Will Kodak's New Strategy Work?
Earlier this month, struggling film giant Eastman Kodak announced a bold new offering that just might shake up the $50 billion printer industry. Kodak is introducing a $150 to $300 consumer inkjet printer that uses ink cartridges priced more than 50% lower than those of incumbents. Kodak's approach has many of the hallmarks of disruptive innovation, giving it a great chance of creating a much-needed winning product. But there's still a long way to go before the company can declare success.
Kodak could certainly use some good news. As disruptive digital technologies have hollowed out Kodak's core film business, the company's stock price has dropped more than 60% (adjusted for dividends) since peaking 10 years ago. Kodak has laid off thousands of workers as part of a desperate attempt to reinvent itself over that decade.
The iconic photography company has tried to diversify beyond film, creating a portfolio of simple-to-use digital cameras, printers that plug directly into cameras and a photo-sharing Web site (through its purchase of Ofoto in 2001). Unfortunately, Kodak's sagging stock price shows that these new businesses have not gotten big enough, fast enough to offset the decline of its old business.