Walt Disney’s Ghost Joins Twitter Board

UPDATE:

I wrote this almost a year ago when Twitter was more subtly implying that they were going to make their own mainline applications, often in competition with 3rd party “development partners.” Of late we are now seeing the “other shoe drop” as Twitter is getting far more aggressive with their APIs and the plan to “cut lose” 3rd party applications now becomes much clearer.

Simply stated, “it’s all about the valuation…stupid!” Twitter tried subtle, now they are just coming right out and telling application developers to stay away from their mainline space. Perhaps they are having a little difficulty competing with the independent development community. My advice is to modify their own APIs and first take advantage of new features in official Twitter apps before opening up improvements to the development world in general. After all, it worked for Microsoft and it would work for them as well.

In any case, what I wrote a year ago about Twitter is even clearer today!

(April 2010) There has been a lot of speculation surrounding a “leak” that Twitter will soon begin developing and launching some of its own “company” applications and features. To be sure, some of these new capabilities will undoubtedly compete with existing partner solutions, and although they never mentioned any names, I would put money on the fact that much of the functionality delivered by “TweetPhoto” is very high on their list. If Twitter wants to maximize their potential (and valuation) in the social networking arena, they will need to actively embrace photo…which is the generally recognized “killer application” for all social networking. As things stand today, virtually all Twitter has done in digital photo sharing has been to make their extensive user base available…to TweetPhoto!

If these leaks turn out to be true, it would clearly indicate that Twitter is finally building a real market strategy. They are growing up and realizing that while they originally had this “wild idea” to build a real time, town square discourse site based on 140 character text messages…they have actually built quite a juggernaut. Early on, they took ideas and help from a large and willing community of 3rd party developers, who implemented powerful new features using Twitter’s published and open APIs. These “partners” certainly helped build brand awareness and also added tremendous incremental utility, but Twitter is now discovering that some of them might be creating some pretty big ideas of their own, perhaps even big enough to rival Twitter, or at least significantly limit its strategic options or terminal market valuation. While what they are doing is comparable to Steve Jobs’ recent OS-4 “middleware stay away” posture, let me use another Californian as perhaps a better example.

In 1954, Walt Disney started the construction of his own “wild idea” in Anaheim, California. Disney Land not only proved tremendously successful, but it also attracted large numbers of 3^rd party “developers” who built hotels, restaurants and their own venues, immediately adjacent to Walt’s “park idea”.  These developers captured significant value for themselves; value which was based, almost entirely, on Disney’s original idea. However, his company apparently learned a lot from their first product launch. Enough so that when they conceptualized Disney World for Orlando, instead of purchasing just 160 acres for the park, this time they quietly acquired 47 SQUARE MILES of “market space”…all reserved for their own “added value!”  This space would eventually provide plenty of room for multiple theme parks, hotel complexes, branded resorts and much, much more. Space that today adds revenue and builds incremental value for The Walt Disney Company, rather than for the 3^rd party “developers.”

Simply stated, Twitter is trying to convert Disney Land into Disney World, and my bet is that there is still enough time for them to take control over their strategic direction as well as capture a tremendous amount of incremental value.

But then, Steve Jobs has always known this.  He’ll partner with you too…as long as you remember to bring your checkbook!

The Wind is Shifting in Internet Photo Space

Seems Snapfish is changing their web photo model to enlist help from 3rd party developers, product manufacturers and imaging creatives. They plan to accomplish this through a new set of APIs coupled with the promise of revenue sharing (here). Of course, Snapfish will still manage all the orders, money and sales commissions… just like Amazon et al. These hungry cottage developers, designers and mail order gift manufacturers will add significant incremental “gloss” and capability to the existing Snapfish franchise. Don’t get me wrong, this is a significant step, one that finally offers motivated and innovative 3rd parties a concrete way to participate in today’s digital photo ecosystem…and it will definitely work…for Snapfish!

