray of Hope
The company’s hope now lies in the hands of Daniel A. Carp, a 29-year Kodak veteran. His new mission would be to rebuild consumer confidence in digital products; the same kind of trust the company has been enjoying in the film industry. This would certainly be a tall order. First of all, success in the digital market requires constant innovation, something a big company like Kodak is not known for.
Carp has built a reputation as a brand builder and the initiatives he’s undertaking appear to be directed towards brand building instead of revenue generation. This is a risky initiative since prices for digital technology have been predicted to reduce and this will expose the company to new competitors. However, the company must cut a niche in the digital world since it provides a direct threat to its core 35mm film business.
New Strategies
Kodak has pinned its core business on coming up with a strategy that bridges the old and new worlds of photography. Quoting Daniel Carp “We see digitization creating a film and a photo-finishing aftermarket that should fuel an explosion of pictures and use” While the company is still hoping for improved sales of its digital cameras, “the cash gold mine lies in the uploading of traditional pictures onto the internet, expanding its share in the market for reprints and photo editing software”(1999) Most industry analysts still criticize these projects saying they are long term projects and they won’t provide the “short-term sales jolt that the company badly needs.”(1999)
Nevertheless, Daniel Carp has continued with his ambitious plans and the crown jewel of his initiative is a joint digital venture with AOL which would give the company a strong internet identity. The venture which is called, You’ve Got Pictures, involves consumers uploading their 35mm film into their AOL accounts. For $6 a consumer will get a roll of 24 pictures digitally. From their AOL accounts, consumers will be able to Email their images to family and friends. Kodak has also been offering a nationwide service called a Picture CD. For ten dollars a roll, consumers can upload images from 35 mm onto a compact disk. The final strategy involves installing 19000 Picture Maker kiosks that print both digital and traditional film.
Are they working?
Most of these strategies are still built around brand development and they will not generate short-term revenue. Looking at You’ve Got Pictures Kodak will probably get 40% of the upload charge. Even if every AOL subscriber uses this service, Kodak’s revenue will amount to $41 million and this won’t solve its short-term problems since the service will take time before it hits its maximum potential. The picture CD will barely generate $10 million a quarter and this is still not enough. The only venture that is showing promise is the Picture Maker kiosks which have proved to be cash cows generating close to $200 million in sales. With a customer return rate of 95%, the revenue is bound to increase steadily.
Summary
Kodak should stick to what it has always been good at. Its sales in high-end cameras, though facing stiff competition from the likes of Sony have generated steady revenue. The Picture Maker kiosks underline the core strengths of the Kodak brand; producing photos! The picture CD or You’ve Got Pictures venture through innovative will only work with a small mid–sized company that can quickly re-invent its products to appeal to the consumer; not a brand like Kodak. (Monks, p 239)
Works Cited
Business Week online, “Film vs. Digital: Can Kodak Build a Bridge?” 1999. Web.
Monks Robert A G, Minnow Nell, Corporate Governance, Wiley Blackwell, 4th Edition, 2008, pp 236-239.