The Positives and Negatives of Kodak’s Exit from the Capture Devices Business

Ed Lee
Feb 10, 2012

On February 9, 2012, to the surprise of no one, Kodak announced that by the middle of the year it would close its capture devices business, which includes digital cameras, pocket camcorders, and digital photo frames. The Kodak name will likely remain in the market through the licensing of the brand name to others to put on camera, camcorders, and photo frames. The company expects to save more than $100 million annually and according to Kodak, up to 400 employees may be affected. Moving forward, Kodak will focus its consumer facing efforts on home, online, and retail photo printing.

How should the market view this news? Here are our thoughts on some of the effects of this news.

Positives:

  • Kodak exits a business it has struggled with for many years to turn profitable. Now it can spend its money in potentially more profitable areas.
  • Retailer shelves are already overcrowded. There is now one fewer brand to stock.
  • Other vendors have the opportunity to grow their share of the affordable, value-oriented segment of the camera market.
  • A Kodak exit could absorb the brunt of potential lost sales in the entry-level camera category due to smartphones’ effects on consumers’ camera buying habits.
  • The pocket camcorder market is now wide open for vendors like Sony, Samsung, and Panasonic to step in, especially with the exit of both Flip Video and Kodak within months of each other.
  • Kodak can focus more on the printing business and work to better integrate the Kodak Gallery online site with the retail photofinishing business.

Negatives:

  • The selection of affordable, value-oriented, entry-level camera models will be reduced, giving consumers fewer choices.
  • Future Kodak branded cameras, camcorders, and photo frames will likely be standalone non-connected products that will not integrate well within the Kodak photo sharing and print ecosystems.
  • The licensing efforts will likely have limited success. Kodak branded cameras and photo frames will not have the reach or distribution of Kodak’s corporate efforts.
  • Kodak leaving the capture device market could further weaken the brand’s image and value.

Kodak’s finances and bankruptcy filing did not leave it much choice but to jettison the capture device business. Kodak CEO Antonio Perez’s mission is to transform Kodak into a printing company and the company can no longer afford to remain in the capture and display markets.

This leads us to wonder if Kodak is again exiting a market too early and will miss the next big opportunity: The Connected Experience.

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