In recent weeks both Kodak and Creo have made major announcements that affect the future operations of their businesses. The fact I am covering both of these in the same article is not because they are related, but because in both it shows a plan to change the ongoing direction of each business. In the case of Kodak it is emphasizing its switch from an analogue consumables based business, to one that is predominantly a digital business. In the case of Creo it is changing to add a consumables business to run alongside its digital prepress business. This article is to look at both companies, and try to identify what difficulties both companies may face along the way.

EASTMAN KODAK

The move by Kodak to become a digital rather than an analogue company is not unexpected. The company has after all been trying to do this for almost the past twenty years without much success. Its first moves into digital came in the early 1980s when like many industrial giants it felt a need to invest in electronic business developments. Kodak was not alone in such a move. Many other industrial conglomerates did exactly the same, and they like Kodak saw few successes.

In Kodak's case it bought scanner company Eikonix for around $50 million and saw it go almost out of business within a few years. It bought Atex, the world leader in newspaper publishing systems for around $50 million, and despite investing in excess of $200 million failed to stop an almost terminal decline. They finally effectively gave the company away around 1990. At the time Kodak failed to understand the market dynamics in which computer power became ever more cheaper and faster.

Kodak was also an early pioneer in photocopying and digital monochrome and color printing. In this it had a limited success but significant losses. Heidelberg took this division and has since made a success of it with their Digimaster range of monochrome printers. Kodak perhaps realized that while they had good technology, they had difficulty successfully bringing it to market, and this generated the NexPress operation for digital color printing, which is a joint venture company with Heidelberg. It has moved into the wide measure ink jet printing market with its purchase of Encad. I beleive the chance of competing against market leaders HP and Epson are seen as small as Encad had already failed in this area before being acquired.

Kodak has had success in the high-end of the digital camera market through its excellent CCD technology and its long-term relationship with the photographic industry. It is however rapidly losing its place in the market to all the Far East suppliers, in particular Canon, Sony, Olympus and Nikon, who now dominate digital photography.