[pure-silver] Re: Kodak Discontinuing All Black and White Paper
- From: "Richard Knoppow" <dickburk@xxxxxxxxxxxxx>
- To: <pure-silver@xxxxxxxxxxxxx>
- Date: Fri, 17 Jun 2005 15:13:30 -0700
----- Original Message -----
From: "Nick Zentena" <zentena@xxxxxxxxxxxx>
To: <pure-silver@xxxxxxxxxxxxx>
Sent: Friday, June 17, 2005 2:25 PM
Subject: [pure-silver] Re: Kodak Discontinuing All Black and
White Paper
On Friday 17 June 2005 16:59, Joseph O'Neil wrote:
So my comment/question/observation is, with
Kodak film noticably
more money for than the competition, is this some sort
of a long term plan
to find a reaosn to phase out B&W products, or maybe just
poor planning? I
can understand T-Grain films being more money, at least
from a marketing
perspective, but Tri-X is an older formulation, no reason
it should be more
money than a film that is made overseas and has the added
cost of shipping
across the Atlantic ocean.
You're confusing cost with price. They might have sold
less product with a
lower price. Think about that Forte film. How many people
refuse to buy
Forte,Efke etc because it's "cheap" and therefore not any
good. OTOH stick
the Forte in a nicer box. Raise the price. Watch the same
people rave about
the special film worth any price.
Agfa 4x5 was even cheaper then Ilford. I can't get any
more-(
Selling your product cheap tends to convince people it
isn't worth buying.
Nick
Another problem here is the cost of selling a product
which varies with manufacturers. Sometimes the
administrative cost is too high, as it was when I worked for
Hewlett-Packard many years ago. The company estimated it
cost something like $300 for it to sell anything (other than
parts) so low cost items were simply not made.
Another problem is the reality of having to deliver a
reasonable return on investment to stockholders. You will
hear a lot about this. Depending on operating costs and
other costs product prices are untimately based on this
factor. Kodak is probably charging more because they have to
in order to meet the requirements of the stockholders.
Remember, in a publicly traded company the responsibility of
the board of directors and other management is primarily to
the stockholders and stockholders can (and have) sued
directors when return was too low. There are criticisms of
this system but the fact is that it exists and must be
catered to. Some businesses choose to become privately held.
This requires a lot of capital so its not often done. It
gives the management greater flexibility because they can
concentrate on long-term planning that will result in an
ultimate high return rather than having to constantly worry
about quarterly performance. In addition to the usual
problems of managing cost of operation Kodak management has
been dealing with a sinking ship for a long time. They have
tried various ways of plugging up the leaks, some worked
some didn't. In this case they have abandoned a product line
which is no longer profitable and shows every indication
that it never will be again.
It is possible that Kodak could sell off some of its
technology but we don't know that it hasn't tried that
already unsuccessfully. Keep in mind that making B&W
sensitive materials is now based on pretty well known
technology so its possible that Kodak no longer has any
secrets or patents which are worth much especially since any
buyer would likely be a small outfit making small volumes of
product and unable to pay very much for someone else's
knowledge.
Kodak's history is one of attempting to create a complete
monopoly on photographic materials. This was George
Eastman's aim and he was very successful at it until stopped
by the anti-trust actions of the Theodore Roosevelt
administration in the mid teens of the last century. Some of
this lateral and vertical integration was to enable Kodak to
be independant of outside suppliers. Eastman early on had
problems with sources of paper stock for printing paper. The
only sources were a couple of French paper mills. Because
Eastman was concerned that these sources might be absorbed
by some other company he decided to get into paper making.
Kodak built and operated specialty paper mills at Rochester
(and I think elsewhere) to provide a reliable supply.
Eastman also got into other aspects of providing raw
materials which were vital to the business. He also engaged
in sales practices which would be illegal today but were
quite routine in his time. Among these was having two tier
pricing for Kodak products, one for stores which agreed to
handle Kodak exclusively and another for stores who wanted
to carry other manufacturer's products. The excluseive
stores got a very large discount, the other stores had to
pay essentially retail. Beause Kodak had such a lock on
products by that time they were successful in this ploy.
The point of this history is to provide some
understanding of Kodak's original organization and the
nature of the market they sold to. In short, Kodak became
very large because the market was vary large and to a great
extent one which wash created by them. Before George
Eastman began making flexible film (orignally on paper
backing) photography was the baliwick of specialists. What
Eastman did was to open up the new, and tremendously large,
market of amateur and snap-shot photographers. It is
primarily that market that the company has relyed on ever
since for most of its income. That market has now been
nearly destroyed by the advent of electronic imaging. So,
Kodak has little choice but to find other activities that
will support the investment made in it by its stockholders.
Like many other companies Kodak will become a name for an
investment rather than a specific kind of product. This is
pretty common. Examples are Loews Incorporated, originally a
vaudeville agency and theater owner, later branching out
into motion picture production (it owned the controlling
interest in MGM for years). Loews is now no more than a sort
of fancy basket investment company having no connection to
any of its original businesses. Even such large companies as
General Electric do not confine themselves to any single
business or type of business. For some time GE's most
profitable division has been GE Capital Co., a company
mainly in the business of leasing out large ticket capital
equipment to other companies. For instance, nearly all
commercial aircraft are owned by GE. Kodak may wind up in
the realestate or hamburger business for all anyone knows.
---
Richard Knoppow
Los Angeles, CA, USA
dickburk@xxxxxxxxxxxxx
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