Kodak's slow transformation compounds woes

Company's lack of presence in camera market outside U.S. and slow transition to become printing vendor leave Kodak vulnerable and future uncertain.
Written by Kevin Kwang, Contributor

Its lack of presence outside the U.S. market and brand strength in high-end cameras, as well as slow transition to become more of a printing vendor have all contributed to Eastman Kodak's current woes.

Quizzed on why the ailing printing and imaging giant was floundering when other longstanding rivals such as Canon and Fujifilm continue to grow, Christopher Chute, IDC's research manager of worldwide digital imaging practice, pointed out that Kodak had always struggled to sell its compact cameras outside of the United States.

Furthermore, since it got out of the DSLR (digital single-lens reflex) space "very early" on, it now does not have the brand strength to compete in the high-end camera arena, Chute noted.

Kodak is reportedly contemplating filing for bankruptcy amid last-ditch attempts to sell off some of its valuable patents and raise capital to keep the company going.

The company on Tuesday also revealed it might be delisted from the New York Stock Exchange (NYSE) if its share price continued to remain below the minimum US$1 a share limit. Its shares' average closing price had remained below the limit for 30 consecutive trading days, Bloomberg BusinessWeek reported.

Further compounding its problems, three of its directors resigned from its board last week.

Christopher Veronda, Kodak's manager of corporate communications, however, told ZDNet Asia that despite its financial challenges, there is a "great deal of evidence" that the company has made substantial progress since early-2011. He pointed out that its four key digital growth initiatives had an aggregate growth of 18 percent through the first three quarters of last year.

Elaborating, Veronda said its consumer inkjet printers were the "fastest-growing line of printers in the world" and enjoyed a 44 percent growth in its third-quarter results.

"We have said that this [consumer inkjet printers] segment, which we entered in 2007, will become profitable in 2012," he said, adding that its development center for this product line is in Singapore.

Based on these results, Kodak CEO Antonio Perez said in a media statement last November: "As for our cash-generating business, the digital product lines, led by digital cameras and devices, significantly improved their cash and earnings performance in the quarter on an operational basis, and we expect the improved performance to continue in the fourth quarter and through 2012."

IDC's Chute corroborated that Kodak is currently trying to be more of a printing vendor, as well as developing its consumer video capture business. However, whether it will see success from this transition is still uncertain.

"We will see how well that works out," he surmised.

Rivals stay nimble, relevant
The IDC analyst noted that both Canon and Fujifilm had transitioned and reinvented themselves quickly and well, to play in the lucrative market segments such as DSLRs as these arenas were where the profits were and being market players was critical for long-term success.

Masamichi Okui, who is from Fujifilm's public relations group, added that beyond its core businesses and technologies in cameras and printing, it had also successfully branched out into verticals such as healthcare and medical systems. One example of this is its Fuji Computed Radiography digital x-ray and diagnostic systems, which were the first of its kind when launched in 1981, Okui told ZDNet Asia.

The Japanese company has since established its presence in diverse fields, including fine chemical electronics, mechatronics, optics and software, he said. "All of these technologies have enabled us to expand our growth business and create new business," he added.

Canon, on the other hand, attributed its business success and sustainability to "giving the customers what they want". Andrew Koh, senior director and general manager of consumer imaging and information at Canon Singapore, said this business philosophy has helped the company retain the No. 1 camera brand position in Singapore "for the past 10 years", as well as the top printer brand in the past seven years.

Koh attributed this success to its ability to "listen, educate and understand customers' sales journeys". He cited how the company had spoken to 5,000 photographers and sought their feedback on the functions they needed when designing the Canon EOS 7D DSLR camera, as an example of its commitment to listen to customers.

In terms of education, it launched its Canon Imaging Academy last year to train photo enthusiasts through regular workshops and courses, he added.

With regard to extending its reach to consumers, Koh said Canon provides product information through offline and online sources. Its Facebook page, for instance, has close to 30,000 subscribers and updates can also be obtained via its Web site and in physical stores.

"We believe that our distributors have continued to support us as they understand that we have a wide outreach that [straddles] both online and offline realms," he stated.

Editorial standards