Kodak shuts down as a camera maker

Photography giant Eastman Kodak has declared it will stop making cameras following a series of lacklustre attempts to keep pace with the digital market.

The manufacturer that vowed in 1888 ‘to make photography as convenient as the pencil,’ has agreed to outsource its business to Flextronics, the hi-tech electronics design company.

It will offload its entire manufacturing operation including assembly, production and testing to the Singapore-based firm, to give it responsibility for design, development and distribution.

Kodak will however continue to control high level system design and advanced research and development, with a view to ensuring the ‘ease of use’ and ‘feel’ of its cameras remains.

According to the terms of the historical deal, some 550 Kodak employees will transfer to Flextronics, to accompany the migration of Kodak’s two production centres in Japan.

The manufacturer, whose slogan has been ‘you press the button, we do the rest,’ will retain its intellectual property rights, but its new partner will acquire a “significant portion” of Kodak’s “associated camera design functions.”

“This agreement will bring our camera products to market more quickly, with greater predictability, flexibility and cost efficiency while maintaining innovative ease-of-use,” said John Blake, vice-president of Kodak’s Consumer Digital Imaging Group.

According to The Times, Kodak’s decision to retire as a camera maker coincides with a plan to cut its workforce by 27,000 - at a higher than expected cost of $3.4billion.

A gloomy trading statement recently accompanied the news, with second quarter results for 2006 showing a net loss of $282million – set against $155million a year earlier.

The company’s troubles have been blamed on its stubbornness to join the digital revolution in photography, compounded by a subsequent failure to offer enough appealing digital products.

Kodak eventually closed the shutter on the sale of traditional cameras in 2004 in the United States and Western Europe, but has struggled to achieve profitability in the digital arena ever since, thanks in part to its late arrival.

The company is now expected to focus more on the design, sale and advanced development of digital cameras, in order to “gain the greatest differentiation and advantage” in an already overcrowded digital marketplace.



 

4th August 2006

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