World Exclusive Interview! James Langley of Kodak goes one-on-one with Andy McCourt

Kodak has been associated with supplying the professional graphic communications industry for many years. The first colour separation scanners in the early 1950s were co-developed by Kodak and Time Inc., attuned to the spectral sensitivity of Kodachrome transparencies. Whilst successful in graphic arts film and proofing, Kodak has not enjoyed the same brand dominance in end-to-end graphic communications as it has with photography.

Recent developments indicate this may be about to change. On January 12th, Kodak announced that it was acquiring all of Sun Chemical’s 50 per cent share in Kodak Polychrome Graphics, yielding total ownership of the film, plate and proofing giant to Rochester. This followed Kodak’s May 2004 acquisition of Heidelberg’s 50 per cent in the NexPress joint venture, its prior takeover of Scitex’s Versamark high volume inkjet business, Encad’s large format inkjet and 3M’s Matchprint proofing.

What does all this mean? I posed some questions to James Langley (pictured), President of Kodak’s Graphic Communications Group, and a Senior VP of the Eastman Kodak Company.

A McC – Kodak has suddenly, since drupa 2004, emerged as sole owner of several key graphic communications/print technologies. Is the company now placing more focus in this area than in consumer digital imaging?

JL: Kodak outlined a strategy in September 2003 that refocused the company on three key markets: Consumer, Health and Commercial (which includes Graphic Communications) – each of these areas serve as pillars that support Kodak’s digitally oriented growth strategy. Since the September 2003 announcement, the company has been delivering on its strategy.

With the Graphic Communications business, we have made several key acquisitions and are in the process of assembling the industry’s broadest product portfolio. Think about this for a second: with the pending acquisition of KPG, Kodak will be able to deliver customers high-speed document scanning technology, pre-press, soft and remote proofing, computer to plate, direct imaging, digital, on-demand colour and monochrome presses, wide format inkjet and continuous inkjet technology for high-speed, high volume applications. We intend to deliver these products through an integrated sales organization and support it with an integrated service offering.

Kodak also continues to deliver on its digitally oriented strategy in other key areas. For instance, in the consumer market, Kodak has become the number one seller of digital cameras in the United States.

A McC – Will Kodak fully integrate the acquired companies into a single Kodak entity servicing the printing, publishing, packaging and document markets? There seems to be a lot of leveraging available between these divisions.

JL: It is our intention to present a single face to the customer. We will have an integrated sales force with a strong account management structure. Customer relationship managers will serve customer needs, and product specialists will back them up. We also will have an integrated service organization, which we announced last year and we are in the process of creating, leveraging Kodak’s world-class service organization.

A McC – NexPress and Digimaster are the ‘Rolls-Royces’ of digital presses but are expensive. Would Kodak consider franchising 'NexPress Print Centres' in the way Kodak Express 1-hour photo labs are franchised?

JL: The Graphic Communications Group is focused on the delivery of robust solutions with solid duty cycles for the production market space. The DigiMaster and NexPress have extremely high reliability and availability to meet the needs of the production printing market. The total cost of ownership makes users of our technology very cost competitive in this market.

We have stated previously that we need to expand our product portfolio, and we intend to do that. We have no plans to enter into the franchising business. Kodak will continue to focus on serving our customers and driving demand for our products to make our customers’ businesses more successful.

A McC – Any more acquisition areas envisaged in the future, such as CTP hardware, workflow software, Cutsheet papermills etc?

JL: I feel very good about the progress we have made thus far. Right now, we are focused on integrating the businesses we have already acquired. Of course, as a matter of policy, we never discuss acquisition plans. That said, the company has always maintained that if an appealing opportunity presented itself, we would act accordingly.

A McC – Do you have any other comments?

JL: We have made a tremendous amount of progress in a short period. The Graphic Communications Group became an operating unit of Kodak in September 2003; at that time, it consisted of two JVs (KPG and NexPress) and a wholly owned subsidiary (Encad). Once the KPG acquisition is finalized, the Graphic Communications Group portfolio will include CTP, pre-press, remote proofing, direct imaging, wide-format inkjet, on-demand digital colour and monochrome presses, document scanning, high-speed, high-volume continuous inkjet technology. We will have the broadest portfolio in the industry, and be able to serve a wide variety of markets and customers. We are very excited about what we will be able to offer customers.

My thanks to James Langley for responding to these questions at such short notice.

MY CALL

When a company of Kodak’s size, history and resources devotes so much shareholder capital to an enterprise, you can be sure a lot of homework has been carried out. Kodak is a completely different company in every respect, from the pre ‘digital strategy’ firm of 2002.

The changes began with the appointment of former Hewlett Packard man Anthony J Perez as President and COO in April 2003. Mr Perez spearheaded HP’s efforts to build a business in digital imaging and electronic publishing. The result is a USD$16 billion sector. (Kodak’s total sales are around USD$13 billion).

Five months after Anthony Perez joined Kodak, another accomplished 30-year HP executive joined – James Langley. He has been involved in printing for most of his career and actually wrote the PCL driver language for the HP laser printer. As VP, commercial printing, he oversaw HP’s entry into that market which today manifests itself with the HP Indigo range.

Add to this list of recently-joined people such as Homi Shamir (well known here in Australia when he headed up Versamark for Scitex), Jeff Jacobsen, the dynamic CEO of KPG, and former Xerox and CAP Ventures exec Barbara Pellow (responsible for marketing for Graphic Communications Group) plus the many people who moved over from Heidelberg with NexPress. The result is you have a level of digital imaging know-how at Kodak that has reached escape velocity and is about to go into orbit.

Locally, NexPress has moved into ultra high-technology premises in Melbourne’s ‘Digital Harbour’ and will act as a technical support hub for SE Asia. What remains to be seen is the speed and degree of integration between local KPG, Versamark, NexPress and Encad operations.

On January 21st, Reuters business news service reported speculation concerning Creo that “The company's stock received a boost this month from speculation it could be bought by Eastman Kodak Co.” It’s only speculation, but what a fit that would be!

So, my call is. . . we are looking at one of the major suppliers to the USD$1.2 trillion graphic communications sector for the future. Kodak recognises that, after a long love affair with film and silver halide, the time has come to prepare for going all digital. It probably can not enjoy the same ubiquity in digital consumer imaging, that it enjoyed with ‘you press the button, we do the rest’ photography – it was a late entrant and it’s too crowded, so it must focus on professional and commercial markets to balance and grow its portfolio.

And that means more acquisitions, more integration of what it has and one heck of an exciting time for anyone involved with Kodak’s Graphic Communications Group.

Maybe the new mantra will be; “you punch the pixels, we do the rest?’