TFI Provides Significant 2006 Technology Trends

Popular futurist and technologist David Smith (Vice President, TFI) states “These trends are of great consequence to those involved with global business, technology business process, science and universities, government agencies, federal labs, corporate labs, and technology savvy consumers.”
Press Release

Once again, Technology Futures, Inc. (TFI) provides important emerging technology trends for 2006 and beyond developed through our 27 years of forecasting, strategy, and analysis work. Popular futurist and technologist David Smith (Vice President, TFI) states “These trends are of great consequence to those involved with global business, technology business process, science and universities, government agencies, federal labs, corporate labs, and technology savvy consumers.” He adds, “Comparing this year’s trends to TFI’s list of trends for 2005, we see the trends as being still on the mark, with continuing progress being made in all the areas outlined last year. Below we have outlined some of the developments and provide some new trends and enhancements.”


(1) Traditional media continues to change as the impact of the democratization of the Internet and the increased penetration of global broadband coverage expands the Internet even more.

As we noted last year, “Broadband and high-speed wireless penetration reach a large enough market for new classes of applications to emerge. These new products will explicitly take advantage of what broadband and wireless networks have to offer in terms of mobility and accessibility to the global marketplace. Location-based services is one class of service that will emerge.” The impact of VoIP extends beyond the business users and will become common place in the new digital home. 2006 will see the first impact of mobile VoIP in connected devices.

(2) The threat to security and privacy continues to grow and to expand to other devices besides the wired Internet such as . mobile devices and device-to-device networks.

Last year we talked about the dramatic escalation in device-to- device communication versus people-to-people communication. This trend continues, and the increasing threats to security and privacy also increase in tandem.

(3) The digital home is entering the next level of acceptance, with the expansion of the electronic gaming and MP3 marketplace being a major driver.

High definition TV and digital recording at home are important drivers, but increasingly a major driver of the digital home is the electronic gaming and MP3 marketplace. The devices have become more than just a video game or a portable audio experience, with integration into many different devices and vehicles, and the addition of video to the MP3 devices. One of the next phases of growth is that of individual content creation. This do-it-yourself (DIY) content creation will vastly expand on P2P networks and will ride on the back of expanding computing power, storage expansion, broadband penetration, and Reed’s law of community building. The power of the games will expand beyond PCs and game consoles to many other forms and devices. On-demand gaming will become part of many households. IPTV will see a new acceptance and because of both broadband penetration and new business models become part of many households.

(4) Public relations and marketing expenditures and projects continue their shift to the public networks.

Not only the Internet, but wireless and cellular networks and the new smart, location aware devices will play an increasingly important role in the transition to public networks. The usage and proliferation of mobile commerce keeps expanding.

(5) The timeframe of the product life-cycle continues to decrease.

In a continuation of the trend from last year, by the time a product hits the market, its shelf life is half what it used to be. So, to remain competitive, science and research time will become more intensive and innovative earlier as product development time continues to compress at an unprecedented rate. Innovation and a future focus will be necessary to remain in the game. Technologies such as grid technology, mid-weight computer clients, and collaborative computing play large roles in making every device a server.

(6) Globalization and outsourcing continue to be paradigms of success.

Again, as in last year, to be successful in a real-time, global marketplace, businesses must understand and adapt to the new source of competitive advantage by connecting to the core competencies and customer interaction on a global scale. In the business world, global collaboration is imperative. Outsourcing becomes more strategic–it’s not all about price.

(7) The age of bio enters a new stage of production as advances in the technology continue.

Continuing the trend from 2005, national and global collaboration is enhancing potential bio commercialization. Bio is beginning to see a pay-off in 2006, and the first wave of consolidation takes place.

(For a complete listing of last year’s trends, please see “TFI Provides 2005 Trends that will Catalyze the Future,”
Mr. Smith has been actively involved in technology management and forecasting for more than 30 years. Since joining TFI in 1996, he has assisted in creating and implementing plans for such organizations as Boeing, CIA, Coca-Cola, Department of Defense, Embraer, Hughes, Intel, Compaq, Kodak, Kyocera, Lockheed Martin, National Security Agency, National Geospatial-Intelligence Agency, and Sun Microsystems.

Recent national and international presentations include Keynote Speeches for the U.S. Senate Conference on Emerging Technology, Information Management Forum, Kodak’s Global Leadership Forum, the Photography & Imaging Manufacturing Association (PIMA), 7-11, and the Society of Telecommunications Consultants (STC) Conference.

Mr. Smith’s views on technology trends have been prominently featured in Business Week and American Demographics, among other publications. His complete bio can be found at Many of his citations and activities can be found under “TFI News” at An electronic copy of his photo is located at

For more than 25 years, TFI has helped organizations plan for the future by offering outstanding technology forecasting, strategic planning, trend analysis, and strategic market research services in high-technology and telecom technologies. Drawing on proven, quantifiable forecasting methods and strategic applications, we combine the vision of the futurist with the down-to-earth judgment of the technologist. Let us be “Your Bridge to the Future.”