Although these APIs will probably start with the Snapfish branded site only, the pressure will immediately come from SnapFish’s mass merchant partners, Walmart and Walgreens, to feed their sites and retail “print to store” networks as well (they already are set up to receive orders from SnapFish.) Interesting move, but it may confuse and potentially upset brand sensitive retail internet merchandisers. Obviously, the next step would be to enable these APIs on Snapfish custom branded photo sites like Walmart and Walgeens, but Snapfish may try to entice partners to move to a Snapfish branded, or co-branded alternative. That way they can unify Walgreens and Walmart users (and images) as well. Way back in 2005, when Snapfish took Walmart from Fuji “at any price”, I predicted this. Rather than Snapfish adding value to the retail brands, networked “pick up in 1 hour” retailers would add value to the Snapfish brand (and by the way, consumables volume to HP.) It will be interesting to see how they play this with partners and whether their retailers remain totally focused on their own internet brand identities. However, in the final analysis, retailer fulfillment networks need production and sales volume and if Snapfish/HP becomes the “only game in town,” they really will have no choice.

But, it isn’t really that simple, and Snapfish will never be the only game in town! Social networks have already won that battle and even today, control the vast majority of all photo sharing done on the web. Facebook alone, the veritable “800 pound gorilla”  in web space, is responsible for something like 65% of all on-line photo sharing!

Facebook quickly capitalized on the knowledge that consumers absolutely love to share pictures. Most users don’t really write that much and this fact has already made personal photo sharing the “killer app” on social networks. Their upload statistics are truly astounding, and even though Facebook images are generally unsuitable for other photographic uses (printing, books, gifts), their storage space has to be growing exponentially. In an overarching photo ecosystem context, Facebook’s technical implementation is flawed…which, at least theoretically, leaves them vulnerable to a competitor offering a compelling case for…”social networked photo sharing done right!”

Obviously Facebook already recognizes this, and their recent acquisition of startup DivvyShot is a clear indication that they are looking for new ways to defend and extend their overwhelming dominance in the social network photo. Watch for them to begin to leverage their web photo franchise into retail territory as well!

Finally, there is a little company in Mountain View that we need to watch as well. While I have already written about Google and Google Buzz, suffice it to say that they have a real stake in this game, and already are sharply focused on a vision for “photo sharing done right!” Not to be left out of the acquisition frenzy, Google recently snapped up PicNik, a web based photo manipulation provider.

Nobody really needs (or wants) two separate and parallel web photo ecosystems…one for soft display social network sharing and the other for production of prints, books and gifts. As far as I am concerned there are really only two horses left in this race. Facebook with 450,000,000 users, a majority of all photo sharing on the internet and literally billions of stored images but with… photo done wrong, and Google, with tons of technology and resources, billions of hits and a vision for social networked photo done right…but with no current community of social network users.

Either one gets it right and the consumer will be the clear winner!

Now as to which one that will be, it’s too soon to tell. Fixing Facebook (and there are lots of creative ways to do this without giving away Petabytes of free storage) is probably best for photo, as it would avoid presenting today’s social network users with a very difficult choice…either keep your friends or keep your photos.

…but then, I would never dream of underestimating Google either!

A Hint of Social Networked Photo Done Right

For years I have been searching for a ray of sunshine to fall on consumer digital photography. Yesterday I think I saw a little light coming from a digital player that just might have the resources and market position to make a difference. It didn’t come from Kodak, Fuji or even HP…it was hidden in the release of Buzz from Google. To be sure, Google is a very late entry in the social networking space, which today is totally dominated by platforms like Facebook, LinkedIn and Twitter. Besides, in addition to being the dominant web search engine, Google has a lot of other significant irons in the fire. Big initiatives like Gmail, Voice, Picasa, Chrome and Nexus One, just to name a few! Its anybody’s guess if Buzz can leverage its family ties to Gmail and Web Albums and grow share over its already well entrenched competition.

But Buzz’s social networking features themselves are not my “eureka” for consumer digital photography. What makes Buzz so interesting is it’s seamless and uncomplicated linkage to full quality digital images, which remain accessible and safely stored for posterity in a consumer’s Picasa or Flickr Web archives. If done right, Buzz offers simple Facebook like photo sharing, but at the same time it maintains the full capability of the shared images for virtually any use.

Today, the “print everything” mentality has lost its appeal for a lot of consumers who frequent our web connected world (and probably for good reason.) However, I don’t believe that these consumers have consciously adopted a “print nothing” model either! I have serious concerns about photography’s continued consumer relevance if once priceless personal pictures are relegated to the “display only” quality of images “archived” by Facebook and other social platforms.

