Magazine Article


Kodak Says 'No' To Inkjet Lab; 'Yes' To Dry Film Processing

If the dissolution was a buzz at the PMDA meeting, it was a gigantic roar at the Phogenix headquarters near San Diego. When I heard the news shortly after 4 p.m. EDT, I called the Phogenix office and spoke to one of the execs. He said the office had been given word about 20 minutes earlier and that "it hit like a ton of bricks." "We had a meeting at nine a.m. today on the allocation of production models and on the progress of trade trials. By one p.m., we were out of business."

Taking a freeze-frame photo at the time of the announcement, here is what one would have seen:

The first 15 DFX production units had gone through final testing at HQ and were being prepared for shipment within hours of the announcement. Other units were on the high seas en route from the Singapore production facility with more on the assembly line.
Production releases for 100 units in June with production scheduled for the future already in place.
About 110 people (about 50 transferred from HP jobs and 20 from Kodak) were un-employed. (At this writing there was no information on how many, if any, would be taken back by their respective firms.)
There were six units on Kodak trade trial in New York area locations (Camera Land, ColorTek, Perfect Picture Store, Photo Mission, Pro Image, Bergen County Camera) plus Bob Davis Camera, near Phogenix HQ. They will all be taken out though at this writing the dealers had not been given any specific instructions.
HP had three units on trade trial, one at Future Shops in Canada, a 104-store chain owned by Best Buy.

The Phogenix shutdown came at the last possible minute. It was like the groom failing to show up at the wedding while the bride and all invited guests were waiting. Cost for the affair? One inside source suggested it approached $150 million.

HP and Kodak have chosen to place the blame for the dissolution on matters financial. The trade has come up with its own ideas as to why the HP-Kodak joint venture became undone. Pick a card:
Because the two firms were competitors in other markets: digital cameras, paper.
Because of a conflict with sales responsibility: Kodak was supposed to sell only to the traditional photo trade accounts; HP to non-traditional. But who sells to Best Buy? Kodak, who has included Best Buy in its Atlanta 500-store digital program; or HP, responsible for electronic channels?
Because Carly Fiorina, HP CEO, was unhappy that Anthony Perez (who was the senior HP executive and a 25 year employee who made the original joint venture announcement at PMA 2000) had recently joined Kodak as president and COO.
Because the orders for the DFX unit that were expected by HP never materialized. At PMA, Kodak took orders for 40 Phogenix DFX systems from a German department store chain plus about another 50 orders for delivery in the U.S. HP failed to scratch an order at the show-or since.
Because the print output of the DFX was 250 prints/hour, too low for the needs of an on-site setup.
Because HP was uncomfortable knowing that Kodak's Qualex division would be servicing DFX machines at HP customer locations.