After a successful series of product launches, Kodak targets patent infringers. Here’s what I think is really going on.
Kodak has been trying, at times clumsily and with varying degrees of success over the past ten years or so, to evolve from a traditional film company to a cutting-edge digital innovator. Lately, they’ve been finding their footing.
Kodak on the rise
The big complaint against Kodak’s digital cameras is that most of ‘em have been boxy, uninspired designs. Yes, there are innovations aplenty within, but the packaging and positioning did at times seem to be out of a previous decade.
That’s changing. Take a look at the products Kodak served up last week at CES: slick, eye-catching designs, filled with high-tech and some never-before-seen innovations. A waterproof, pocket-sized HD Video camera, a touchscreen-operated uber-slick digital camera (it even sports a goosed-up Kodak logo) were introduced. Even the new product names—Pulse, Slice, Playsport—have a nice ring to them and the products are positioned to compete with the top electronics players.
At the same time, Kodak’s sensors are finding their way into high-end cameras, such as the Leica M9, image sharing services have been improved and the company has been shedding its less profitable divisions. A lot has been going on behind the scenes.
Kodak is also utilizing social networks—especially Twitter—to engage consumers. The Playsport, for instance, was named by Kodak’s Twitter and Facebook fans, and Kodak reps are posting daily and engaging in conversations. That’s a smart move.
And they've produced some viral videos to get the message across, like this classic from 2006:
They’re starting to get it, and that’s all nice and warm and fuzzy and I say, good for them and good for the industry.
Then they brought in the lawyers
Then there’s the dark (but apparently necessary) side of the coin…litigation. Kodak has started to get more aggressive in protecting its intellectual property, and it’s going after anyone and everyone who they feel ripped off Kodak-grown technology. Earlier this week, Kodak announced it had gotten Samsung to agree to a cross-licensing agreement after months of legal wrangling. Yesterday, Kodak announced patent infringement lawsuits against Apple and RIM over technology being used in iPhones and Blackberries, respectively.
Both the iPhone and the Blackberry have digital cameras built in, and Kodak claims that some of the technology behind these cameras is theirs. The specific technologies have to do with image preview and processing images at different resolutions, and how different software within the smartphones communicate with each other—itself a subject of a successful lawsuit that Kodak filed 6 years ago against Sun Microsystems.
Kodak says it doesn’t want to kill ant innovative, popular products. According to Kodak’s VP and Chief Intellectual Property Officer Laura Quatela, they only want to be fairly compensated. “Our primary interest is not to disrupt the availability of any product, but to obtain fair compensation for the use of our technology,” Quatela says. “There’s a basic issue of fairness that needs to be addressed. Those devices use Kodak technology, and we are merely seeking compensation for the use of our technology in their products.”
LG, Motorola, Nokia, and Sony Ericcson are among companies that have licensed Kodak technologies and are paying Kodak royalties.
What’s really going on here?
Kodak is an innovative company whose technology is being widely used, but public perception is that it’s a dinosaur, and its most innovative days are behind it. This perception hasn’t been helped by years of poor financial reports. The truth is that Kodak continues to innovate and is constantly filing patents for cutting-edge technology that finds its way into more products that the general public realizes because these products don’t necessarily say “Kodak” on the front.
So, here’s my theory: Through its social networking presence, introducing sleek, attention-grabbing new products, and aggressive, well-publicized legal action against big companies to collect compensation for using technology that they say is rightfully theirs, Kodak is trying to change public perception and improve its bottom line.
They’re saying, “we’re everywhere, we’re innovating, and we want you to know it.”
It wasn’t long ago that pundits were preparing Kodak’s obituary, and now Kodak is fighting back. It is sending a message to consumers—and stockholders—that it is going to war on multiple fronts to fight for its long-term viability.
It’s a long-overdue, coordinated effort.