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Kodak Lagging in Digital World
mattmcal writes "Wired reports on the Kodak's struggle to survive and Mark Glaser comments on their demise at The Industry Standard saying that Kodak failed to take digital photography seriously, or at least failed to find a way to successfully transform their business. The Photo Marketing Association reported that in 2003, digital cameras outsold analog. Kodak's stock has been hovering near its 20-year low. Finally, today, the Asian Business Times reports that billionaire Carl Icahn sold all his shares saying the current business model there doesn't work."
Properly stored original film negatives last decades, whereas digital media is gone in a blink of an eye when your harddrive/memory card breaks down or you accidentally erase your media.
It's the same thing as with e-mail. I routinely print out all my e-mail correspondence (sent and received) these days because I've lost my mails too often.
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Yes, film is pretty much doomed (except for niche applications). But Kodak has seen this coming and started preparing in time. I think among old companies that needed to transform themselves, Kodak has been doing pretty well: their digital camera lineup is decent, they have done some nifty stuff with OLED, and they still have lots of non-consumer products that probably make them money. They also were one of the first companies to actually sell digital cameras widely. Kodak isn't a hot company, but give the guys a break on this one--they haven't been blind and they have been trying to go for the new market.
What is really dragging Kodak down is their brand name--some companies have a brand name that stands for innovation, and they can put out any kind of garbage and people will think it's the latest and greatest thing. Kodak, on the other hand, can put out a really nifty digital camera and the stale odor of photographic fixing solution clings to it in the mind of buyers (yes, including my own).
A 1942 book by Joseph Schumpeter (excerpt here) provides some background info on this.
[Capitalism] incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in....
The idea is that capitalism and innovation are almost linked. By doing something better, handier, cheaper, you can make more money than the other companies. So there is an incentive to do something new.
Seen over a long time, the biggest threat for companies is not so much the competition in the existing market, but the landslide next year when something entirely new just chops down existing, nicely ordered, markets.
Digital photography is such a "creative destruction" development. Suddenly the demand for ordinary kodak camera rolls drops down. Not even the best product in it's category will sell really well when the entire market moves to different products. (Kodak is not just camera rolls, also photographic paper etc, but this is the general idea).
An historical analogy: the dreadnought was the first all-big-gun battleship, completed in 1906. Great Brittain and Germany (and others) were engaged in a huge shipbuilding arms race. A lot of "ordinary" battleships were being build (one year later they were called "pre-dreadnoughts"...). That one single first dreadnought, prototype of the modern battleship, made every single fleet on earth obsolete. Brittain and Germany effectively had to start from scratch, 0 vs. 0. (Or, more rather 1 vs. 0 :-) Talking about creative destruction...
Reinout
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the printer manufacturers got their act together first... after all... when faced with the choice of the right paper and cartridge for your photos, you go for the printer manufacturer's first...
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The one thing Kodak has, which I haven't seen from any other company, is kiosks in drug stores that will take any digital media (CompactFlash, SecureDigital, Memorystick, CDs, etc) and for about 30 cents will print out a 3x5 picture.
Solid ink (wax), and color laser printers require quite a large investment ($1,000+). Quality inkjet printers cost $100+, and ink is notoriously expensive. Not to mention problems with ink spots, clogging, etc.
So these kiosks are probably the best thing to come along for those that don't do a huge ammount of printing, but want a few digital photos in a good quality, physical form. So, that's one place where Kodak has a foothold in an up-and-comming market, and could continue to expand on it for a while (different size prints, etc). No other companies appear to be taping this potentially major market, so they've got a good position. It may not completely make up for loss of film sales, but it is a good money maker, and they should be able to live off of that for quite a long time.
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someone comes out with a concept that makes your razor blade obsolete... the same thing has happened with Kodak and Polaroid... they only made their cameras to sell film, paper and chemicals. After all, you buy one camera but buy lots of film and chemicals/paper (when you get it processed even if with a one hour lab)... they just didn't react to the new paradigm that rendered complex proprietary film and chemical processes obsolete...
Donald 'Duck' Dunn: We had a band powerful enough to turn goat piss into gasoline.
Yeah, well done there. That single ad in the print version was really burning my eyes out, thanks for taking the hit for all of us. And you never know, Wired could be slashdotted.
...I bought one by Kodak. Why ? To this date, I still wonder.
.....
It was one of those DC-3200 camera's(opinion definitely not mine), which provided 1 megapixel resolution with the camerasize of a polaroid.
After one first try, I brought it back when I found out that the batteries (AA) would only last 30 minutes. Since then, I regarded Kodak in the digital camera business for what it proved to be to me: crap.
My second camera was a Fuji A-101, which was a lot smaller, more power-friendly, and gave me a lot of pleasure for my money. I stayed with Fuji ever since.
