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Spotlight on Patrick Jung



Spotlight on Patrick Jung
Chief Executive Officer of the Gretag Group

by Dan Havlik

As part of a recent restructuring plan, Gretag has been made smaller. Can you discuss the restructuring plan in some detail and explain the reasons why it was necessary? With the economic slowdown in 2000, the events of September 11th, along with a saturation in the retail on-site traditional markets, Gretag, along with our competitors saw a considerable slowdown in our business activity. But this slow down has created an environment for optimism. With a lot of liquidity in the markets, and interest rates being very low, we will reach a point where this liquidity will be put into use, and Gretag's restructuring has positioned us to share in it.Today, Gretag is not only smaller, but a leaner company that's able to respond and adapt to change quicker. We're more focused on our core business. To this end we've undertaken the following steps:

Reorganized the company's structure. Before we had four business units, we now operate with a more traditional business structure. We've developed a new business plan that we feel very comfortable with, and that concentrates on our core businesses, our strengths in consumer imaging. We've also created a new management team. We've looked into our organization as well as outside to pull together an executive management team that is experienced and competent, and that shares the same guiding values of openness and transparency, confidence and teamwork, responsibility and reliability, promptness and efficiency, and an ability to focus on the issues affecting us as a company.

Why has Gretag decided to enter the digital kiosk business? Actually, this is one element in being a total solutions provider of Imaging Solutions. Gretag's involvement in developing a kiosk strategy, and products to meet the market needs, is an outcome of our extensive relationships with retailers. With the boom in digital camera adoption, our customers, especially our existing on-site retail customers, wanted a way in which they could share in the digital printing and sharing of these images captured by the consumer. When you look at the on-site retail customer's buying habits, it just makes sense that those currently processing the consumer's film are looked to for providing the same service when they bring in their camera media. It's convenient for consumers and they like the service they are already getting. So why change? Additionally, with Gretag's kiosks, our software has been made so intuitive to use that the consumer can easily process their images with little assistance from the store's personnel. At PMA 2002, it seemed that every major (and minor) imaging company was unveiling a new kiosk. Is the market potential for kiosks large enough to support so much new product? No its not, and not all those that are and have been introduced are actually selling. As with any new product or technology you have a lot of people trying to "get on the band wagon." Over time, many of them end up getting out of the business, and those that succeed are the companies that have the best products and services. In the case of Gretag, we've been in the retail, on-site business for a long time, so we have access to knowledge as to what our customers really want, and how they want to implement products like ours. What separates Gretag's line of kiosks from the rest of the marketplace? Actually, a couple of major features separate Gretag's kiosk line from competitive offerings. First of all, all our kiosks are designed with an open architecture platform. As a retailer, if you have a competitive minilab that you want to hook up to our kiosks-no problem! We don't expect a retailer to get rid of his minilab investment. Of course, we would like to sell him a MasterFlex digital minilab, but the important thing is that we can show retailers how to capture additional revenue through digital, while leveraging their current investments whenever and wherever possible.

The second feature that separates Gretag kiosks from competitive models is our operating software, our Image2Print software. This is really the heart of any kiosk. We've developed the software to provide the consumer with an easy-to-use and intuitive experience that makes printing pictures from digital camera media as easy as having their film images printed. And best of all, the consumer can easily enhance their images, print greeting cards, calendars, etc. in a couple of simple steps. The software is also what makes our kiosks capable of interfacing to any digital minilab, or photo-quality printers such as dye-sublimation or ink jet printers, or other technologies such as Polaroid's Opal printing technology.

While many digital camera users print their images at home, it has been difficult to get them to print at retail. Name three things that need to change to get more consumers to print their digital images in a photo retailer's store. Those that are currently printing at home consist of the people who are into new technology, and they may continue to print at home. They love the technology for itself. When digital cameras get entrenched with the so-called "soccer moms," they will need an easy way to get prints. They will want prints of their kids, of family events, etc. Retailers have to let their customers know that they can print their digital images. They need to promote digital services to their customers, and to consumers in general.

Secondly, the consumer needs to know that the quality and cost of getting prints of their digital images is more efficient and cost effective, with higher quality, through their on-site retail location versus printing at home on their PC's printer. And through a retail location, you are exposed to new products and services, as they become available.

And lastly, the consumer needs to know that printing of their digital images is easy and simple, like the service they receive for their film-based pictures. They don't need special training etc.

