Magazine Article


Kodak Scuttles Dry Film Processor

Pulling Plug on Former ASF Unit Will Cost Big Yellow $45 Million

The dry film processor that was developed by Applied Science Fiction has been the talk of the trade since it was first whispered about at the PMA convention in 2000 and introduced at photokina that year. The whisper became a loud shout after Kodak acquired ASF and made the product its spotlight introduction at the 2004 PMA.

The only talk about the dry film processor at this year's PMA will be the fact that Kodak has decided to not bring the product to market, after all.

After years of research, the concept of a dry film processing kiosk may fade into oblivion.

In an SEC 8K filing on December 13, 2004, Kodak stated that it "will cancel its program to market an automatic film processing station it was developing…by March 31, 2005." It was further stated that, "The total charges related to the program cancellation amount to $45 million."

The bottom line seemed to be the bottom line. Patrick King, general manager of Kodak's consumer output business said that there were in-house orders for only a few hundred machines and it became apparent that to make the program viable "we needed a scale of thousands…we couldn't get there," he said.

A field test involving about 18 of the film processors was being conducted in Chicago and Detroit at such locations as Target, K-Mart and Rite Aid. King said that the retailers were advised of the withdrawal of the program on the same day the SEC filing was made. He said the trade trial units would be removed and the floor space restored.

King indicated that his efforts to make the dry process program a success included sales trips to Europe and the Far East.

Timing, of course, was against the program. With film now declining as much as 20-30% a year, a rate never anticipated, it became difficult to justify new investment in a machine that was dedicated to film processing. Added to the fact that the system would not accept APS cartridges, about 5-6% of film processing, or single-use cameras, another 15-20%. King stated that the system could have been designed to accommodate these items, but it would have meant more investment and more delays. Kodak could afford neither.

The product was designed to be a sidecar attachment to the Kodak Picture Maker so that one package would be able to handle film as well as digital input and output dye-sub prints and CD's. Introduced at $50,000, the price was later reduced to $39,000.

Another element to the difficulty of selling the dry process, according to King, was that the big players had already made major capital investments in digital minilabs and kiosk systems.

Asked if the program shutdown was at all related to the current shortage of the thermal dye-sub paper, King said, "Definitely not." He indicated that by the time the systems would have been shipped, the paper supply problems would have been overcome.

Kodak became the owner of the dry process technology with the acquisition of ASF in May 2003 for an estimated $35 million. ASF's Austin facility became Kodak's Austin Development Center. Dan Sullivan, who was president and CEO of ASF and general manager of the Development Center, has left the firm along with about 39 others. Mike Conley, ASF's VP of Marketing, remains along with about 16 people who will move to a smaller facility and deal with Digital ICE and other software products developed by ASF and supplied to such firms as Epson, Nikon, Konica Minolta and others.

It is generally agreed, even by the early naysayers, that the system was a remarkable technical achievement. It did what it was supposed to do: process negatives without wet chemicals.

The system was looked at as a solution to installations that had limited floor space availability or had chemical use restrictions. There was also a positive labor saving story that King said was never really appreciated.

This is not the first time Kodak has abandoned a product that had reached trade trial and was at the brink of its formal launch. In May 2003, within only a few days of its acquisition of ASF, Kodak cancelled its Phogenix inkjet digital minilab program in which it had partnered with Hewlett Packard. It was a product that seemed to have serious trade interest. King said that the circumstances surrounding the cancellation of the Phogenix program and the dry processor, were entirely different.

"Kodak can take risks that others are not financially capable of," he said. "Some pay off and some don't."