Kodak indeed can't hack it in the digital age. I would say to them: put up with it, or
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Wouldn't it make sense to make a business model of producing physical copies of these digital photos?
I mean, somewhere or other, everyone wants a decent glossy copy of their perfect digital photos... Kodak just needs to really tap into it.
They could have done it better, of course. Right now they are focusing on using digital cameras exactly like film cameras: making prints and organizing photos into albums for storage. Digital photography can be so much more. They should be focusing on the things that can be done better with digital photography: photo editing and distribution. They should offer a web hosting service for individual pictures or complete albums, and their camera software should come with extensive photo editing capabilities. (also it shouldn't suck quite so much). But there's a lot of inertia in a company like Kodak, and it's amazing that they've been able to adapt to changing technology as much as they have. Certainly better than some companies in other industries I could name...
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I know the selling point and the comparison these days seems to be megapixel as the measuring point for the quailty of the camera, much like the MHz race with CPU's. And I guess it is easy to understand, explain and a line up in a table fact sheet when comparing cameras.
But it says little about the true quality of the image and none about the optics. So what if it has 99 megapixels when the colors aren't right. How many in the mass market needs a ultra high pixel count, they are not making posters.
I can't believe noone has mentined this. I don't think this is a matter so much of Kodak's failure as it is the success of Canon. In fact, despite the new huge market, all companies are having trouble competing with Canon; they have dominated the entire field, particularly in the upper end DSLR field. As was stated earlier, Kodak has primarily a film company, so it has had to scramble (due to the shrinking of the film market) to compete with other companies that were already in the business of making cameras.
-ashot
Could be that Icahn misjudged the potential of Kodak and its managers after all. There's knowledge in that company that goes beyond analogue- and digital photography and it isn't bad in digital either. He knows it,they know it. To split the company and sell off the parts is one way to do it. There are other ways. If Icahn needs an even lower stock price for his plans he sells and gives an interview (and nobody has written when and what he actually bought). Kodak will survive this A/D conversion. Probably in a better shape than with Icahn.
Ernst
Seriously though, that case that you make of finding someone else's media is the one case where you have a point for analog - you could call it the 'archaeologist case'. With many forms of digital media, *someone* has to care enough to keep the systems going to preserve the information. While this isn't a problem if it is your own stuff, I grant that it is a problem after you are gone.
They have patented CMOS technologies that are used in MANY digital cameras from different companies.
I wouldn't say they are finished. Their most recent cameras are pretty nice quality.
This means changing what Kodak is about. It's not changing your "business model."
At least, if I got you right, you expect Kodak to either get involved in home printing -and they're going to challenge Epson/Seiko and all the other heavyweights how exactly?- or professional printing, which of course has its heavyweights too.
What Kodak need to do is either do some heavy R&D and convince consumers they need it or tap into the current market they were so aggressively almost pushed out, by employing the same (if not more) aggressive tactics.
/. Where the truth
> Analog photography is a trinity: Camera - Film - Paper. Digital photography drops that down to two elements, the camera and the film.
> It might be a matter of perception. Canon, Nikon and Olympus got it. They realized that digital photography is all about the camera.
Well, there's a third element that I take into consideration (you may care less if you're in the tourist point-and-shoot set, or maybe not) which is the optics. Optics are in some way keeping me in film. Like you, I shoot in film and then scan a lot of stuff in to work with.
I have a (for me) significant investment in lenses. No matter how fine your film grain, no matter how many MPixels, you're still limited by the quality of your lens. The thought of pitching all that hardware is, for me, painful. I'm waiting for the D-100 body to come down in price enough for me to use the lenses I already have. Quality optics are not cheap, and whatever camera
I have, I will want the ability to make decently large prints. 8x10 is a minimum, I'd prefer 11x14 or larger. I realize most people want a 5x7 that they can crop and put in a scrapbook, and that's where most of the market is going, but I'm going to be realistic about where I am, as well.
Producing prints in analog is expensive. A scanner that can do several thousand dpi is cheaper and more versatile than a good quality enlarger. I can use the scanner for other things, and it takes up a lot less space. (Not to mention, I can have sunlight in my office when I use the gimp!) I still have to use a darkroom to get bigger prints, although I drool at the larger inkjets every time I go to Microcenter.
With the B&W market, Kodak still has a good solid foot in the door. And B&W will probably be the last up against the wall for the digital revolution. IMO, It's hard to beat their TMAX either at 400 or 3200. I shoot mostly Kodak B&W. It's financially tractable for me to process B&W in my basement, walk the negatives over, and scan them. That will give me an outlet till I save up for the digital that talks to my already existing hardware.