Kodak Looses a Lot of Money

Third quarter financial results are not positive for Kodak
In the third quarter Kodak sales went up by 5%. However, it gets
interesting when you examine the breakdown. Digital products and
services rose by 47%, which is a great result. However traditional
product revenue fell by 20% in the quarter. In total, Kodak lost
US$1.029 Billion in the quarter.

The figures give hope for Kodak in the great sales result in their
digital products and services, but their is undoubtedly more pain to go
as Kodak restructures into a digital company.

The full financial press release is given below.

Kodak’s 3rd-Quarter Sales Rise 5% to $3.553 Billion

Digital Sales Surge 47%, Led by Graphic Communications and Consumer
Portfolio; 3rd-Qtr GAAP Net Loss Totals $1.029 Billion ($3.58 Per
Share), Largely Reflecting Tax Valuation Allowances and Accelerated
Restructuring Charges;  Company Reaffirms Three Key Metrics from
September Investor Meeting: Digital Revenue Growth, Digital Earnings
Growth and Cash Generation

ROCHESTER, N.Y., October 19 — Eastman Kodak Company reported that
revenue rose 5% in the third quarter, led by a 47% increase in the sale
of digital products and services. The performance primarily reflects
strong demand for the market-leading offerings from the company’s
Graphic Communications and consumer digital portfolio.

On the basis of generally accepted accounting principles in the U.S.
(GAAP), the company reported a third-quarter loss of $1.029 billion, or
$3.58 per share, largely stemming from a $900 million ($3.13 per share)
non-cash charge to record a valuation allowance against the net
deferred tax assets in the U.S. This reservewas an accounting
requirement resulting from the company’s continuing losses in the U.S.
created by the accelerated and extensive restructuring activity
required by the decline in the traditional business.

For the third quarter of 2005:

  • Sales totaled $3.553 billion, an increase of 5% from $3.374
    billion in the third quarter of 2004. Digital revenue totaled $1.888
    billion, a 47% increase from $1.283 billion. Traditional revenue
    totaled $1.661 billion, a 20% decline from $2.085 billion.
  • The GAAP net loss was $1.029 billion, or $3.58 per share,
    compared with GAAP earnings of $458 million, or $1.60 per share, in the
    year-ago period.
  • The company’s loss from continuing operations in the quarter,
    before income taxes, interest, and the net of other income and charges,
    was $103 million, compared with earnings from operations of $3 million
    in the year-ago quarter.
  • Digital earnings were $10 million, compared with $6 million in
    the year-ago quarter. This includes the favorable impact of $18 million
    in the third quarter of reallocating certain costs from the digital
    business to the traditional business, as well as a $5 million charge
    for reducing the useful life of certain digital assets. To calculate a
    common basis of comparison with the company’s full-year digital
    earnings projection, as adjusted for the two accounting changes cited,
    requires the exclusion of $44 million of costs associated with Creo’s
    operating results and purchase accounting for the KPG and Creo
    acquisitions, as well as the exclusion of $12 million of in-process
    research and development credits. On this basis, digital earnings in
    the third quarter were $42 million, and they were greatly improved in
    September versus the first two months of the quarter. This supports the
    company’s previously expressed view that the bulk of Kodak’s digital
    earnings in 2005 will be generated in the last four months of the year.

“In the third quarter, our digital revenue exceeded our traditional
revenue for the first time on a quarterly basis, representing another
milestone in our digital transformation,” said Antonio M. Perez, Chief
Executive Officer and President, Eastman Kodak Company .  “As
importantly, on the basis outlined above, our digital earnings were 3.5
times greater than in the year-ago quarter, and September’s significant
improvement increases our confidence for strong digital earnings in the
fourth quarter.

“We remain committed to the 2005 cash flow target presented at our
Sept. 28 investor meeting,” Perez said. “For the quarter, our cash flow
performance was consistent with our expectations, our cash balance
increased, and our debt decreased sequentially from the second quarter.
We are delivering on the three key metrics by which we are managing the
company: digital revenue growth, digital earnings growth and the
generation of cash.

“Within the business units, we continue to see widespread evidence of
the success of our digital transformation,” Perez said. “Our Graphic
Communications Group continues to demonstrate strong growth, coming off
a very successful Print 05 trade show in September. In our Health
Group, operating margins in the quarter rebounded from a soft start
earlier this year, led by solid sales of computed radiography systems.
On the consumer side, we began shipping last month the groundbreaking
EASYSHARE-ONE zoom digital camera, making Kodak the first company to
bring a Wi-Fi consumer digital camera to market.”

