Kodak Axes Digicams, but keeps film

[Loren Sattler]

Received an email from Freestyle Photo today claiming film division sales at Kodak were up 20% last year. Here is the email:



Eric Joseph
Senior Vice President Merchandising and Product Development
Dear Valued Freestyle Customer,
The recent announcement by Eastman Kodak Company that they have voluntarily applied for Chapter 11 restructuring comes at no surprise. This is a situation that has been brewing for quite some time and we have received many calls and emails from customers voicing their concern over the future of silver-halide, traditional photographic materials. We have never relied too heavily on any single supplier for our future. As opposed to what you are reading in the media, interest in Film, Wet Darkroom and Historical Photographic Processes is not declining. If it were, Freestyle would very quickly be forced to change course, focusing its efforts on other products. The media tends to dwell on the negative, ignoring the details of a situation to deliver quick sound bites that will capture your attention.

Here are some facts to consider:
Kodak's sales in their film division increased 20% last year, and this division continues to be a profitable segment. They have billions of dollars in assets. Citicorp Group just gave them $950 million to help fund their restructuring efforts which will continue for 18 months.

Sounds like Kodak will be around for a while longer and that Citicorp is pretty sure they are going to get their money back with interest. The film division seems to be doing quite well and may even prosper under new management as a separate entity. Regardless of what happens, Freestyle is prepared to make a sizable investment in product to keep important products available for years to come.

Kodak film is not the only brand of product Freestyle sells. While Kodak is an important and high volume supplier of ours, in actuality, we do more business individually with Harman Technologies in Ilford Brand B&W Film and Paper, Foma, Fotokemika and Adox brands. These brands are totally committed to continuing manufacturing for the foreseeable future and have absolutely no plans to stop production as sales continue to be quite robust. They have already taken necessary steps to restructure their facilities for long term survival.

As individual items have been discontinued over the years, folks have adapted to the ever changing product selection and have continued creating their art and means of photographic self expression. While we are to some extent limited by the availability of products it by no means hinders creativity.

Hopefully some of these thoughts will reassure those who are nervous. Know that Freestyle continues to be THE driving force in traditional photographic products and that our commitment is stronger than it has ever been.

Sincerely,
Eric Joseph
ej@freestylephoto.biz

 

[Curt]

I know it's a poor venue for discussing this, but I took a picture photographed with the new iPhone 4S, and I did some minor adjustments in Photoshop, and subsequently printed an 8.5 x 11 on the Epson R2400, and it is a gorgeous print! The camera in that phone is actually damned good, especially in low light it's miles better than my own iPhone 4, and better than the little Nikon P&S digital camera too. I don't think there's a future for digital cameras other than what's in a phone, or an SLR. I wouldn't be surprised to see an SLR that you can dock the iPhone to either, or have pictures transferred via Bluetooth while you're shooting. The possibilities are endless, and I believe we've only just seen the beginning yet.

I don't know if that adds anything to the discussion or not, as I feel I'm digressing a little, but in my mind what's happening at Kodak will hopefully allow the company to survive, while some really tough sacrifices have to be made. It's bound to have sad consequences, but hopefully some good news for those that still have a job.

Another off the topic; there was a show on tv about the top 100 all time inventions. The panel of scientists and others in various fields named the number one all time invention the smart phone. It has radically changed our existence on the planet in so many ways.

 

[clayne]

That's half the problem.

The other half is plunging demand and the decline of processing labs and no one making the devices to put your product into.

That is the problem. It's really the only problem regardless of Ch.11.

Does anyone honestly think the new Kodak with creditors turned into shareholders is going to back film given the drop in demand and no one making cameras?

Plunging demand!

Studios dumping their Panaflexes in the back lot dumpsters this weekend!!

Mass recycling of all existing film into ingots at the end of the month!!!

Give it a flipping rest.

 

[DWThomas]

It is unusual for me to be optimistic, but I'm not sure I see the current lack of film camera production as much of an obstacle. If a few years hence a market is identified for new cameras, and given there is a century of existing film camera history/experience/designs, it would seem a junior engineer project for Olympicanikon to modify a d!git@l SLR body to take film instead of a sensor. Surely it would be a hell of a lot less effort than going in the other direction.

Geeze -- resurrect the Argus C3, in polycarbonate with an electronic shutter -- take THAT Holga!

