General: Kodak's Road to Recovery

Kodak has been in a rather tricky situation for years: their entire business model has been threatened by the emergence of the disruptive technology of digital photography and imaging. This fascinating NYTimes article on Kodak covers some of what they've done to cope and is filled with lots of interesting tid-bits.

One of the more interesting elements is Kodak's efforts to target the printing market by taking on HP and Xerox. Kodak has hired a lot of people away from HP to help develop and market Kodak's creation of a consumer printer that is relatively pricey, though it uses really cheap toner/ink cartridges. The printer, as such, follows the exact opposite strategy of most current prints on the market - i.e. the razor blade strategy of charger a low price for "razor" and relying upon sales of "blades" for most of the profits.

The Hewlett alumni introduced an expensive consumer printer that runs on inexpensive ink — tantamount to heresy in an industry that has always sold cheap hardware in hopes of making money on high-margin inks and toners. “We were entering an entrenched market, so we went after the biggest dissatisfier for consumers, the cost of ink,” said Steven A. Billow, a manager in the inkjet systems division

However, their plans aren't being well received...

Analysts remain wary. “The stuff that comes out of the Kodak labs is impressive, but it does not give them a leg up on Hewlett or Xerox,” said Shannon S. Cross, an analyst at Cross Research who rates Kodak a sell. Nor is she impressed with Kodak’s consumer printer. “Consumers buy on the cost of hardware, not of total ownership,” she said.

This does raise the interesting question of how easy it is to attack a strong incumbent in an industry with out following the same general strategy. How easily can Kodak get consumers thinking about TCO instead of upfront hardware costs? I image such a change would require significant cooperation from retailers (in terms of how products are displayed) as well as a large amount of marketing.

It would be useful to further explore everything else Kodak is doing to turn around. Perhaps - even to compare Kodak's efforts to Fuji's - given that they're in a similar position.