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KODAK-COMPETING IN THE DIGITAL AGE (1) Since the time when Eastman Kodak Company was founded in 1892, it always strived to maintain a customer friendly reputation, which was one of the most important factors that enabled Company to remain competitive on the market of photographic equipment, up until today. Kodaks advertisement campaigns always emphasize on the easiness with which Companys products can be used. In its turn, this made many people to associate Kodak with the scientific progress, in the field of photo technologies. Nevertheless, it took a few years for Companys top officials to recognize the fact that the beginning of digital era will inevitably affect Kodaks sales. This was the reason why Kodak was the last large manufacturer of photo equipment to incorporate digital technology into the line of its products. In her article Picture This: Kodak Clicks Way Into Digital Age, Theresa Howard says: Kodak, with its consumer business rooted in film, was slow to join the digital age and missed out on several holiday seasons that posted strong digital camera sales (Howard).
However, after it became clear that film cameras are being referred to by many people as the thing of the past, Kodak began to invest heavily into restructuring its operations, in order to be able to meet customers new demands. In 2004, Kodaks managers had realized that it was only the matter of time, before film cameras would be taken off the market. As the result, Company began to think of designing digital cameras as priority, while trying to find its own niche on the market of digital photo equipment. Kodak was quick to realize that many photo enthusiasts do not feel comfortable about switching to digital cameras, because they think of digital technology as being little too complicated for their understanding. This is why Company decided to benefit on manufacturing digital cameras that would be comparatively easy to use by people who have no experience in digital photography. In her article, Theresa Howard was able to define the essence of Kodaks commercial philosophy: The user-friendly message is behind Kodak's umbrella EasyShare moniker for everything in its digital photo line, from printers to cameras to its Web photo service (Howard). According to numerous market surveys, the majority of customers who decide to switch to digital photography prefer to buy Kodak cameras, because these cameras are very easy to operate.
In 1991, Kodak released its first digital camera under the name of DCS (Digital Camera System). It was designed to be used by professional photojournalists. The fact that DCS was overly expensive and very complicated to operate prevented this camera from becoming a commercial success. After this, Kodak continued to improve digital technology with the purpose of designing a camera, which would appeal to the broad range of customers. However, it was not until the beginning of a new millennium that Kodak was able to introduce product, which instantly attracted a price sensitive customers. In 2005, Kodak introduced its EasyShare C433 camera, which was intended to be sold for $99.
Camera featured 4 megapixels CCD and optical zoom. It became an instant commercial success and established Kodak as one of the companies that actually define designing trends in the market of digital cameras. The Kodaks innovative approach to designing such cameras consists of viewing them as an integral part of photographic process. We can say that Company does not refer to taking pictures and printing photographs as separate procedures. It encourages customers to buy cameras along with printers. Kodak was the first company to introduce a digital printer that did not require a computer, as intermediary link, in the process of photographs printing. This means that, in order to initiate a printing process, all Kodak printers need to be simply hooked up to Kodak cameras.
In its turn, this significantly increases Kodak cameras commercial appeal. In their article Will Kodak's New Strategy Work?, Clayton Christensen and Scott Anthony suggest that the reason why Kodak puts emphasis on manufacturing easily integrated photographic equipment, is to remain competitive in the future: Kodak is certainly hoping that its approach grows the printing market. It believes that a trusted brand name, coupled with an easy-to-use, low-price solution, will encourage more people to print more photos at home (Christensen, Anthony). Company seems to be committed to the idea of manufacturing products that customers want to buy and that Kodaks competitors do not want or unable to copy. This kind of commercial philosophy derives from times when Kodak enjoyed an undisputed dominance, on the market of photographic equipment. At the same time, Kodaks top managers do understand that Company needs to remain very flexible, when it comes to addressing buyers requests.
They do not want the customers to associate Kodak brand name with low-end products exclusively. This is why Kodak continues to design cameras that would correspond to the demands of different sectors of the market. At the same time, Companys managers are well aware that the commercial appeal of its brand name can only be maintained for as long as Kodak continues to be associated by people with technological breakthroughs. Therefore, Kodak invests increasingly large amounts of money into development of new technologies. For example, in 2005, Kodak introduced EasyShare One camera, which instantly became a top seller, because it boasts many new features that have never been incorporated in digital cameras before. Jeff Keller in his review-article DCRP Review: Kodak EasyShare One, explains the reasons why this camera can be considered as truly unique: The Kodak EasyShare One ($599) is more than just another digital camera.
When it was introduced in early 2005 it was the world's first consumer camera with Wi-Fi connectivity. The EasyShare One tries to be a camera and Internet-connected photo viewer at the same time, and for the most part it succeeds (Keller). This proves once again that Kodak pursues the policy of active competition, when competitive cutting edge is achieved with the mean of making its products to be more technologically advanced. Kodak is certainly not intimidated by the fact that it was the last large company to enter competition on the market of digital cameras. In fact, it strives to gain reputation as technological leader. Therefore, we can define Companys business strategy as being aggressive, which is the main reason why it is quite impossible to imagine todays world of digital photography, without mentioning the word Kodak.
(2) The market of digital devices is the most dynamic in the world. For manufactures that strive to beat the competition, it is not enough to make sure that their line of products corresponds to the technological criteria alone. The practice shows that, without organizing an effective production and distribution systems, the manufacturer of digital cameras will no be able to come up with good profits. We need to say that Kodak had realized the validity of this statement early enough. Since 2002, 80% of Kodaks digital cameras are being made in China, which allows Kodak to significantly cut the production costs. It also allows Company to greatly diversify the line of its products, without losing much in quality. In addition, Kodak strives to make the distribution of its digital equipment to be more effective. In 2006, Kodak announced that it signed a distribution agreement with Flectronics. According to it, Company will divest its entire digital camera manufacturing requirements to its new partner.
