Kodak Launches a Printer Offensive

(page 2 of 3)

The product launch signals the end of a remarkable three-and-a-half-year march to get a potentially revolutionary product out the door. Perez built his team by matching a slew of former HP colleagues with Kodak chemists and nanotechnology experts. Perhaps never before has a challenge to a major company been launched by a rival that knew it so well.

Seeds of the project were planted in the late 1990s, when HP briefly considered acquiring Kodak. During a 15-day due-diligence process, Perez looked over Kodak's patent portfolio. Although HP's board nixed the merger, Perez' prowling later resulted in a joint venture, established in 2000, to produce high-quality inkjet photo printers for retail outlets. The project, Phogenix Imaging, was ultimately a bust, a victim of conflicts between its owners. On May 14, 2003, with the first machines ready for shipment on the loading dock and only a month after Perez had joined Kodak, the two sides announced they would part company.

Big Risks and Rewards

But Phogenix wasn't all for naught. At Kodak, Perez had hired two former top HP printer executives, Bill Lloyd and Philip Faraci, to help him evaluate the consumer inkjet business. In 1979, Lloyd had led the HP team that came up with a key advance in inkjet printing that spawned the industry. As soon as the Phogenix news came down, Lloyd and Faraci were on the phone with about 40 key recruits, many of them former HPers. They couldn't talk about Perez' ambitions yet, but "we called them up and asked them not to take other jobs," recalls Lloyd, now Kodak's chief technology officer.

The crucial go/no-go meeting came on June 25 in Perez' conference room on the 19th floor of Kodak headquarters. Lloyd and Faraci laid out the arguments, pro and con. The risks were enormous. Kodak would be entering a mature business already dominated by a handful of leaders. And with Kodak's turnaround in question, Perez couldn't afford an expensive failure.

But the opportunities were huge, too. Perez decided to sleep on it. He tossed all night at his home in the posh Pittsford suburb of Rochester. In the morning, he made his decision. "The industry had been doing things the same way for 20 years, and it was time for a change," says Perez. "I called up Bill Lloyd and said, 'Go ahead. Let's launch a full program.'"

Startup Mentality

A few days later, a dozen former Phogenix employees were invited to lunch at the suburban San Diego home of David Clark, who had been the Phogenix research and development chief. They sat by Clark's backyard pool with a view of the rugged Poway Hills in the distance, munched on chicken salad, and listened raptly while Clark laid out Perez' audacious plan.

"At first, we thought it was a far stretch. We know how capable HP is and how much technology it has and how much money they spend," recalls Susan Tousi, a 10-year HP veteran who now runs research and development for Kodak's inkjet business. Still, within a few days, all but one of those who had sat by Clark's pool decided to sign on. Tousi did so because she liked the startup mentality and wanted to keep working with people who had become close friends.

Perez wanted to get to market quickly, with a target of three years, so the InkJet Products Group leaders made choices designed to speed up the development process. They worked with technology partners, such as chip-design specialist SigmaTel, rather than trying to design everything from scratch. And once they established their market goals, in late 2003, they never veered from them. The result: a process that took years less than it might have and that required just a $300 million investment.

Last-Minute Crisis

One of the key decisions was choosing pigment as the basis for Kodak's ink, rather than the usual dye. Pigment-based inks hold their colors longer, but typically the colors aren't as vivid. So Kodak engineers had to come up with innovations in ink chemistry and nozzle technology to produce a new kind of ink and printer head and paper that would produce vivid colors that also last.

The inkjet printing process is a wonder of modern computer technology and chemistry, and Kodak's take on it required several twists. Software in the printer evaluates each image and determines what's in it (faces, trees, sky), optimizing the process based on that analysis. Ink is boiled and sprayed through 3,840 nozzles at a rate of 24,000 drops per second. The tiny pigment particles are designed to sit on the surface of porous paper while the liquid they're suspended in is absorbed. Drying takes just 15 milliseconds, so there are no worries about smearing the prints, which take 28 seconds to produce.