I have always believed that the road to successful innovation starts with finding real consumer problems and ends with packaging the right technology to solve them. This can often be very difficult in the consumer market as users are often need solutions to problems that they don’t overtly recognize. In the mass market a better motto might be “give the consumer what he needs, disguised as what he wants!”

My professional photographer friends may see this little ray of sunshine as a gathering storm of copyright infringement, but this need not be the case. There are plenty of existing technological solutions to solve those problems as well. What’s good for consumer photography adds gloss to professional photography!

Its way to soon to tell if how Buzz will do against Facebook, but I have tremendous hope for its modern consumer photo model. I would highly recommend that Facebook and others get on the bandwagon!

An American Icon…Turns to Dust

I will never forget the sheer amazement that I felt when I joined Kodak in 1971. Rochester’s “Kodak Park” was a beehive of activity with trucks and rail cars streaming in literally all directions and high volume, state of the art consumable manufacturing virtually everywhere you looked. I loved to walk or drive through the “park” as we called it, and watch the frenzied activity at a true, “gold plated” American manufacturing icon.

But, as some would later remark, “Kodak was a franchise that turned into a business…and no one noticed!”

We did some great things there, but the technology and market vision left the company many years ago. I haven’t thought about those early days for many years as I moved on to other companies who chose to embrace the developing digital market.

Today I got a link to a video from an old Kodak colleague…a very sad day and a warning to all who believe that they can unilaterally hold back progress for their own business reasons!

You can find a pretty good version of the video at http://bit.ly/KodakDust. It’s all too bad, but perhaps not, as crumbling buildings in Rochester, NY are perhaps best forgotten as has the powerful franchise created by “you push the button and we do the rest!”

Digital Photography’s Relevance Challenge…A Call to Arms

Get Everything Digital from a Retailer Down the Street!

I read a tremendous amount of excitement about the ability to buy software published “while you wait” at the new Microsoft retail stores http://bit.ly/MicrosoftPublishing . With a little help, consumers could be a lot closer to this than anyone thinks; we don’t need to wait for a new Microsoft store; and we really don’t have to limit ourselves to desktop software only from Microsoft!  Consumers could get virtually anything that comes on a CD or DVD…with packaging, quality and reliability identical to conventional mass produced copies. Imagine no inventory, no distribution, no floor space… all from a friendly retailer just down the street. While we’re at it, why not publish your own professional demo CDs or business presentations, or just make yourself some personalized CD or DVD blanks that just say you in style!

As I write this, there are already more than 2,000 fully networked, geographically distributed retail stores that burn and full color label CDs and DVDs. Some also offer personal entertainment hardware, computers and peripherals...and many have a wide variety of software for all of it!

The reason you didn’t know about it is because these systems currently masquerade as retail digital photofinishing counters; but with a little help, they could easily add the capability of on demand manufacturing for virtually every kind of digital content imaginable. Today most are in Walmart locations, but the number would approach 10,000 if others like Walgreens, CVS, Ritz and Cord added full color disc printers to address an exciting new market opportunity.  All they really need to fulfill this vision is an innovative digital industry partner that is willing to step in and help them move the data from the store end of the wire to their existing CD/DVD manufacturing and printing equipment!

The photo companies have no reason to invest and nothing to gain. We need somebody smart enough and big enough who cares! Palo Alto how about you? Redmond, remember Itunes? You can’t wrap a download and put it under the Christmas tree! This could change everything!

HP’s New Beachhead at Walmart…

By now many know that during their earnings call, Kodak acceded to losing the US Walmart account, even though they intimated that it shouldn’t be terribly material.  I believe that the $100M or so in lost sales could turn out to be pretty significant, and their inclusion of the contract loss in their Q3 10Q, followed by the comment that “The Company plans to replace a significant portion of this volume of business, although the timing and extent is uncertain” certainly sounds a little ominous.

Perhaps far more important than the lost revenue itself, assuming that Kodak plans to stay in the consumer imaging business, is the loss of the customer facing brand exposure provided by the nearly 8,000 Picture Maker kiosks currently located in Walmart US locations. These stores, in aggregate, represent the largest retail photo operation in the entire world. Since Kodak consumer ink jet (and commercial printing) products generally compete head to head with HP, losing the brand exposure to HP just represents more salt in the wound.

