Kodak's NexPress business is generating a flurry of coverage and commentary, following an erroneous report in the States that the company was looking to divest it. Not correct, and chief executive Antonio Perez has gone on the offensive, posting a video on YouTube refuting the misinformation and reinforcing the firm's commitment to toner-based digital print.

Instead, the electrophotographic business that includes NexPress and Digimaster is among a number of Kodak businesses earmarked for "transformation". This could involve segmenting the business, working with a partner, forming a new alliance, or licensing some of the technology. At the investor meeting earlier this week Perez said: "We are not thinking, at this point in time, of divesting any of those businesses. We think the better return will be to combine or form an alliance so we can continue to be in those businesses without carrying all the investment and all the risk."

He said that NexPress being strong in one area of the market - the high end - wasn't enough, and Kodak can't devote the resources necessary to scale it down into a more mass market offering. Considering that the company turned to Canon technology for its entry-level M700 digital press, this would already appear obvious.

There's a back story here, of course. NexPress was originally a joint venture between Heidelberg and Kodak, launched with much fanfare at drupa 2000. Things didn't quite go according to plan, Heidelberg retrenched by getting out of digital and web offset, and Kodak "bought" the business for a nominal $1 four years later.

Here's an extract from Kodak's 2006 report and accounts that illustrates how sales didn't take off in quite the way anticipated: "Under the terms of the acquisition, Kodak and Heidelberg agreed to use a performance-based earn-out formula whereby Kodak will make periodic payments to Heidelberg over a two-year period, if certain sales goals are met. If all sales goals were met during the two calendar years ended December 31, 2005, the Company would have paid a maximum of $150 million in cash. For both the first calendar year (2004) and for the second calendar year (2005), there were no amounts paid to Heidelberg. Additional payments may also be made relating to the incremental sales of certain products in excess of a stated minimum number of units sold during a five-year period following the closing of the transaction."

I can't find any reference at all to this earn-out in Kodak's 2007 results, so that would imply that while NexPress promised "the power of a press with the flexibility of a printer", it was also, in the words of one industry-watcher, "over-engineered, over-priced and under-sold".

What happens next? Perez claims that "a lot of people would like to be part of this business... we have a strong position, are the reliability leader and have a breakthrough toner technology that many would love to have". Kodak also describes one of the NexPress assets as "a leadership position in high volume colour". I guess that depends upon how you define leadership. The Kodak definition would appear to exclude the Xerox offering in this space.

Who might be in the frame for any future alliance? The M700 deal means that one might automatically turn to Canon as a potential partner, but as previously noted it was Kodak that was more in need of Canon's technology rather than the other way around.

I wonder instead if Ricoh may be a more likely candidate? There's a back story here too with the Ricoh-acquired Infotec business (Danka as was) and the Digimaster kit. Kodak is already partnering with the company on service for black-and-white products and I hear this is being extended to the NexPress kit too. So for what it's worth my 10p currently lies with Ricoh. As always, I watch with interest.