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  • CFO IT

Whole New Ball Game

The first decade of E-business was not an unmitigated field of dreams, but some companies are once again ready to take the field.

Like baseball, Eastman Kodak Co. can trace its history back more than a century. In fact, in the same year that the classic poem Casey at the Bat was written (1888), George Eastman coined the phrase “You push the button, we do the rest,” launching Kodak as a wildly successful purveyor of both photographic film and cameras.

Unlike professional baseball, however, Kodak faced a steady diet of competition from Japan, Germany, and elsewhere, reaching its apotheosis with the Digital Age, as cameras were suddenly based on microchips and film looked as anachronistic as the handlebar mustache. Kodak was slow to respond, but in 2003 it made a strong commitment to digital cameras, investing billions and laying off tens of thousands of workers. The company quickly caught up to market leaders Sony and Canon and now leads the U.S. market. Not content to win only in hardware, last year CEO Antonio Perez vowed to transform the company into a major digital player. Key to this strategy was the Internet — and not just as a channel for selling cameras.

“Eighteen months ago we embarked on an internal strategy, called Kodak Connects, to reflect how we are integrating our digital cameras, software, and output services,” says David Rich, vice president of online services at the Kodak EasyShare Gallery, in Emeryville, California. “We looked at our assets, IT, and input devices like mobile phones, digital cameras, and film. We realized that customers might be interested in an E-commerce company that could offer them the ability to upload from their devices to a Website where they could keep their pictures, organize them, and print them from multiple devices, from a printer at home to a retail shop.”

Central to this strategy was the relaunch of www.ofoto.com as the Kodak EasyShare Gallery, at www.kodakgallery.com. Kodak makes money three ways on this new venture. First and foremost is the printing of photographs and photo-related merchandise, everything from T-shirts to greeting cards to calendars and photo books. The second revenue stream comes from subscription fees for online access to photographs taken with mobile phones. The third is a blend of the other two. In July, EasyShare launched a beta version of Gallery Premier, a premium online service that gives customers a personal Web page for $24.99 a year. “You can create your own gallery of photos and content and invite others to see it and order prints,” says Rich. “If you’ve collected photos from the company field day or the Christmas party, you can develop an album of pictures with captions that colleagues can see online and print for a price.” On the horizon is Kodak’s first wireless digital camera — the EasyShare One — which will enable consumers to take pictures and upload them from a Wi-Fi hot-spot to the Gallery service, connecting people with their pictures anywhere, anytime.

The E-business strategy is transforming Kodak: as recently as 2002, 70 percent of its revenue came from traditional photography; this year, the company expects digital revenue to outpace that of traditional products and services. By next month it will offer EasyShare services in 13 countries and expects to have 1.25 billion images under management by year-end.

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