The main reason why this agreement was signed in the first place is that Kodak wants to reduce the distribution time. In other words, Company strives to enable its products to hit the market as soon as possible, after being manufactured, because it usually takes only a few months, before digital camera becomes outdated, which is the major negative factor that affect sales. In her article Kodak Offloads Camera Manufacturing, Distribution, Molly McLaughlin quotes Kodak Vice President, who sees partnership with Flextronics as the essential part of increasing Companys overall commercial effectiveness: This is another move in Kodak's overall strategy to further drive improvements for profitability and efficiency in the operating model of our consumer digital business. By partnering with Flextronics, Kodak will streamline our digital camera operations (McLaughlin). However, it would be wrong to suggest that Kodak was able to successfully meet all the challenges of digital age. Companys unique problem consists of the fact that, even though film cameras market has shrunk considerably, in recent years, it nevertheless continues to exist. Kodak does not want to lose profits that are associated with manufacturing of conventional cameras and it still continues to produce them in great numbers, even though that they represent a dead end in evolution of photography.
In its turn, it prevents Company from allocating more resources for organizational restructuring. At the same time, we cannot say that digital cameras are becoming quite as widespread as they were originally anticipated. In fact, many economists suggest that in 10 years from now, there are going to be no digital cameras, in the form we are all accustomed to, because cellular phones will become universal devices that will incorporate camera, mp3 player and phone. This process already began to gain a momentum. In his article Cell Phones Replace Digital Cameras, Ralf Jurrien forecasts that in few years from now, digital cameras will be facing very grim prospects: Towards the end of the 1990s, digital cameras started replacing analog models. Now there is a trend to replace digital cameras with cell phones with camera capabilities (Jurrien). There is no doubt that Kodaks managers know that, which is why Company now considers entering the market of cell phones.
So far, there has been no official announcement from Kodak officials, in regards to it; however, we can conclude that it is just a matter of very short time, before mobile phones are going to be equipped with Kodak cameras. In 2007, Kodak signed an agreement with software company Exclaim, which signifies a new turning point in Companys business philosophy. The article Kodak Collaborates on Cell Phone Pictures, which can be found on the site of Camera Core, gives us an insight on why this agreement was signed in the first place: Eastman Kodak Co is collaborating with US software company Exclaim, to make it easier to upload, print and share camera phone picture. Kodak and Exclaim have introduced Kodak Mobile Link - a cellular program which enables camera phone users to send their photos to the Kodak Gallery Web site with the click of one button (Camera Core). Thus, we can conclude that Kodak is trying to gain some experience in the market of cell phones, before it actually becomes markets active player. It is very likely that in few years from now, the Kodak first mobile phones will be made available for the buyers.
(3) To summarize this paper, we need to say that Kodak has been very successful in staking its share of digital cameras market. Despite the fact that Company entered it much later, comparing to others companies that manufacture digital photo equipment, it nevertheless managed to make the line of its digital products instantly appealing to the customers. It appears that the most important reason why Kodak remained competitive in digital age is that Companys managers were able to understand what defines the dynamics of digital market. They adopted an unconventional approach to manufacturing digital photo equipment, when it is not the products quality or price that characterizes a popular demand on it, but the easiness with which product can be used. However, we cannot refer to this strategy as being universally applicable. In other words, Kodak happened to be in the right place in right time. The Company was able to take a full advantage of socio-political situation that we now associate with the advent of digital technologies.
This is the main reason why Kodak continued to make steady profits, while other manufactures of film cameras were sustaining heavy financial blows, before they managed to undergo a complete restructuring. Since Kodak managers proved that they are capable of thinking creatively, it is very likely that Company will be able to address the demands of the market, when the development of digital photography will enter its new phase. Bibliography: Christensen, C. and Scott, A. Will Kodak's New Strategy Work?. February 26, 2007. Forbes.Com.
Retrieved October 21, 2007 from http://www.forbes.com/leadershipinnovation/2007/02 /23/innovation-kodak-disruptors-lead-innovate-cx_c c_0226christensen.html?partner=links Howard, T. Picture This: Kodak Clicks Way Into Digital Age. December 27, 2005. USA Today. Retrieved October 21, 2007 from http://www.usatoday.com/money/advertising/adtrack/ 2005-11-27-kodak-track_x.htm Keller, J. DCRP Review: Kodak EasyShare One. November 18, 2005. Digital Camera Resource Page. Retrieved October 21, 2007 from http://www.dcresource.com/reviews/kodak/easyshare_ one-review/ Kodak Collaborates on Cell Phone Pictures.
February 20, 2007. Camera Core. Retrieved October 21, 2007 from http://www.camera-core.co.uk/20-02-2007-kodak-coll aborates-on-cell-phone-pictures.html McLaughlin, M. Kodak Offloads Camera Manufacturing, Distribution. 2006. Find Articles. Com.
Retrieved October 21, 2007 from http://findarticles.com/p/articles/mi_zdext/is_200 608/ai_Jurrien, R. Phones Replace Digital Cameras. February 11, 2007. Lets Go Digital.Org. Retrieved October 21, 2007 from http://www.letsgodigital.org/en/12714/cellphones_c amera/.
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