Kodak's Digital Journey

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Case Details:

Case Code : BSTR190
Case Length : 16 Pages
Pages Period : 1995-2005
Organization : Kodak
Pub Date : 2005
Teaching Note :Not Available
Themes: Adaptation to Market Changes | Transformation
Countries : US
Industry : Consumer Electronics

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The Steps Taken

In April 2003, Carp recruited Perez, who had been at HP for 25 years, holding positions like corporate vice president and member of HP's executive council. More important, during his tenure at HP, Perez was the president and CEO of HP's inkjet business and president of consumer business and was instrumental in building HP's digital imaging business.

Perez was also an independent consultant and adviced major investment firms on the impact of technology changes on the financial markets. In the same month, Kodak hired Yusuke Kojima of Olympus as General Manager for Kodak's consumer digital camera business. By the end of June 2003, Kodak's debt had increased to US$ 2.99 billion.

In July 2003, Kodak again laid off 6,000 employees across the world. For the second quarter that ended June 2003, Kodak reported a net income of US$ 112 million, a decline of 61% over the corresponding quarter in June 2002. The company's sales were flat at US$ 3.4 billion as compared to the same quarter in 2002...

Kodak Overtakes Sony

According to IDC research, for the third-quarter of 2004, Kodak finished just below Sony in digital camera sales in the US market. Sony sold one million digital cameras (20% market share) while Kodak sold 900,000 digital cameras (19.8% market share). Canon secured the third place with 800,000 cameras (16% market share).

According to digital imaging analyst at IDC, Chris Chute (Chute), "The investments that Kodak has made in digital imaging are really starting to pay off."Though analysts were skeptical about whether Kodak could continue its performance, in the fourth quarter of 2004, Kodak overtook Sony for the first time with sales of 2.4 million digital cameras in the US as against Sony's 1.6 million. According to IDC, in 2004, 22.3 million digital cameras were shipped across the US. Kodak surpassed Sony in the US market by shipping 4.9 million digital (66% more than total shipments in 2003) cameras as against Sony's 4.3 million (21% more than 2003). Canon stood third with 3.5 million cameras...

The Road Ahead

Even though Kodak emerged as the leading digital camera seller in the US by the beginning of 2005, it was still only third after Sony and Canon in worldwide sales of digital cameras. According to analysts, as digital cameras were the future, Kodak had made the right move by focusing on digital cameras and slowly reducing investments in the traditional film business. However, they felt that the company's initial delay in focusing on the digital business while trying to safeguard its film business and the pace at which its film business had fallen had had an adverse impact on its performance...

Exhibits

Exhibit I: Traditional Revenues Vs. Digital Revenues At Kodak
Exhibit II: Kodak's Businesses
Exhibit III: Steve Sasson with the Prototype of Digital Camera in 1975
Exhibit IV: Kodak Under Fisher

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