Tuesday, February 06, 2007

Kodak takes another stab at survival

So I was watching CNN Headline News at lunch today. They popped up with a story about Kodak trying something else to survive in the consumer imaging market. I had to chuckle at the story, not just because CNN made two mistakes about Kodak in their little 30 second story, but because of what I know of Kodak's relationship with digital imaging.

The second mistake CNN was pretty easy to make: the woman reading the story said that film photography was dead. Well, it may seem that way but it's not. It's just moribund. It will never die, though. What, you think it will? Nope. People are still make daguerreotypes for heaven's sake. You can still buy spool film. Some professionals still use film (landscape photographers are still fairly big into film). There are industrial applications that need it. The main reason is resolution. About the best resolution you can get in a professional camera is around the 20 megapixel range (which is the rating of film resolution in millions of pixels — dots — per picture). Good quality ISO 100 film has approximately 15,000 megapixels!

The first mistake was when they introduced the segment with the phrase, "Kodak is late to digital photography". This is so stupid a comment that it's obvious that no one at CNN bothered to phone Kodak to verify it. Kodak partnered with Nikon to produce one of the first professional digital cameras. More than ten years ago, Kodak had a Digital Imaging division. Kodak's been involved in digital imaging longer than most companies. It's just that they weren't very good at it.

For those who don't know, I worked at Kodak Canada until 1998.

Back in 1993 Kodak came out with the Photo CD format. It was pretty cool. You could get photographs scanned at very high resolution and put on a CD. The quality was/is great. You could play Photo CDs on special Photo CD players, allowing you to do the equivalent of slide shows.

Unfortunately, Photo CDs were never all that popular. The players were expensive. I got one cheaper than average because I worked there, but even still the player was running around C$300 at the time. It could play CDs, too, which was good. Mine died around 2000, and that wasn't with heavy use either. The player wasn't very user friendly, either. I remember writing an e-mail suggesting they include the equivalent of the TV/VCR button found on your VCR. Basically, if you wanted to hook up your Photo CD player to a TV with a cable box you had to either buy a switch box or swap out the player manually. Kodak thought this was okay. The Photo CD format was proprietary, and they didn't loosen control on it — so that you could write in the Photo CD format from your favourite piece of software — until everyone was using JPEGs for amateur and web pics and TIFs for professional pics.

Kodak was expensively — perhaps fatally — distracted from digital imaging in the early through mid 1990s due to the Advanced Photo System. They conducted focus groups to determine how to get people to take more photographs. They discovered some interesting issues. People wanted smaller cameras, cameras that could take panoramic photos (the panoramic disposable cameras were all the rage) and cameras where you could swap partially exposed films in and out. Most importantly, 5% of the time when people tried to load film the loading procedure failed, and in some 15% to 20% of the time something went wrong that the user had to correct. People wanted a camera that was easy to load.

Kodak and Fuji had each patented the other into a corner. They couldn't advance without stepping on the other's patents. So, they got together and came up with the Advanced Photo System. Instead of a roll of film, the film was in a canister. The film was pulled out of the canister by the camera and could be loaded back into it and even pulled out of the camera when partially exposed. It had a strip of clear magnetic media allowing it to record electronic information on top of the negative. Photos were stored in the same aspect ratio as HDTV, but you could also get photographs printed in standard photograph aspect ratio, or as a panoramic shot (which was a cheat; they just took a long horizontal slice of the picture and blew it up).

There were three problems with APS.

First, they didn't ask people if they would be willing to spend around C$200+ for the better features of APS in their camera, like the ability to swap out partially exposed rolls. They considered APS a "premium" system, and thus could command a premium price.

Second, they didn't ask people if they would be willing to give up some picture quality in order to have a small camera with a big (compared to the size of the camera) canister in it. The APS negative was 56% the size of a 35mm negative. The grain quality was better, but not that much better! This means that, at best, they had to zoom the negative about half again as big to get the same size picture. APS pictures were, therefore, grainy compared to 35mm pictures.