From my own experience with Walmart, a chain wide kiosk and printer switch out on the retail floor is a logistical nightmare and I would estimate that HP won’t  manage to convert more than 500 stores before the Christmas holiday “lockdown,” when photo gifting seasonality is at its peak. The remaining Kodak systems will still burn a tremendous amount of Kodak branded consumables, and this should go a long way to soften the earnings blow for Kodak in Q4.

As time passes, it will be very interesting to see how Fuji responds to the HP incursion into Walmart.  Fuji enjoys a somewhat broader product portfolio than Kodak,  supplying  production software, Fuji branded consumer kiosks and “behind the counter” printing equipment, not to mention almost all of the conventional photo paper and ink jet consumables used by Walmart associates to produce 1 hour photo orders.  Fuji also performs “off site” production of a significant number of prints and photo gifts which can be ordered on 12,000  Fuji 1 Hour kiosks located in Walmart photo departments.  These  orders are transmitted “by wire” from Walmart stores and delivered back to the store in 3 to 5 days, but are produced  by Fuji’s wholesale  labs or subcontractors. Fuji has also integrated and installed full color, plain paper printers, sourced from their Fuji/Xerox joint venture, at a growing number of Walmart locations, but has yet to really develop a “photo document” market for consumer retail.

With this one deal, HP has made very significant progress in positioning themselves to become the “Kodak” of  consumer digital imaging.  Walmart will add immense brand visibility at retail (not to mention consumables burn) to their already powerful arsenal of competitive weaponry.

Without a doubt I’m sure Fuji would be much happier looking across the isle at Kodak!

The air is draining from Kodak and Rochester

After having spent almost 40 years in the photo industry with both Kodak and Fuji, driving innovations ranging from dye sublimation printing to 1 hour web to in-store printing, there are some major issues “between the lines” of today’s Kodak Q3 press release. Although not specifically mentioned in releases, their 10Q contains this ominous statement:

“The Company and one of its significant Retail Systems Solutions customers will not renew a contract that expired on September 30, 2009. The Company plans to replace a significant portion of this volume of business, although the timing and extent is uncertain.”

As many industry observers have noticed, it appears that Kodak Picture Makers, Kodak’s last remaining customer facing brand presence at retail, have recently begun being replaced in some Walmart stores by a new HP instant printing system. In addition, Walmart was noticeably absent from their upbeat enumeration of major and minor “dry lab” and kiosk customers which was released yesterday. We can now be pretty sure that this “significant” customer is in fact Walmart US. While Walmart stores in the US represent less than 4000 of Kodak’s 100,000 “locations”, US retail print volume numbers would predict that this loss should represent at least $100M in annual media sales. In the US market, mass merchants are where the retail printing volume is and Walmart is by far the leader in the category.

While an ongoing loss of $100M in annual sales to Kodak is a very serious issue, their complete loss of customer facing brand presence at US photo retail locations could be even more important. What will this mean to the remaining Kodak retailers, like CVS with its 15,000 Kodak kiosks? Where will Kodak media cost (and therefore price) go with such a significant loss of thermal dye transfer media manufacturing volume? Time will tell, but at least we finally have some closure on the death of the world’s original photo market mover.

The digital transition has been difficult for everyone in the photo industry. Traditional market movers have abdicated leadership roles due to very significant consumable and service volume losses. Many retailers have either disappeared entirely or abandoned the photo category, while the consumer has been left to figure out how to personally manage the entire transition themselves, at the risk of losing personal memories forever.

This now leaves retail photo dependent on HP, Fuji and a few others.  While HP has installed systems at much smaller retail chains, Walmart would be their first major, mass merchant “print at retail” customer. Fuji has enjoyed the dominant share in “behind the counter” solutions for quite some time, and while challenged to lead or follow the industry’s evolution to all digital, is still quite comfortable in this market. Clearly, Kodak and Fuji practiced détente for years; retail photo is a very unique market and where we go from here is much more complicated, depending on how Fuji reacts to HP and whether HP can adjust its focus to become a real “turnkey” retail photo solution provider.

Even at today’s digital printing volume, there is a lot of money on the table!