Other third-quarter 2005 details:

  • Net cash provided by operating activities from continuing
    operations, as determined in accordance with GAAP, totaled $370 million
    in the third quarter, compared with $411 million in the year-ago
  • Gross Profit on a GAAP basis was 26.3%, down from 32.0%,
    primarily because of increased restructuring activity compared with the
    year-ago period.
  • Selling, General and Administrative expenses were 18.9% of sales,
    up from 18.6%, primarily reflecting the additional costs incurred
    through the ownership of KPG and Creo.
  • Debt decreased $158 million from the second-quarter level, to
    $3.563 billion as of Sept. 30. So far this year, debt has increased
    $1.242 billion, reflecting more than $1.5 billion relating to
  • Kodak held $610 million in cash on its balance sheet as of Sept.
    30, up from $553 million on June 30, and down from $1.255 billion at
    the end of 2004. The company expects its cash balance to exceed $1
    billion by the end of 2005.

“Even after paying down debt and spending more on restructuring, I am
pleased with our ability to increase our cash balance from the previous
quarter,” said Robert H. Brust, Kodak’s Chief Financial Officer. “We
remain confident in our ability to generate cash, and we note that the
$900 million charge involving deferred tax assets in the U.S. has no
cash impact. What’s more, the net deferred tax assets can be realized
in the future. The write-down results from current and expected future
losses in the U.S. created by our accelerated and extensive
restructuring actions. As a result, management has concluded that a
valuation allowance is required under U.S. accounting rules.”

Segment sales and results from continuing operations, before interest,
taxes, and other income and charges (earnings from operations), are as

  • Digital & Film Imaging sales totaled $1.995 billion, down
    16%. Earnings from operations for the segment were $108 million,
    compared with $230 million a year ago. Highlights for the quarter
    included a 48% increase in the sales of KODAK PICTURE MAKER kiosks and
    related media; a 45% increase in sales of home print
    ing products and
    media, including KODAK EASYSHARE Printer Docks; and a 20% increase in
    consumer digital capture sales, which includes KODAK EASYSHARE cameras.
  • Graphic Communications Group sales were $886 million, up 158%,
    largely reflecting the acquisition of KPG and Creo. Earnings from
    ations in the third quarter were $15 million, compared with a loss
    of $16 million in the year-ago quarter.
  • Health Group sales were $635 million, down 1%. Earnings from
    operations for the segment were $90 million, compared with $106 million
    a year ago. Highlights included a 24% increase in digital capture
    systems, reflecting a rebound in sales of computed radiography systems,
    as well as strong sales of healthcare information systems. 
  • All Other sales were $37 million, up 48% from the year-ago
    quarter. The loss from operations totaled $55 million, compared with a
    loss of $53 million a year ago. The All Other category includes the
    Display & Components operation and other miscellaneous businesses.

“As I indicated at our investor meeting on Sept. 28, we anticipate that
more than 40% of the company’s total digital revenue in 2005 will occur
in the last four months of the year, reflecting the seasonality common
to digital markets and the company’s acquisitions earlier this year,”
Perez said. “As those sales occur, we will enjoy increased digital
earnings, as September’s performance shows.

“We’ve made it clear that we measure success against the three critical
metrics that best reflect the company we are building – digital revenue
growth, digital earnings growth and cash flow,” Perez said. “In each
category, our performance in the third quarter was in line with the
expectations presented on Sept. 28, and we intend to carry this
momentum into the fourth quarter and 2006.”

Digital and traditional revenues, digital earnings, and digital
earnings excluding certain purchase accounting costs for KPG and Creo
and operating results for Creo are non-GAAP financial measures as
defined by the Securities and Exchange Commission’s final rules under
“Conditions for Use of Non-GAAP Financial Measures.” Reconciliations of
these measures included in this press release to the most directly
comparable GAAP financial measures can be found in the Financial
Discussion Document attached to this press release.

Certain statements in this press release may be forward looking in
nature, or “forward-looking statements” as defined in the United States
Private Securities Litigation Reform Act of 1995. For example,
references to expectations for the Company’s earnings, revenue, and
cash are forward-looking statements.