DaveT

 

[Aristophanes]

Received an email from Freestyle Photo today claiming film division sales at Kodak were up 20% last year. Here is the email:



Eric Joseph
Senior Vice President Merchandising and Product Development
Dear Valued Freestyle Customer,
The recent announcement by Eastman Kodak Company that they have voluntarily applied for Chapter 11 restructuring comes at no surprise. This is a situation that has been brewing for quite some time and we have received many calls and emails from customers voicing their concern over the future of silver-halide, traditional photographic materials. We have never relied too heavily on any single supplier for our future. As opposed to what you are reading in the media, interest in Film, Wet Darkroom and Historical Photographic Processes is not declining. If it were, Freestyle would very quickly be forced to change course, focusing its efforts on other products. The media tends to dwell on the negative, ignoring the details of a situation to deliver quick sound bites that will capture your attention.

Here are some facts to consider:
Kodak's sales in their film division increased 20% last year, and this division continues to be a profitable segment. They have billions of dollars in assets. Citicorp Group just gave them $950 million to help fund their restructuring efforts which will continue for 18 months.

Sounds like Kodak will be around for a while longer and that Citicorp is pretty sure they are going to get their money back with interest. The film division seems to be doing quite well and may even prosper under new management as a separate entity. Regardless of what happens, Freestyle is prepared to make a sizable investment in product to keep important products available for years to come.

He' right on the first score (in bold), but he drank some Kodak sales pitch Kool-Aid on the second.

From Kodak's SEC filed AR:

"Due to changes in technology and customer preferences, the market for traditional film and paper products and services is in decline. Our success depends in part on our ability to manage the decline of the market for these traditional products by continuing to reduce our cost structure to maintain profitability."

Total net sales of Kodak FPEG:

2008 = $ 2,987
2009 = $ 2,257
2010 = $ 1,767
2011 = $ 1,131 (to Q3 only)

Kodak FPEG revenues were dramatically down last year. They did not grow. They are not projected to grow. They are projected to steadily decline.

Has Kodak reduced the cost structure? Probably. But they are going to hit a point where demand reduces and supply costs can no longer shrink, and it will happen on the creditors forecast, not Kodak's, which means 13 months from now.

Citicorp will get their money back because they have a lien on Kodak's hard assets, like land. That's how creditors in possession secure collateral ahead of bondholders.

Freestyle is mail order and big. They are picking up the volume from the Mom & Pop stores that used to be all over. That does not mean that overall consumption of film products is not declining. My local Craigslist says it is. So does my national one.

 

[Roger Cole]

I've heard nothing about an Ilford B&W processing service. Even assuming it exists, it has to account for processing only a tiny fraction of the film they produce. They seem to be surviving quite nicely without C41 (except XP2 Super, and that's black and white.)

My SWAG is that the vast majority of black and white film sold today is processed at home or in school or club darkrooms by artists and hobbyists, generally the same ones who shot it. Admittedly it's a SWAG, If anyone has any real data to the contrary, not just a contrary SWAG, I'd like to see it.

 

[MattKing]

You can make a profit on any product as long as your expenses are lower than your revenues. Elementary, right?

For film to survive, all of the excess expenses have to be removed from the equation. Paying people who no longer work for Kodak isn't going to be possible if Kodak film is to survive. The pension is a thing of the past, unless, of course, you work for the government.

In most cases, where retired employees are concerned, the pensions themselves are fairly well funded and the funds are held in trust, outside the bankruptcy. The additional benefits (health premiums in particular) are definitely in jeopardy.

I don't know what the specific US numbers are, but the funds set aside for Canadian Kodak retirees have been actuarially valued by the Ontario government's department that provides oversight for private pensions at a value equal to 96.2% of the projected demand on those funds. Technically, of course, Kodak Canada is not bankrupt - but its owner (Eastman Kodak) is.

 

[Steve Smith]

I've heard nothing about an Ilford B&W processing service. Even assuming it exists.....

It does.

http://www.ilfordlab.com/


Steve.

 

[Roger Cole]

It does.

http://www.ilfordlab.com/


Steve.

Ok, thanks. I guess I wouldn't normally be aware of it being in the US. I do spend some time on FADU but that's pretty darkroom-centric so no surprise there either.

Looks like a good service (only the resident under-bridge dwellers would turn this into an oracle of the demise of film) but the prices seem pretty steep, or at least they are once I apply the exchange rate. Color in the US is a good deal less expensive than that. Then again, color in the US is generally a good deal less expensive than commercial black and white in the US too.