> What part of digital photography finally makes its way to prints anyway? I've never had a photo printed, just share all of them among friends via the net.
I like having the odd print hanging up around the house, or to give hardcopy to $SIBLING to display. We're not quite to the point where we can all have fancy LCD frames in the living room alternating between displaying Magritte paintings and my best digital prints. (:
> Hell, even when I'm taking photos on film, I develop and scan. And of course, I'm shooting on Fuji.
For color, I also shoot Fujifilm, but Kodak has already lost most color customers to digital anyway. They can't be counting on color film at this point for much of anything. They've brought out that C-41 B&W film to try and get people to buy film, but I won't use it. It's the same price as color, and has the same orange tinting to the negatives as color film, an added pain when I'm scanning them in. I'd be really suprised if it gets them anywhere.
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The biggest thing that Kodak has going for it right now is the name "Kodak." It's synonymous with photography. Everyone knows what a "Kodak moment" is. There's no such thing as a "Fuji moment" or an "Olympus moment."
That said, Kodak hasn't leveraged their name very well. They were slow to produce an inkjet paper for photos. "Printed on Kodak paper" has long been a focus of their advertising as a source of quality. Getting a slice of the home consumables market should've been a no-brainer, but I think they waited too long on that one.
What's worse is that they waited way too long to get into the digital "film" market. It was just last month that I first saw a Kodak-branded memory card for sale at a local drugstore. That should've been a total no-brainer. For anyone over the age of 40, given a choice between a brand you'd never heard of, and Kodak... which memory card would you buy?
Heck, they let Lexar get away with trademark dilution. For a while now, Lexar has been selling their memory cards in Kodak-yellow packages that are about the same size and shape as a Kodak retail film box. It confused me a little when I first saw it... a less technically-astute and observant person might easily think it was a Kodak product.
Others have commented on Kodak's "Gillette model" business plan, making money on the consumables. There's still money in digital consumables. Kodak's brand name should give them a huge chunk of the market, if they don't muff it up. So far, they've conceded that market by default, I think...
This anouncement came just at the begining of the digital photography era and seemed like a promise that digital would never reach the level of film.
I never heard about that again (nor have I the time to google for it now). Note that it would mean a change in the 2 main processing systems (C-41 and E-6).
More on topic, I think Kodak's spirit of innovation has been long dead. They killed their Kodachrmoe line without replacing it with quality E6 films -> Fuji took over. Every time I've found an equivalent film from another company (usually Fuji), the other has proved better. Instead of that, they started the Adventix/APS customer ripoff, starting a completely incompatible line of film/cameras (together with many other companies) claiming that it was 'better' while it was indeed half the quality at double the price.
Also their software is garbage (have you honestly ever used a Kodak software for more than 2 minutes without looking for a better solution ?).
I also briefly worked in quality control at a Kodak film production plant and, well... Let's skip it.
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But these aren't just scans, they're high resolution scans, color-corrected, in five different sizes. Sure there's the film, developing, and CD costs, but unless one is taking an enormous number of shots they're still a good bang-for-the-buck deal for the average special-event snapper.
Not only does one get a handy digital copy, certainly far better then all but the latest prosumer digital camera models can produce, but also one needn't invest into a new camera but continue to use one's tried, true, and relatively cheap equipment already out there.
Kodak even managed to get their PhotoCD technology put into about every CD reading device out there. Almost every PC CDROM supports PhotoCD. Many DVD players support PhotoCD. Numerous Kodak development shops can process the film and give you a CD in an hour. Even most major photo software can read a Kodak PhotoCD natively.
So where'd the blow it? They could have shared the digital photography revolution. Kept selling film for quality and offered digital prints for versatility. But truth be told Kodak had no clue how to counter the sexy new digital cameras.
Instead of trying to sell their system's versatility they offered it as a poor alternative. Instead of bringing in new customers lie digital cameras were they kept selling to their shrinking existing base of customers. Instead of doing a massive give-away promotion to jumpstart the whole thing they've steadfastly clung to their high prices.
They took their eye off the consumables business and instead tried to cash in too early on the PhotoCD tech, in the process losing both markets. They've even abandoned third parties being able to make PhotoCDs any more - their last software product went off the market years ago and there's no legitimate source left.
With folks scurrying around buying software to make VCD slideshows on often buggy players it's ironic that much of the needed tech is already working in their drives. Just the company owning it won't sell tools to use it.
Kodak's not going under, at least not soon. Polaroid's instant film market was pretty much decimated, that and years of dreadful mismanagement did them in. (To whomever now works for the last batch of Polaroid execs - SELL & RUN!) Kodak still has a viable business. Indeed they're even transitioning over pretty well. But they could have had a much easier time of it and owned a lot more of it if they'd have played their cards right.
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