Actual results may differ from those expressed or implied in
forward-looking statements.  In addition, any forward-looking
statements represent our estimates only as of the date they are made,
and should not be relied upon as representing our estimates as of any
subsequent date.  While we may elect to update forward-looking
statements at some point in the future, we specifically disclaim any
obligation to do so, even if our estimates change.  The
forward-looking statements contained in this press release are subject
to a number of factors and uncertainties, including the successful:

  • Implementation of our digital growth strategy and business model;
  • Implementation of a changed segment structure;
  • Implementation of our cost reduction program, including asset
    rationalization, reduction in general and administrative costs and
    personnel reductions;
  • Implementation of, and performance under, our debt management program;
  • Implementation of product strategies (including category
    expansion, digitization, organic light emitting diode (OLED) displays,
    and digital products);
  • Implementation of intellectual property licensing and other strategies;
  • Development and implementation of e-commerce strategies;
  • Completion of information systems upgrades, including SAP, our enterprise system software;
  • Completion of various portfolio actions;
  • Reduction of inventories;
  • Integration of newly acquired businesses;
  • Improvement in manufacturing productivity and techniques;
  • Improvement in receivables performance;
  • Reduction in capital expenditures;
  • Improvement in supply chain efficiency;
  • Implementation of our strategies designed to address the decline in our analog businesses; and
  • Performance of our business in emerging markets like China, India, Brazil, Mexico and Russia;

Forward-looking statements contained in this press release are subject to the following additional risk factors:

  • Inherent unpredictability of currency fluctuations and raw material costs;
  • Competitive actions, including pricing;
  • Changes in our debt credit ratings and our ability to access capital markets;
  • The nature and pace of technology evolution, including the analog-to-digital transition;
  • Continuing customer consolidation and buying power;
  • Current and future proposed changes to tax laws, as well as other
    factors which could adversely impact our effective tax rate in the
  • General economic, business, geopolitical, regulatory and public health conditions;
  • Market growth predictions, and
  • Other factors and uncertainties disclosed from time to time in our filings with the Securities and Exchange Commission;
  • Any forward-looking statements in this press release should be evaluated in light of these important factors and uncertainties.

Philips Shows Innovations

The Simplicity Event at L’Espace Grande Arche in Paris

INTOUCH, hung on the wall, converts
one-to-one communications back into ‘group-to-group’ of
‘family-to-family’ communications. © PHILIPS (by Capital Photos);


Royal Philips Electronics (NYSE: PHG, AEX: PHI) unveiled more than 25
new design concepts, demonstrating how the company’s focus on
‘simplicity-led design’ is likely to translate into new products over
the coming three to five years across its entire healthcare, lifestyle
and technology portfolio. At The Simplicity Event at L’Espace Grande
Arche in Paris, Gerard Kleisterlee, President and Chief Executive
Officer of Philips, also announced the introduction of Hands-free
Interaction in the Hospital (HIH), a new kind of remote voice-control
for equipment used in medical environments, as a major example of how
the company’s brand positioning of ‘sense and simplicity’ is already
benefiting customers.

LOOKLOOK captures stills that can be
instantaneously sent to a mobile phone or projected onto any surface
for immediate sharing with others. © PHILIPS (by Capital Photos)

Gerard Kleisterlee, President and Chief Executive Officer of Philips
commented: “Our Simplicity Event marks a real milestone in the
transformation of Philips into a truly market-driven company. Today,
many companies recognize the role of design-led innovation. But we at
Philips have gone one step further with a special differentiator in
this area: we believe in simplicity-led design. We have focused and
refined our thinking on design-led innovation and the result is
simplicity-led design, which is our springboard to even greater
innovation. In 2004, new products accounted for 38 per cent of group
revenues and for this year, our target is 42 per cent.”

Philips Light Chimes detect changes
in the breeze and temperature and translate them into captivating
paterns and swirling light. © PHILIPS (by Capital Photos

Supporting the company’s commitment to ‘sense and simplicity’, Philips
also used the first anniversary of its brand positioning to unveil
creative work from the second wave of its brand campaign for 2005.
Being rolled out in nine markets from September, including: China,
France, Germany, India, the Netherlands, Russia, Spain, UK and US, the
campaign will cover TV, print, outdoor and online media.

THE CHAMELEON, a lamp shade that changes to match any color you ‘show’it.

© PHILIPS (by Capital Photos)

The event was supported also by the publication of the Next Simplicity
Book, to provide a full overview of the design concepts demonstrated in
the showcase and to explain the simplicity-led thinking that was used
in their development. It also features a review of the work of the
Simplicity Advisory Board (SAB), a think-tank created to advise and
inspire Philips across a wide range of design-led issues.

The Paris event, taking place over four days, features important
presentations from Gerard Kleisterlee, President and Chief Executive
Officer of Philips and Andrea Ragnetti, Chief Marketing Officer,
reporting on the deployment of the new brand positioning and showcasing
the company’s vision for the future.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is
one of the world’s biggest electronics companies and Europe’s largest,
with sales of EUR 30.3 billion in 2004. With activities in the three
interlocking domains of healthcare, lifestyle and technology and
159,700 employees in more than 60 countries, it has market leadership
positions in medical diagnostic imaging and patient monitoring, color
television sets, electric shavers, lighting and silicon system
solutions. News from Philips is located at