KODAK AND DIGITAL REVOLUTION The digital Imaging Chain Image Capture->Digitization->Storage->Output->Delivery They were strong vertical integrated

so there arent suppliers or retailers to considers because theyre part of the company PRODUCTS: films (initial product) camera storage devices printings MARKET 4 sub-markets: cameras (digital, traditional, instant), home printing, online services and retail kiosks and mini-labs Increasing market COMPETITORS Canon Fuji HP Nikon Sony SUBSTITORS ? ENTRY BARRIERS Capital and technical competences requirements Strong brands High start-up cost (for r&d, to create a laboratory, since is a chemical-based product) Necessity of specialized personnel DISTRIBUTION Very important because 33% of 45 million images captured were printed (2001) Mini-labs and kiosks as dominant channel Profitable CUSTOMERS (importance of high performance) -studio photography -photojournalist and professional photographers -consumer and business application Follow the trend of the industry (digital cameras->everyone wants one!) 1. Evaluate Kodak Strategy in traditional photography. Why has the company been so successful throughout the history of the industry? Razor-blade strategy: low cost for camera and a lot of film User-friendly product, mass production at low cost, international distribution, extensive advertising, customer focus Relationship with retailers Loyalty to the core business, incremental improvements 2. Compare traditional photography to digital imaging. What are the main differences? DIGITAL IMAGING: Created a specific divisions (too fragmentation) Lack of specific competences Outsourcing and buying outside missing technical capacity Acquired other firms of high technology (Datatape division of Bell and Howell)

Invested a lot in R&D (1986 1.059 million $) Executives didnt really trust in the project (Whitmore fell asleep during the meeting with Bill Gates!)* Try to combine the best of the photographic medium with the best attributes of electronic imaging (digital camera and the Photo CD)/collaboration with Phillips Digital imaging doesnt fit with razor-blade strategy -> they can make money only through cameras not films) Digital involves less the company -> consumers dont need intermediates for prints Digital has a easier storage and more possible devices for it Digital allows to modify images easier (also without being a professional) Digital creates new ways for transmission and printing

3. Evaluate Kodak Response to Sonys Mavica back in 1981 The response wasnt appropriate They recognized the threat but moved too slowly in research and diversification They didnt really believed in the digital imaging sector * Kodaks competencies were in precise mechanics, chemistry, manufacturing and consumer marketing NOT in digital 4. Why did Fishers attempt to transform Kodak fail? Selling digital cameras remained unprofitable (60% of Kodaks losses) Many executives resisted to all those changes *, it was hard to change their minds! They focused on photofinishing phase, they were strong in that segment but it is getting smaller because consumers do it by themselves They werent able to follow the market -> for example their software for image manipulation still involved the use of film He focused on the core business and on exploiting new digital technologies: Pushed for a network and consumables-based business model and for a horizontal company Divested Kodaks health segment Outsourced manufacturing to China to fight off Fuji competition (63%of the Chines retail film market) Created a digital and applied imaging division Joint-ventures/collaborations with IBM, Microsoft, HP New products of digital cameras and printers and he introduced the DIGITAL PRINT STATION Kodak should participate profitably in the 5 steps of digital imaging chain He looked for a balance between the old and the new worlds of photography