AHEAD OF THE CURVE: Vendors can’t afford to wait

  • Tom Yager (InfoWorld)
  • 13 August, 2003 14:53

Within a couple of weeks of each other, Sun and Eastman Kodak announced disappointing sales of their signature products. Demand for Sun’s servers isn’t keeping pace with projections, and Kodak is having an increasingly hard time milking its old cash cows — photographic film, paper, and chemicals. Neither company is hoisting the white flag, mind you. But as Paul Simon sang in his famous ode to the finest and most fickle slide film ever made, I can read the writing on the wall.

It isn’t that Sun and Kodak didn’t get the message. Sun is wriggling out of the hardware-company box it’s been in from the beginning and is fighting to establish credibility in a technology area (software) that was overcrowded by the time it climbed in. Kodak failed to predict the rise of inexpensive digital SLR (single-lens reflex) cameras from Nikon and Canon. Success in a changing marketplace isn’t merely a matter of what you do, but when you do it. Kodak’s dilemma is a particularly good illustration of that concept. It’s rich with parallels to recent goings-on in the IT space. Kodak struck a bargain with Olympus Optical in 2002 to develop a new digital camera technology dubbed “Four Thirds”.

The deal looked promising for both companies. Kodak would compete with Sony in the profitable image-sensor business. Olympus would get its first digital camera with interchangeable lenses. Other vendors could license the sensor and even the lens mount, potentially creating a busy market for compatible cameras, lenses, and access­ories.

The plan was sound in all ways but one: timing. The first Four Thirds camera (the Olympus E-1) only recently entered public trials. Before Kodak and Olympus could get to market, giants Nikon and Canon redesigned and slashed prices on their own interchangeable-lens digital cameras. And ironically, Olympus’ own E-20 digital SLR presents stiff competition for Four Thirds. By the time Four Thirds made it to market, others were already meeting the needs the technology was designed to satisfy.

Kodak never got the hang of serving the volume market, and neither did Sun. The planning Kodak did prior to its announcement in 2002 failed to anticipate where the market would be now. It must have seemed unlikely to Kodak that Japan, with economic troubles of its own, would develop second-generation products for the lackluster US market. Kodak missed something that its competitors understood: No matter what our economic conditions are, consumers will always buy certain products. Digital cameras are an example. Canon and Nikon saw no need to scale back their R&D.

The Four Thirds system is bound to be well received. However, nobody gets points for their good name anymore — the market will not save seats for Kodak or Sun for sentimental reasons.