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Monday, October 3, 2011

Good Bye Kodak...

The "Hawkeye" Plant - Birthplace of the NexPress
Though I don't often write about graphic arts here any more I was not surprised by this in the WSJ regarding Kodak.

Kodak has, in my perspective, been deteriorating significantly for the last decade or so - more people have commented on this as well (see this and this in Forbes).

Basically I see Kodak on its last legs.  I was involved with them during the time when the NexPress was being launched - saw the first devices and worked with the people involved.

What always struck me was their arrogance. 

We're Kodak - we know what we are doing...  even when we don't.

In the mean time I would drive there (Rochester, NY) for meetings - past the giant silver halide plant on the west side of town.  It was obvious that this was purely an old school manufacturing business and it was old.  It didn't look much different than Niagra Falls, NY (along the river above the falls) did from the late 1960's.

My interaction there started around 2000 or so - before Antonio Perez - when variable data printing was going to save their world.

I worked on various PDF-based VDP strategies and tried to bridge the "gap" between VDX and PODi and PPML.

Of course by that time the Xeikon and Barco folks had developed the PrintStreamer II and BTF - which was effectively the fastest model out there in terms for VDP models.  The people from Kodak never quite understood that model and why it worked so well - which was kind of funny considering they thought it was a competitor.

We had technology that could have allowed them to leapfrog their competition - but since they didn't invent it there was not much interest - they had to do it for themselves.

I remember sitting in endless meetings in the Rochester, NY "hawkeye" plant - named after some sort of missile development from decades past - going around and round in negotiations and getting nowhere.

I remember them putting different folks into the business mix.  One guy who had worked in the old "spy camera" business - U2's and Gary Powers and all of that.  He left in the middle of working with him to drive a truck for a living.

Their "arch enemies" at Xerox were about twenty miles down the road over in Webster, NY. and there was a constant sort of imagined "tension" about that - they hired some guys away from them at some point for their assault on "world domination" of VDP.

They never liked me or my company - we only cared about our customers and their success in the business - not about making our "numbers" each quarter.  They merged with the black and white Heidelberg copier/printer division so they could "compete" with Xerox and the then new color iGen.

All along though, the basic story was the same, they knew that "silver halide" was dying - had for decades apparently.  All of this new activity was going to "save" mother Kodak.

Kodak was valued at $80 a share in 1999 - its peak - just as digital cameras were making it onto the consumer scene.  I remember I had a 1M pixel Olympus camera I bought around that time - Mrs. Wolf had had a number of other digital cameras around that time as well.  Far, far simpler and easier - at least for us computer literate folks - than film cameras - particularly with the internet.

But by 1999 Fuji had taken over the film business - with cheaper products that ate into Kodak's margins.

Kodak's foray into digital printing was just an attempt to stem the blood flow though the arterial cuts left by Fuji.

Further cuts were caused by the general advancement of digital cameras.  Mostly because there model was not one that used "consumables."

I think that's what allowed the Nexpress to move forward within Kodak - it was based on consumables.  Kodak got that business model and they figured it would be like "silver halide."

But they never imagined what the internet would do to printing - not that they made realistic market estimates - but they just imagined that the market for "NexPress" consumables would go on forever.

All the work by Antonio Perez was sad to watch - going digital as it were.  Buying up, for example, the highspeed inkjet systems from Scitex in Dayton, OH. 

As if that would ever replace "silver halide."

Ditto for their forays into cameras.

And now into inkjets for desktop printing - too little too late - a consumables business model yes - but not one of any significance based on the direction smartphones are taking us.  But undercutting the price will only buy so much market share.

Few people show me paper "pictures" any more - they just hand me their phone and say "look at this."

I don't see cameras much anymore - not the silver halide kind for sure - nor even digital cameras - not with phones with 8M pixel CCDs in them.  With that many pixels you can snap and print an 8 x 10 for hanging on your wall that no one will be able to distinguish from a silver halide image.  Now smartphones still don't possess the focusing, light, lenses, and other systems you find in a SLR-type camera - at least not yet.  But that will come in time - to the degree its possible engineers will figure it out.

Kodak is about to be worth less than what it owes - and that spells the end in most cases.

These little business units will probably get sold off to competitors who will dismantle them rather than keep them alive and productive.

Their stock price is about $0.78 USD - down from $80 a decade ago.

They are borrowing money ($160 million from the "credit line").

They owe about $1.4 billion more than they have (more liabilities than assets).

Digital printing would never have saved Kodak.  The NexPress is a nice machine but its not that nice - its not a production machine like a Xeikon - its market, medium-sized printers, has been obliterated by the internet. 

Photography in general has been destroyed by camera phones - "joe average" who used to buy a camera (digital or film) just uses his cellphone now - so what if the pictures are a bit crappy - is basically a "free" add on to the basic cellphone purchase.

I don't know who or what uses VDX at this point - but I do know its not taken over the world.

PPML has - at least to the extent there is a world to take over.

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