I still suspect the vast majority of black and white film sold is processed and either scanned or optically printed in home, school or club darkrooms by the same people who exposed it.

 

[Steve Smith]

Looks like a good service (only the resident under-bridge dwellers would turn this into an oracle of the demise of film) but the prices seem pretty steep, or at least they are once I apply the exchange rate.

I have not used the service myself but I have heard good reports. The last time I looked, the prices were a bit higher than UK colour processing but not excessively so (most things are more expensive here anyway).
A nice side product of this service is that digital users can get black and white prints on real black and white photographic paper. From what I remember, I think Ilford worked with Fujifilm to convert a minilab machine to run a black and white process.

I recall reading about a similar service in the US but don't remember the details now.


Steve.

 

[perkeleellinen]

Ilford use a converted mini lab which they load with MGIV. The prints come back in a nice box, they're on thick paper with white borders. Friends who I've directed toward the service have all been struck by the quality of the 'real' photo paper. In some respects it could be seen as a gateway into darkroom printing - 'you can do this cheaper at home on this great paper'.

 

[railwayman3]

Ilford use a converted mini lab which they load with MGIV. The prints come back in a nice box, they're on thick paper with white borders. Friends who I've directed toward the service have all been struck by the quality of the 'real' photo paper. In some respects it could be seen as a gateway into darkroom printing - 'you can do this cheaper at home on this great paper'.

I find the Ilford service excellent and reliable. Not quite as cheap as C-41 "D&P", but it does include the cost of UK postage, both ways, which, (at present Royal Mail rip-off rates for anything larger than small letter), probably accounts for about 30% of the price!!

 

[j-dogg]

Just found out about this today, good move Kodak

When I get some cash together I have a ton of P3200 and Tmax400 I have to get through.

 

[pierods]

Maybe we get to keep Tri-x...

http://www.dpreview.com/news/2012/02/09/Kodak_exits_camera_business

Kodak’s continuing consumer products and services will include:....The traditional film capture and photographic paper business, which continues to provide high-quality and innovative products and solutions to consumers, photographers, retailers, photofinishers and professional labs.

And maybe they will develop a new developer, beyond xtol...maybe...

 

[Roger Cole]

I find the Ilford service excellent and reliable. Not quite as cheap as C-41 "D&P", but it does include the cost of UK postage, both ways, which, (at present Royal Mail rip-off rates for anything larger than small letter), probably accounts for about 30% of the price!!

Heck if there's no handling charge either that makes a BIG difference. I send my color to Dwyane's (except 4x5 which they don't do) and they charge $4.50 shipping and handling for the first roll and $0.50 for each additional up to four meaning I wait until I have four rolls. This does not include postage TO them which usually runs me between $2 and $3 for four rolls. A 36 exp roll with 4x6 prints is $6.99 or $9.95 with 5x7 prints. I always get a cd of scans too which is another $2.99 each.

 

[mesh]

Great news... still think it might be wise to stock up a little though ;-)

 

[Steve Smith]

Most UK colour film processors which I use have a FREEPOST address and return postage isn't too bad.

I usually use Transpacolor or Peak Imaging.



Steve.

 

[tomalophicon]

Lovin' your new website David.

 

[Roger Cole]

Dwayne's, that I use for color, does do B&W I just didn't know the rates because I do my own B&W so I looked them up. $9.99 for 36 exposure develop and print with 4x6 prints. $13.99 for 5x7 prints. Of course with just one roll the shipping and handling will add nearly 50%, and that's just return. It gets much cheaper with more rolls.

I'm about send three rolls of C41. If it were all 36 exp. 35mm, three rolls with a single set of 4x6 prints would be $35.47, not counting postage to them (no such thing here as a FREEPOST address, but there can be pre-paid mailers if someone wanted to supply them) which I know from experience will be about $2.75 for me. A currency conversion web site makes that 24.15 GBP versus 32.97 GBP for Ilford over there. But I've no idea what Dwayne's is printing these on. My guess would be RA4 paper in a color processor with a more or less neutral filter pack. I'd bet Ilford's is considerably better. And, as you say, we seem to have lower prices on most things.

So it seems black and white is pretty available here if one wants it. At Dwayne's it's $3 per 36 exposure roll more than color, a significant difference of nearly 50% but not absurdly so. (The same three rolls I worked out above to cost $35.47 would be $32.47.)

I still wonder how much of the B&W film sold is sent out or done locally by a commercial photofinisher versus being done at home or school.

 

[Steve Smith]

So it seems black and white is pretty available here if one wants it.

