Kodak and the Digital Revolution

Kodak and the Digital Revolution

1. Kodak strategy in traditional photography had the following guiding principles: mass production at low cost, international distribution, extensive advertising and focus on customer needs. It was supported by heavy investments into scientific research and development.

The company always had superior marketing, full of innovative approaches, and very good relationships with retailers. Kodak managed to maintain its leadership for such a long time largely through its power with distribution channels. Its attachment to quality was also Kodak's "fighting argument".

Along the way, Kodak always used rational thinking approach to the production and marketing of its products. The company used a razor-blade strategy: it sold cameras at a low cost, and consumables, such as film, paper and chemicals generated huge profits.

When the industry moved to color, Kodak continued its success due to heavy investments in R&D, which was necessary to succeed in color photography, and was easily affordable. In fact Kodak has become the industry standard. Continuous incremental improvements allowed Kodak to maintain its leadership throughout the years.

2. The traditional photography is structured the way that cameras are produced and sold at a low cost, but the profits are made from the sale of film, paper and other supplies needed to develop and print pictures. It is called a razor-blade strategy. The film then may be developed in independent kiosks, digital labs, other retail specialized outlets.

Digital imaging is different in two major ways: the way the pictures are taken and in the way the pictures are handled after they were taken. First of all, there is no film required for the digital image to be taken. Secondly, the images do not need to be developed (as in situation with a film) or printed to be viewed. They can simply be stored on a PC or a service provider's server. Then the desired pictures may be printed at home on a personal inkjet printer, printed in a lab, or distributed for viewing via Internet.

Digital imaging is obviously is going (at this time, we can see that already did) to replace the traditional photography due to two main reasons: lower costs and convenience. Firstly, digital cameras, despite its high cost at that time, were continuously falling in price and were going to reach the levels of traditional cameras. Secondly, it did not require films, i.e. regularly saving money for consumers. Then, a number of convenient features made digital cameras attractive, such as there was no need to develop the film, the possibility to view the picture at any time, store it on PC, print the pictures at home on a inkjet printer, etc.

3. When Sony announced the launch of the first digital camera, Mavica, Kodak CEO Colby Chandler, despite recognizing the

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