You and other industry leaders have predicted that digital kiosks will turn up in a variety of locations where there are picture-takers, such as at sporting arenas, in malls and hotels or on cruise ships. If this does happen, won't that take away from consumers actually visiting photo retail stores to print their images? Yes, it probably will to a certain degree. We'll see a shift, but the total volume can very well increase with more options and availability of print processing. This shift is another opportunity for the retailers to take part in. Actually, when you have kiosks in a whole variety of venues, you'll see people printing even more images. The convenience will actually, I believe, increase the number of images that are printed. The easier, the more convenient the method, the more use you'll see. You've been a proponent of the imaging industry capitalizing on the "Infoimaging" market? While the term "Infoimaging" has been a hot buzzword among manufacturers, how do the little guys, i.e. Photo specialty stores, get a piece of what Kodak has described as a "$225 billion industry created by the convergence of image science and information technology." As with any product market, the "Photo Specialty Store" needs to provide more value-added services to their customers and extend their offerings to things like new photo-related devices and products to increase their revenue.

They need to give the consumer a reason to come into their shop over a competitive location. The "specialty photo store" needs to provide the services that the consumer wants, while at the same time seeking additional services and products not traditionally found in these locations.

At PMA 2002, Gretag unveiled Version 4.0 of its image2print software for kiosks, which is being used not only by Gretag, but also in kiosks from Polaroid and Olympus, among others. What is this software all about? I briefly talked about our Image2Print software earlier, but this is the heart of our kiosk, as well as anyone else's. This is what allows the kiosk to talk to the printer, no matter what type or make - minilab, photo-quality ink jet, dye-sub, etc., and transmit and convert the customer's images into prints. Our Image2Print software is compatible with most competitive digital minilabs and other photo-quality printers. This is what we talk about when we refer to it being an "open architecture system." The front end of our Image2Print software has been designed to be very easy to use so that the consumer, no matter what "technology" comfort level, can quickly and in a timely fashion generate high quality prints of their digital camera images. The software has also been developed to give the user many options as to products, image enhancements, etc. In all the hoopla over digital kiosks at PMA, it was easy to overlook printers, minilabs and central labs, which have long been Gretag's bread and butter. What are some of the latest products Gretag is offering in these areas? Gretag has a host of new products that it has introduced in the last six months or so, even prior to PMA. The Cyra Digital system was introduced for the central lab environment, and provides a full high-speed digital system for high productivity environments that you find in the so-called central lab. The system has modules for scanning, printing, and reorders functions, and can be installed separately or as one system. Also, our Synex Lab Data Management (LDM) system dramatically improves workflow in the lab, and is the first management system for the lab that implements version 4.0 of PfDF standard.

For the retail on-site marketplace we've announced our new digital minilab, the Eomotion minilab, which is a digital minilab that provides many digital services, yet is affordable and allows a lower cost entry point to digital. We've also introduced what we call a "bridge solution" making our analog minilab available to provide digital services. This is particularly important to those thousands of retailers who have Gretag analog minilabs because it allows them to offer a number of digital services without having to buy a new digital minilab. Of course, as digital grows, the need for a full digital minilab becomes a necessity, but this bridge solution helps those retailers to start promoting digital services through their locations and build up the business.

Eastman Kodak recently signed an agreement to acquire approximately 5% of Gretag's outstanding shares. What was the reason for this acquisition and how will it effect Gretag's future? Apparently, this is an indication that they do feel they have an interest in our continued operation. With our past history and relationship, their interest seems to be a natural extension.

Gretag and Kodak have been business partners for years. They have installed nearly 11,000 minilabs, Gretag minilabs, throughout the world, so Kodak and Gretag are not new to partnering. They are an important distributor of our equipment, and therefore have special interests in our continued success.

When you look at the markets that we as separate companies address-the on-site and central lab photo processing markets. We do share common goals, problems etc. So, it's only natural that we continue to have formal business relationships. Currently we have OEM agreements with Kodak to supply the new digital minilab to Kodak. It's called the Gretag DLS, and is the Kodak version of our MasterFlex Digital minilab. We're also installing our Synex Lab Data Management System that implements the new version 4.0 of PfDF, and dramatically improves workflow in their central labs. It also allows these labs to have the foundation for implementing digital technology and introducing digital equipment into their lab's workflow, alongside their "traditional" analog equipment.

With a history of providing minilabs to Kodak's Qualex program, we are also supplying spare parts. Part of our redefined relationship, we have negotiated to continue that, as well as to provide Kodak with the assurance that they will always have access to spare parts for the multitude of minilabs that they have in the marketplace.

As to the investment in Gretag, and the approximately 5% interest in the company, I look at this as Kodak's confidence in our abilities to perform as a company. Obviously, it does help to ensure our financial stability.


   







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