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.