History 2000: Matsushita in Computer Media

The Japanese giant Matsushita, one of the greatest manufacturing concerns in the world, comprised of JVC, Panasonic, National, Technics, Quasar, as well as one of the largest producers of storage units (optical and tape drives, all of Quantum’s HDDs), is now embarking for the first time into computer media.

The news will clearly not delight Fuji, Maxell, Mitsubishi, Verbatim, Sony, TDK, Ritek and the rest.

Matsushita’s first step: a majority participation (51%) in 2 CD-R factories belonging to Kodak (which keeps 49%) in Guadalajara, Mexico and Cork, Ireland, under the new name, Matsushita Media Manufacturing (MMM), with combined sales of nearly $120 million last year.

The internal details of the 7-year agreement were not disclosed, but Matsushita must have put up considerable cash, and/or, at the very least, promised substantial future investment in a business where all profits must be cycled back into the joint venture.

The Japanese firm, previously nonexistent in computer media, will now be able, as a result, to take advantage of the Kodak brand name, which has a long and healthy history in this domain, even if it has suffered significantly since it sold off Verbatim to Mitsubishi in 1990.

In fact, when we visited the Cork plant, the Kodak signs had not yet been taken down, and it took a good eye to find any trace of the name of the new majority owner.

Meanwhile, for Kodak, the deal will mean that it can keep a finger in the optical media pie, for which the company has years of know-how, and which could help out with future plans involving digital images, but also by virtue of its association with a manufacturing giant with particular expertise WW in industrial automation.

In fact, both factories (the one in Mexico opened in 1993, Cork was launched three years later) just barely avoided disaster towards the end of 1996, due to a heavy drop in the prices of the media, low productivity, and at the time, selling 60% to OEMs (compared to 97% off today for Kodak branded media), which led to a complete production halt in order to overhaul the 2 facilities.

That Matsushita should enter computer media by way of optical is hardly surprising, given the extent of its investment in CD technology, and more recently, in DVD-ROM and DVD-RAM, if only to control the entire production chain.

“In DVD, Panasonic will make it all,” said Robert Pfannkuch, president of Panasonic Disc Services Corp., in Torrance, CA, which already has a DVD mastering and replication facility in place, and will oversee the two CD-R plants for Matsushita.

In Cork, a huge space has already been designated for pressing DVDs in the future, and Kodak, from its Rochester, NY labs, still boasts serious expertise in phase-change technology for forthcoming DVD-RAMs, which it applied in the past to its 14-inch WORM disks that have since been discontinued.

Kodak also plans to launch production at the Ireland facility of what it calls CD-PROMs, announced last year, which are partly pressed CDs, partly write-once media, although there is some risk that such technology will only interest a handful of users for niche applications.

Recall what happened with Fujitsu’s 3.5-inch P-ROMs, half pressed, half rewritable, and quickly forgotten.

This marriage between a giant manufacturing brand-name and an electronics giant is even more understandable when you consider that Kodak is far more adept in manufacturing photographic film than optical supports.

According to John O’Grady, a Verbatim veteran, and director of business ops in Cork, “Kodak is the largest European manufacturer of CD-R media,” while announced production for 1999 was 65 million CD-Rs.

“Kodak’s market share WW for CD-R was 5.7% in 1999,” revealed David Bunzel, director of the Santa Clara Consulting Group.

For 2000, the executives at MMM are counting on production on the order of 80 and 120 million, respectively, in Ireland and Mexico.

History 2000 Matsushita