Kodak 2008 Annual Report Download - page 8

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Kodak also distributes Kodak EasyShare desktop software at no charge to consumers, which provides easy organization and editing
tools, and unifies the experience between digital cameras, home printers, and the Kodak Gallery services.
Imaging Sensors: Kodak's line of CCD and CMOS sensors provides an attractive market opportunity, including mobile, automotive,
industrial and professional imaging sectors. Kodak has leading sensor architecture intellectual property positions, and operates with
an "asset light" manufacturing strategy that includes relationships with key industry players.
All-in-One Inkjet Printers:In February 2007, Kodak introduced the KODAK All-in-One Inkjet printers as a major initiative to drive
future revenue growth and earnings. Four key components enable this breakthrough market entry: 1) a proprietary high-speed inkjet
printing system; 2) nanoparticle pigment-based inks; 3) instant-dry, porous papers; and 4) Kodak’s unique Image Science
technologies. Additionally, the system is designed with a permanent print head. This unique offering targets the high-volume
document and photo printer market with a breakthrough value proposition delivering dramatically lower cost per printed page as
compared with competitive products. The inkjet operating model leverages Kodak technology and the efficiency of the current
industry infrastructure to achieve an “asset light” approach to deliver this unmatched value proposition to the marketplace.
Today, the EASYSHARE All-in-One line of consumer inkjet printers has expanded into more markets. Sell-through of inkjet printers
for the full year more than doubled compared with the prior year, resulting in an estimated installed base of more than 1 million
printers as of December 31, 2008.
Marketing and Competition: The Company faces competition from other online service companies, consumer electronics and
printer companies in the markets in which it competes, generally competing on price and technological advances. Rapid price
declines shortly after product introduction are common in this environment, as producers are continually introducing new models with
enhanced capabilities, such as improved resolution and/or optical systems in cameras.
The key elements of CDG’s marketing strategy emphasize ease of use, quality and the complete solution offered by KODAK
Products and Services. This is communicated through a combination of in-store presentation, online marketing, advertising, including
direct television advertising, and public relations. The Company's advertising programs actively promote the segment’s products and
services in its various markets, and its principal trademarks, trade dress, and corporate symbol are widely used and recognized.
Kodak is frequently noted by trade and business publications as one of the most recognized and respected brands in the world.
Film, Photofinishing and Entertainment Group (“FPEG”) Segment
Sales from continuing operations of the FPEG segment for 2008, 2007 and 2006 were (in millions) $2,987, $3,632, and $4,254,
respectively.
This segment is composed of traditional photographic products and services including paper, film and chemistry used for consumer,
professional and industrial imaging applications and those products and services used in the creation of motion pictures. The
Company manufactures and markets films (motion picture, consumer, professional, industrial and aerial), and one-time-use
cameras.
The market for consumer and professional films, traditional photofinishing and certain industrial and aerial films are in decline and
are expected to continue to decline due to digital substitution.
The market for motion picture films, however, has remained relatively stable, with any significant impact from digital substitution still
expected to evolve sometime into the future. The future impact of digital substitution on the motion picture film market is difficult to
predict due to a number of factors, including the pace of digital technology adoption in major world markets, the underlying economic
strength or weakness in these markets, the timing of digital infrastructure installation, and the ability to finance the installation of
digital systems. However, during 2008, the Company noted a decline in the rate of digital adoption primarily due to instability in the
financial markets.
Marketing and Competition: The fundamental elements of the Company’s strategy with respect to the photographic products in
this segment are to maintain a profitable business model, serving customers for traditional products while aggressively managing our
cost structure for those businesses that are in decline.
The Company’s strategy for the Entertainment Imaging business is to sustain motion picture film’s position as the pre-eminent
capture medium for the creation of feature films, television dramas, and commercials. Selective investments to improve film’s
superior image capture and quality characteristics are part of this strategy. Kodak has the leading share of the origination film market
by a significant margin, led by the widely acclaimed and OSCAR-award-winning VISION2 series of motion picture films, and the
positively received VISION3 series of motion picture films initially launched in late 2007.
The distribution of motion pictures to theaters on print film is another important element of the business, one in which the Company
continues to be widely recognized as the market leader. Price competition is a bigger factor in this segment of the motion picture
market, but the Company continues to maintain the leading share position, with several multi-year agreements with major studios.