Grainy pictures were a big deal due to the third problem: the flash unit in Kodak's APS cameras sucked. I remember one of my co-workers buying an expensive APS camera and taking it to a wedding. She was very, very disappointed in the results.

APS cost Kodak around $1 billion in development (or perhaps that was the total spent by Kodak, Fuji and the consortium of camera developers). It would take many, many years to recoup the investment. Years Kodak didn't have.

This is a true story: when I was leaving Kodak in 1998 I asked a marketing manager I knew how long they thought they'd have until digital photography took over the consumer film market. I had a pretty good idea myself and was curious if Kodak was on the same page. The manager said, "Oh, we've got a long time. Fifteen to twenty years."

Yes, that's almost exactly what he said!

I blurted out, "No. You've got five years. Ten years, tops."

I'm kind of proud of that statement, because I was bang on. At the end of 2002, 2 megapixel cameras dropped below US$300. In 2003, it seemed everyone I knew had bought a digital point-and-shoot camera, including us. We bought our camera almost five years to the date that I had my discussion with the Kodak marketing manager. Ah, the irony...

Of course our camera is now nine years old, and I've outstripped its ability. It's a good camera (Canon Powershot A40) but after taking a picture a couple of years ago I found that the picture was let down a little by the small lens...

So, what was the announcement that prompted CNN to disparage a once mighty company? Kodak is announcing that they are going to produce a new line of inkjet printers. They are taking a different tack from other companies. Their printers are going to be a little big more expensive than the average inkjet printer, but they are going to have inexpensive ink. They are planning to sell ink at about half the cost of most other printers. $10 a cartridge (I'm assuming colour cartridge) was the price quoted, and a cost of about 10 cents per picture.

I'm not sure how this will fly. It may have worked five years ago, but are people really going to run out and get a new printer just because the ink is that much cheaper? Especially given that you can get professionally printed, and cut, prints for around 15 cents a picture?

I can't help but think that Kodak is, still, a day late and a dollar short. I'd like to see them succeed, but I can't help but think that Kodak is collapsing under the weight of its own obsolescence.

3 comments:

JAM said...

Allan, this was a really interesting post. The inside info on the APS cameras was interesting to learn about. It's discouraging how people in big companies can delude themselves into thinking a bad idea is a good one.

When APS came out and friends would ask me about it, I would tell them to buy a decent point and shoot 35mm, that APS was the new 110 camera and would die a painful death, the negatives were too small.

Strangely, APS has a life still, sort of, the 2/3 the-size-of-a-35mm-frame digital imaging sensor that Nikon's dSLRs and some Canon dSLRs use is sometimes referred to as an "APS sized sensor."

Years ago, I longed to have the money to put all of my 35mm slides into Kodak Photo CD format, but at an average of 2-3 U.S. dollars per scan, I could only dream of it. I have thousands of slides.

A couple of years ago I bought a nice Minolta film/slide scanner and have been slowly scanning and archiving my own stuff.

About Kodak's new printer and cheap ink scheme. I was blown away this week by just how many people on the photography web sites and blogs I read, have commented that they're going to buy a Kodak printer as soon as they come out. Many stated that when a printer runs out of ink, their Epson replacement ink is more expensive than a new low-end printer that has high resolution, and they don't buy refills anyway, they buy a new printer every couple of months instead.

Buying a new Kodak is right up their alley many said, and are planning to buy one when their Epsons and HPs next run out of ink.

I've always just bought refills like a good little sheep. I was astonished at how many claim to buy a new printer every time their ink is depleted.

Based on comments I've seen this week about this very thing, I think Kokak might be on to something good for them.

Allan Goodall said...

Allan, this was a really interesting post.

Glad my post was interesting!


It's discouraging how people in big companies can delude themselves into thinking a bad idea is a good one.

