Thursday, September 29, 2005

Kodak: We Have Seen the Future and it is Digital

In case you've been asleep for the past couple of years, digital photography is poised to surpass analog big time. This may not be news to everyone, but it's interesting how quickly it has happened.

The "Great Yellow Father" (aka Eastman Kodak Co.) says that for 2005, it expects revenue growth from its digital sales and services to exceed the 36% it forecasted earlier this year. But what's more significant for the company, and photographers everywhere, is the fact that the year 2005 marks the first time that digital revenue exceeds analog revenue at the company.

Let me repeat that, in case you didn't quite catch the significance. According to Kodak,

This year will mark the first in the company's history in which digital revenue will exceed traditional revenue.

Kodak also said that digital earnings from operations this year should increase by more than 300%.

So what does all this mean? Well, it basically means that digital is becoming a cash cow for Kodak, at the expense of its analog business. It also means that as digital revenue grows and analog revenue shrinks, Kodak will look for ways to eliminate more and more analog products that fall short of its revenue expectationss.

To facilitate this, the company plans on January 1, 2006 to separate its digital business from its analog film business, creating separate business units.
"This structure will afford the consumer digital portfolio the ability to manage its unique supply chain needs and retail partners in a manner consistent with what digital businesses require. The change also will allow Kodak to streamline its management structure," the company said.

What all this means is that Kodak will populate its digital business unit with people familiar with digital products and services, rather than traditionalists weaned on analog photography and thrust into the digital arena to prolong their careers.

So could this be the beginning of the end of traditional analog photography products from Kodak? Will the company also eliminate its R&D in this area and eventually turn 100% digital?

Probably. Maybe. Eventually. Who knows?

The company plans to have the restructuring of its analog business complete by the middle of 2007. Kodak continues to scale back its manufacturing operations of traditional consumer products. Basically, it will continue to eliminate analog film and chemicals as time goes on. The company already said it will eliminate all of its black & white paper manufacturing by the end of 2005.

So, instead of shelves full of little yellow boxes of film on retailers' shelves, we'll eventually only be able to find little yellow packages of Compact Flash cards.

When that day comes, it will be a sad day indeed.

1 comment:

Anonymous said...

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