Do Dwayne's print on real black and white paper?


Steve.

 

[Roger Cole]

Do Dwayne's print on real black and white paper?


Steve.

I've no idea. See above, "I've no idea what Dwayne's is printing these on. My guess would be RA4 paper in a color processor with a more or less neutral filter pack." That's just a guess, though. I bet Ilford does it better. Not that Dwayne's is bad - they've done fine by me for color. But Ilford knows black and white, and given it's real Ilford paper, I'd bet it's better.

 

[Steve Smith]

See above, "I've no idea what Dwayne's is printing these on."

Yes. There does seem to have been a clue in your words!


Steve.

 

[Thomas Bertilsson]

I've heard nothing about an Ilford B&W processing service. Even assuming it exists, it has to account for processing only a tiny fraction of the film they produce. They seem to be surviving quite nicely without C41 (except XP2 Super, and that's black and white.)

My SWAG is that the vast majority of black and white film sold today is processed at home or in school or club darkrooms by artists and hobbyists, generally the same ones who shot it. Admittedly it's a SWAG, If anyone has any real data to the contrary, not just a contrary SWAG, I'd like to see it.

SWAG = http://en.m.wikipedia.org/wiki/Swag
I'm trying to work that into your text. Which of the meanings are you referring to?

And what does FADU stand for?

Sorry to pick on you Roger, but abbreviations are cool for the user, saving a few keystrokes, but for readers such as I, who have to look them up, it's a pain in the back.

 

[keithwms]

No growth unless new cameras in volume are also manufactured.

Not true. At all.

You seem to be assuming that net growth is essential and that the mini-Kodak emerging from chp. 11 will operate in the same way they do now. Of course they will not! It is extremely unlikely that the same facilities will be used to make the same products at the same scale. So what? You can turn a very tidy profit in a declining market, as competitors get popped off one by one and price point changes.

Philip Morris / Altria is a prime example of a company that operates in extremely adverse conditions and went through many production and distribution changes.... and is extremely profitable today . But guess what... cigarette consumption is in steep decline in the US and has been since 1998.

http://www.cdc.gov/tobacco/data_statistics/tables/economics/expdcom/

And yet, if you bought PM stock in the last few years, I reckon you'd be pretty happy with it right now...

http://www.google.com/finance?client=ob&q=NYSE:PM#

And obviously, the addictive tendencies of film are quite similar to those of nicotine Wait, that's it, eureka, I have a new product!!!! I will call it a digipatch. This will be a patch that you wear on your arm, and it slowly introduces a very small number of pixels into the bloodstream, aiming to suppress urges to shoot film. Yes! I think I am on to something, this is even bigger than digitat...

 

[CGW]

Film demand has dropped precipitously. No one is disputing that. But the bigger question is whether it (discounting motion picture which we know will continue to fall off a cliff) has declined as far as it's going to. Is the current level sustainable or possibly due for growth?

I don't really know and I submit that no one else can be sure either!

The argument that no one is making new film cameras looks more reasonable than it is. With the way demand has dropped and the life span of older quality gear being dumped on the market, there isn't much demand for new cameras right now. As older cameras wear out, are broken and become unservicable, it remains to be seen if an interest in film photography will remain large enough to bring new cameras to market. Notice that new large format cameras ARE being made, but of course this has always been a small market and the ones being made are simple enough to be a bit of a cottage industry.

Mechanical cameras aren't that difficult to make. Heck, with the advances in 3D printing technology in ten years you may be able to use a $500 (currently the cheapest are about $2000) 3D printer to make all the parts you need, save for maybe a lens, for a serviceable plastic camera right at home from your computer. If you break a part just print another one.

I agree that film won't survive solely on Kodak's shoulders. The loss of commercial photo finishing is much lamented, but I have no problems sending my film out, even though there are labs in Atlanta. Heck, it's easier for me to mail it to Dwayne's than drive into Atlanta from the suburbs to drop it off then to pick it up. And black and white has been "dead" to commercial photofinishing for a couple of decades but still survives for hobbyists and artists who do their own developing and printing or send it to custom labs - very rarely to large volume non-custom ones.

Where have you been for the past decade? The major makers killed film cameras because--wait for it--there was insufficient demand. The film ecosystem as it was known to many has simply collapsed. What leads to this bizarre belief in a resurrection of film camera manufacture? Hope for a reverse "cargo cult" where Nikon F2 bodies and rolls of K-64 rain down from above?