When I came to work at Kodak Park twenty years ago, I was amazed at the wide variety of work that Kodak employees performed at the site.  There were carpenters who made lab cabinets, machinists that would make parts out of metal or plastic, engineers of all varieties, an elevator maintenance crew, security staff, skilled-trades workers of all types, and many very specialized occupations.  Kodak people could do just about anything including repairing equipment, fabricating parts, designing machines, and constructing buildings.  We were so vertically integrated I was a bit surprised Kodak did not own a silver mine!

With the change in the market for film, costs needed to be reduced to keep the company viable.  Over the years many of these specialized and site services have been transitioned to a wide variety of suppliers.  While this practice has played a part in the well publicized reduction in the number of Kodak employees, what is often missed is the number of functions performed at Kodak sites by our suppliers.  Many of our supplier's employees are former Kodakers whose knowledge and dedication is still vital to Kodak's success.  Although the jobs are no longer on Kodak's payroll, Kodak's suppliers have created and maintained thousands of jobs in Monroe County.  Here is a sampling of suppliers that support our Rochester sites and Kodak's future success!

www.eastmanbusinesspark.com

The New York State Business Council annual meeting was held in Rochester September 30 to October 2, and the Eastman Business Park (EBP) had a prominent presence with an exciting exhibit booth that provided exciting information on how we are trying to attract businesses here.

By the end of the first day, the booth was highlighted as the "buzz" of the exhibit hall showing off the virtual campus software on an oversized screen with the latest technology in visual graphics and the capability to take you on a virtual tour of the properties and potential that Eastman Business Park has to offer.                                 
 

In addition to the virtual tour, the booth provided marketing brochures and access to website information which shares many details on the unparalleled services available.

A drawing was available to attendees, giving away Kodak's latest Zi8 video camera which also drew huge interest from visitors.  The crowd was excited about the new product and the booth had one in action each day taking videos and downloading on the spot for viewing.   


One of the highlights was an interview conducted by local news channel WHAM13 where EBP Director Dave Stoklosa took the opportunity to talk about the event, our virtual model and the great things Eastman Business Park has to offer.  The spot ran that evening and was a nice plug for the event and our exhibit booth.

Next up is the Greater Rochester Enterprise (GRE) "Eyes on the Future" Economic Summit sponsored by Eastman Business Park, which will be held the morning of October 16 at St. John Fisher College and is free to the public.  Register at eyesonthefuture.com

I get this simple question a lot: How can Kodak possibly succeed against the behemoths who dominate the consumer inkjet business?

I have the answer. But first, a story.

One of my favorite books is The Hobbit, by J.R.R. Tolkien. And in that book, my favorite scene is the one where Bilbo Baggins has to solve a series of riddles or else become the dinner of that menacing creature Gollum. Bilbo makes it through the first few and then gets stumped on the final riddle:

This thing all things devours;
Birds, beasts, trees, flowers;
Gnaws iron, bites steel;
Grinds hard stones to meal;
Slays king, ruins town,
And beats mountain down.

Bilbo is panicked. He doesn't know the answer, and Gollum is anticipating a nice meal for himself. Desperate to keep Gollum at bay, and needing more seconds to come up with a solution, Bilbo issues an appeal to Gollum that inadvertently provides the answer to the riddle. He breathes one word: "Time."

Time, and timing, is key to understanding Kodak's consumer inkjet business. Time has weakened the behemoths, and our timing has allowed us to come up with a breakthrough technology solution that benefits consumers.  Here's why.

Kodak's value proposition directly addresses the top three unmet needs of the consumer when it comes to inkjet printing. The first is that ink costs way too much. The second is that the quality isn't good enough. And the third is that inkjet printers aren't easy enough to use. When we got to work designing our system, I remembered all the times that my customers, friends and family would complain to me about the cost of ink, among other things. I vowed to provide the consumer a better experience in each of those categories.

The business model for thermal inkjet printers that the market leaders use nowadays is 20 years old. A lot of time has passed since people first thought this business model was a good idea, and its weaknesses are starting to show.  It is a model that makes sense for the manufacturer but not for the consumer. It is a model that reflects what technology allowed 20 years ago, but not what technology can do, and is doing, today. I know this well because I was part of it. And it is beyond time to change it.

