Kodak victim of it's own success — transfers digital camera production to Flextronics

As if we haven’t already seen how volatile the digital camera market is, Kodak served up a big reminder yesterday. Less than a year after Minolta called it quits and transfered its assets to Sony — Kodak — the number 1 digital camera seller in the US is transferring all its digital camera production to a company called Flextronics in Singapore. Apparently, the cameras will still be labeled Kodak — but all production and some of the design will be handled by Flextronics.

Of course Kodak is no longer in the dSLR market, having ended production of it’s dSLRs last year. So this announcement won’t affect the Sony Alpha line — but it may shake things up in the Point and Shoot digital camera area, where Kodak’s Easy-Share models currently have the market share crown n the US. This could open the door for Sony to grab more market share in this arena — hopefully it won’t affect Sony’s commitment to develop more pro line SLR Alpha cameras.

Ironically, Kodak has attempted to flow with the digital tide, even if it meant abandoning it’s position as the leader in the very lucrative 35mm and APS film arena. Many companies might have dug in their heals and tried to fight against the digital tidal wave. Not Kodak. They developed many aspects of digital cameras that we take for granted today. And while it appears they lost their way in the digital world, Kodak has a ton of patents that will continue to earn the company royalties on every digital camera sold in the future. So the company is not going away. Kodak is still considered the largest photographic company in the world.

MSNBC has an interesting story of how a Kodak engineer developed thefirst digital camera in 1975 — although it would be two and half decadesbefore Kodak actually started mass marketing digi-cams. And let us notforget that Kodak was first to the market with a functioning dSLR –they released a black & white only, 1.3MP digital SLR based on the Nikon F3 in 1991. Itwas definitely a “Pro” model as it cost upwards of 25,000 and was aimedat photojournalists who needed to shoot newspaper images and transferthem immediately to the publication for publishing.

It should be sobering, however to consider that Kodak, even thoughit bravely pushed into the digital world and captured the lion’s sharein the consumer digital camera market, couldn’t remain competitive. Thecompany posted it’s seventh losing quarter yesterday. It’s dSLR markethas been abandoned to Nikon, Canon, Sony and others, while itssuccessful Easy-Share cameras couldn’t produce enough revenue for Kodakto continue manufacturing them.

None of this affects the core market of the SonyAlpha line — but it does serve to point out how unstable the digitalcamera market is. Kodak pioneered the dSLR but lost out to othermanufacturers. Kodak dominated the consumer digi-cam market but couldn’tearn enough money to continue to make it;s own photo hardware.

Undoubtedly, there is plenty of revenue to beearned as a digital camera maker — but the pitfalls are around everycorner. If Kodak couldn’t make it — no company can rest assured thatthey have a handle on the market. Sony representatives have been quoted saying that they intend to overtake Nikon in the dSLR sales in the next fewyears. Nikon may have something to say about that — but as I have said– no one can predict what will happen n the next 18 to 24 months.Canon is currently riding the wave has the top digital SLR maker. Will they be able to make that claim in another in three, five or seven years? No one can say.

I hate to see any of the players go under. More competition meansbetter and more accelerated product development and lower overallprices. But I’m afraid that Minolta and Kodak won’t be the lastcasualties in the digital camera wars.

Until next time, stay focused — Tom

I recomed the following MSNBC story for anyone insterested in digital cameras:

Digital camera turns 30 — sort of – Tech News & Reviews – MSNBC.com

Here is a link to an EETimes story about Flextronics and future proiduction of Kodak cameras:

EETimes.com – Flextronics to manufacture cameras for Kodak

Comments? Suggestions?

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technorati tags:Kodak, Digital Camera, Flextronics

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