I pointed out a couple of the flaws to the marketing people when they did a pre-release demonstration to us employees. They simply pointed out that I was further advanced than the average consumer they were aiming APS toward. As it turns out, I was a better person to talk to than their focus groups. It really astounded me that they didn't take picture quality into account.

Point-and-shoot digital cameras have poorer picture quality than film cameras, but there's a difference. Digital pictures are usually better overall, for your average user, because they can see what the picture is going to look like on the camera's screen. Digital cameras have better light sensors, so under- and over-exposure is less of an issue.

Besides, the limits of APS pictures easily showed up as grainy images on photographs. 2 megapixel and 3 megapixel camera limitations only show up when you try to blow up an image, or try to take an advanced picture.

The picture that disappointed me with our Canon Powershot is a photo I took of the Windsor Ruins in Mississippi. There's a rock in the middle background that's softly focused only because of limitations in the lens. Otherwise, the photo was properly exposed and composed.


When APS came out and friends would ask me about it, I would tell them to buy a decent point and shoot 35mm, that APS was the new 110 camera and would die a painful death, the negatives were too small.

I had hopes that some of their advanced film grain research would fix some of that, but it never happened. I did ask them if the better quality film would show up in 35mm cameras. They were non-committal. I believe it did show up in some of the really good quality ISO 400 consumer film that Kodak released in the last few years.

Oh, and that's another problem with APS. At the same time as they were releasing it, Kodak decided that the "go to" film for consumers should be ISO 400, not ISO 100 (the standard consumer film of the 60s and 70s) or ISO 200 (the film Kodak had been positioning as the "go to" film for consumers in the 90s). ISO 400 has more grain than ISO 200 (my personal generic use speed, when I can't find Portra VC 160). This made matters worse.


Strangely, APS has a life still, sort of, the 2/3 the-size-of-a-35mm-frame digital imaging sensor that Nikon's dSLRs and some Canon dSLRs use is sometimes referred to as an "APS sized sensor."

That's interesting! Ironically, digital cameras fixed all of the problems that Kodak was trying to fix with APS, but now do it at a cheaper price point.


Years ago, I longed to have the money to put all of my 35mm slides into Kodak Photo CD format, but at an average of 2-3 U.S. dollars per scan, I could only dream of it. I have thousands of slides.

It cost a fair bit, but most of my best slides from my trip to Scotland in 1992 are on Photo CD.


About Kodak's new printer and cheap ink scheme. I was blown away this week by just how many people on the photography web sites and blogs I read, have commented that they're going to buy a Kodak printer as soon as they come out.

That's a wonderful observation! I hadn't thought about Epson photo printers. We had one, I forget the model, it was their second printer with the Colorbrite ink. We threw it out after a year. The print heads clogged. It gave wonderful results, but they printer was poorly made. I bought it based on glowing results, only to find out six months later that there was a time bomb in it. I won't buy another Epson printer because of the bad experience.

Our current Canon multipass printer (scanner, printer, fax) gives good results. The pictures aren't quite as good as the Epson, but the ink is much, much cheaper and the results are good enough for us. Whenever I want good quality photo prints I'll take my Compact Flash card to local photo place and get them to make prints.

So, it looks like Kodak could end up competing with the likes of Epson after all.


I've always just bought refills like a good little sheep. I was astonished at how many claim to buy a new printer every time their ink is depleted.

There was a brand of Lexmark printer that was being sold with essentially a full tank of ink. The printer, on sale, was something like $5 more expensive than the ink, so it made no sense to buy the ink; just get a new printer!

Most printers are sold with smaller than usual ink reservoirs, so I can't see how this method would be that affordable.

Maybe Kodak is on to something. On the other hand, Kodak's consumer printers were nothing to write home about. We had to use a Kodak laser printer 10 years ago. Oh, what a dog that thing was. Their little portable ink jet printers were okay, but not wonderful. Kodak's stuff tended to be a little more expensive than the equivalent from another company.

JAM said...

I just came across this article: Kodak may sell it's film division.