First, they lure the consumer by pricing the printers really low, sometimes even giving them away, so they can hook you with astronomically expensive ink. The consumer has been trained, to the manufacturers' benefit, to focus on the price of the printer at retail and to ignore the fact that over time replacement ink can cost them a lot more than the printer itself.

The market leaders pull this off because in most cases they install one of the most expensive and critical components of an inkjet system - the printhead - on the ink cartridge. Every time you buy their ink, you're really buying an expensive new printhead whose life cycle should be far longer than the ink in that cartridge. That's like replacing your engine every time you need to refuel your car - that would be insane, yet that's what you do when you buy their ink cartridges.



At Kodak, we said it's time to change that model. We incorporated a uniquely-designed printhead as an integral component of our printer, and we charge a little more than our competitors for a printer that includes this printhead. We think that's fair. What's more, you don't have to recalibrate the printer every time you swap out ink cartridges because the printhead is installed as part of the printer rather than as a part of the individual ink cartridges. The previously unmet need of ease of use has now been met - by Kodak.

But the real benefit comes with the ink. We can say with utmost confidence that Kodak offers the lowest total ink replacement cost in the industry.  With Kodak's printers, consumers who print 1,500 documents a year enjoy an average savings of $110 a year on ink compared to leading consumer inkjet printers. Kodak's inkjet business model is an idea whose time has come. The previously unmet need of lower-cost ink has now been met - by Kodak.

And it just can't be beat. The market leaders have constructed an entire industry on the lure of low-priced printers and high-priced ink. They simply cannot change this, overnight or even over time, unless they change first the system architecture, that is, designing a high-quality printhead incorporated in their consumer thermal inkjet printer, thus eliminating the need for "throw-away" printheads in the cartridges. Most of their profit - for the entire company - comes from high-priced ink, so simply cutting the price doesn't work. They can't afford it. Their profit margins would plunge, as would their corporate profits, taking stock prices along for the ride. All they can do is to keep trying to push further and further the old business model and hope the consumer will come along. 

Kodak, on the other hand, plays it straight with our business model, and the consumer is embracing it. At a time when the entire $50 billion industry is declining because of the recession, we're growing in double-digits and taking market share. Time is on our side.



So is technology.  On top of the uniquely designed printhead architecture, at Kodak, we use pigmented inks. Our competitors mostly use dye-based inks. Why should you care? Pigmented inks offer outstanding image quality and permanence - and, when using Kodak media, they are instantly dry to the touch. That means that you can immediately enjoy the documents and pictures you print with Kodak, and they will last longer and look better well into the future.

Here again, the market leaders can't beat us. They would love to use pigmented inks, but they couldn't figure out a way to do it. Pigmented inks are really hard to work with and refine, so they decided to stay with dye-based inks. Of course, with dye-based inks you have to make a choice between image quality or instant dry prints. Instant dry prints yield lower quality images and optimizing for quality means that prints come out of the machine slightly wet - even a wet finger can smudge one of their prints. With Kodak's pigmented inks, you can pour a cup of coffee over a high-quality picture fresh off the printer with no damage to the print. Don't try that at home with dye-based ink. Plus, there's no comparison when it comes to image permanence. Most dye-based inks fade over time under typical home conditions. Documents and photos printed with a Kodak All-in-One Printer will last a lifetime. The previously unmet need of better photo quality has now been met - by Kodak.

Kodak, of course, has been a leader in materials science for more than 100 years. Remember that making film requires us to spread up to 14 layers of complex emulsions on a relatively unreceptive plastic substrate at high speed, and we do it in the dark because film is light sensitive. If we can do that with film, then spreading ink on paper in daylight isn't a huge leap for us. We've figured out how to mill pigmented inks in such a way that they are usable in a consumer device, and our competitors have difficulty matching that on a thermal inkjet device. 

So we've got the right business model and the right technology. But we have one more thing on our side - timing.

The market leaders did us a huge favor. During the past 20 years, they created this huge infrastructure to source, manufacture and ship printers and ink. This supply chain was just sitting there for us. Instead of spending hundreds of millions of our own capital to build a supply chain, we simply took advantage of the existing supply chain created by our competitors to manufacture our products. And this is what I mean by timing being critical. In this case, entering the market 20 years later is an advantage. We get to benefit from the work of others at much lower cost to us. Sometimes, being second helps.

Why didn't our competitors do what we've just done?

Fundamentally, they were culturally incapable. These are large companies that have developed complicated systems, processes and expensive machine tools uniquely designed to manufacture their present throw-away cartridges (whose value is depreciating slowly on their books and would have to be written off if they change to an integrated printhead), whose natural tendency financially and otherwise is to preserve the original vision that started more than 20 years ago. (I detail this in my blog posting titled, "Notorious Decadence." ) The second reason is that to come up with a technology breakthrough like this you need to have both the technology know-how and the vision and desire to create it.  They lacked both. 

This is why our strategy is so hard to beat. We've got a value proposition for consumers that our competitors can't match without first developing a printhead incorporated into their printer architecture and, second, without risking serious financial hardship.  We've got a technology in pigmented inks that our competitors can't match because they don't have more than 100 years of experience, as we do, in materials science and complex chemistry. And we've got access to a supply chain that they paid for.

With the installation of more printers comes lots of very profitable revenue on ink sales, even at prices that are a fraction of the competition, because we target those customers who do not want to limit their printing because of expensive ink. These are the people who are most appreciative of our approach, and demonstrate that appreciation by buying the most ink. The best proof point that our value proposition is working is the fact that our printer hardware and ink sales have been growing by double-digits for the past year, while the industry overall has been declining.  That's strong evidence that Kodak has been successful in addressing the top three unmet needs of the inkjet consumer.

The riddle says that time slays kings. Time is on our side.

Much like Intel considers Ajay Bhatt a rockstar, we have our own rockstar here at Kodak. Steve Sasson, a Kodak research scientist who invented the first digital camera back in 1975, is our rockstar.

We aren't the only ones who know it. The Economist is honoring Steve with an "Innovation Award" in ceremonies in London on October 29. The Economist's Innovation Awards are considered the "Oscars of Innocation".

"Steven has refocused the face of consumer photography by pioneering the first digital camera at Kodak in 1975," said a citation from The Economist, also noting, "Kodak has continually driven innovation at the highest standard in both print and digital photography, as well as within other imaging products."

Steve is receiving the award in the category of Consumer Products and Services. Some other winners of the award in the same category are YouTube founders Steve Chen and Chad Hurley, video game pioneer Shigeru Miyamoto of Nintendo, and the Apple iPod team. Wow!

Congratulations Steve! Rock on!

It wasn't too long ago that Kodak announced our latest CCD image sensor targeted to applied imaging markets - the 8-megapixel KODAK KAI-08050 Image Sensor.  This device joined three other KODAK CCD Image Sensors (1-megapixel, 2-megapixel, and 1080p format) in a family of products based on the KODAK TRUESENSE 5.5 micron Interline Transfer CCD Platform - Kodak's eighth generation of Interline Transfer CCD technology.  With four products already a part of this high-performance family, there seemed only one obvious, logical next step to take.

Come out with a fifth.

Make no mistake, the KODAK KAI-04050 Image Sensor fits right in with the rest of the family.  Same new pixel, same improvements in image quality, same increase in frame rate (now at 32 frames per second for this 4-megapixel device).  It even shares the same Region of Interest (ROI) mode available in the 8-megapixel KAI-08050 that allows the center portion of the sensor to be read out at even higher speeds.  But the real news here - other than announcement of the new sensor itself - is how having an integrated portfolio of image sensors allows camera manufacturers to bring new products to their customers more quickly. 

It's been less than 24 months since we announced the first product in this family, and now we have five - all with the same pin-out connections and electrical configurations, and each responding the same way to light.  That makes it easy for camera manufacturers to extend their camera line as each new sensor comes out, because now they can support a full portfolio of cameras using a single camera design.  Essentially, they can just take a single electronics board and plug in any of these five sensors to build a camera - meaning fewer parts in inventory, faster time to market, and better control of costs.

But the real benefit is to customers, because they can start using this new sensor technology - with improvements in frame rate and image quality, and available in the resolution and optical format they need - more quickly.  Customers don't need to wait for manufacturers to design a new camera every time a sensor is announced, since that work was done once for the whole family.  So as Kodak's sensor family has expanded, manufacturers have been able to quickly extend their camera families as well, giving customers the freedom to choose from a full portfolio of products to get the best match for their imaging application.

So with sensor resolutions ranging from 1- to 8-megapixels, now we've got Five Sensors in our Family.  And, no - there's not one of them I'd swap.