Slashdot Mirror
The Rise and Fall of Kodak
H_Fisher writes "Michael Hiltzik of the L.A. Times writes with a frank look at the decisions and changes that have led to Kodak's decline from top U.S. photography company to a company whose product is almost irrelevant. He writes: '[Kodak] executives couldn't foresee a future in which film had no role in image capture at all, nor come to grips with the lower profit margins or faster competitive pace of high-tech industries.' He also notes that Kodak's story comes as a cautionary tale to giants like Google and Facebook."
I wrote an article about the impact of Kodak on Rochester, New York, the city it built. Some interesting context about how technology built a city - twice.
go get it
Companies already know what happens when you don't continue to innovate. The book:The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business goes into great detail and is basic reading at most business schools.
Kodaks whole business was founded on film development. The whole idea was that they sell the cameras cheap and charge for the development. Was that way going back to the glass plate days. Simply put, they where rendered irrelevant by digital photography which is the exact oposite market. Expensive cameras, free "film". While its sad to see them go, they are more or less a lost cause now.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
This site was one of the pioneers of tech blogs in the early days of the Internet. Then other tech blogs came, then fb commenting came and now twitter has made slashdot a total non-entity. In fact, the fact this site looks virtually the same and has no real new features in years shows how much the rest of the tech world has passed them by.
In short, Kodak = slashdot. May they both rest in peace.
more or less a lost cause now
I would say less. If they were able to cut their expenses to the bone, then take on additional funding to create innovative imaging products, then they would have a shot. Their brand recognition is still worth a lot. There are a lot of people over 30 who will have some trust in new Kodak products.
Unfortunately, they have tried to create products by copying the status quo. They should raid developers and designers from Apple and try a fresh start.
Flexible bare-metal recovery for Linux/UNIX
The paper industry is feeling the pinch, too. Newspapers are dying, and paper mills are closing. The latest generation of computer users feels little desire to print anything. The paper industry had a "put it on paper" promotion. That seems to have disappeared.
Paper requires an infrastructure. In business, paper implies filing, filing cabinets, folders, record storage, file clerks, trash cans, shredders, staplers, paper clips, paper recycling, and other cost items. This not only increases cost, it increases head count and makes outsourcing and offshoring harder.
Printed forms are really expensive. Someone has to fill them out, they have to be moved around, sorted, and filed. and probably entered into into a computer at some point. It's been a long time since a forms manufacturer could advertise "the world is run on tracks of printed paper".
There are still many businesses with a lot of legacy paper, but the trend is down.
One big Kodak moment.
It's lesson for all businesses: adapt or become irrelevant. Look at IBM. They used to make tabulating machines. Now they make most of their money selling services. Some industries change at a glacial pace (e.g. oil, cement, Christmas trees) so companies entrenched here can take their time adapting to new realities whereas other industries change pace almost daily (e.g. fashion), so companies in these industries also need to adapt very quickly (e.g. Coach, LV, etc.).
'[Kodak] executives couldn't foresee a future in which film had no role in image capture at all, nor come to grips with the lower profit margins or faster competitive pace
Hmmmmm ... where have I seen that behavior before?
I want to say I enjoy slashdot as one of the few sites actually implementing a nice and full threaded discussion system. We aren't talking about obsolescence, but rather a preference. Too many discussion systems either reorder posts, support no or one level of reply, and other such silly limitations.
Aside from that, the quality of commentators tends to be higher. More often than not, someone related to or very keenly aware of the subject of a story chimes in with additional data whereas most other forums explode in a barrage of inane chatter, trolls and woefully misinformed people. Yes, slashdot is subjected to that as well *but* if we are grading on a curve here, slashdot's community comes out pretty good.
XML is like violence. If it doesn't solve the problem, use more.
They already 'learned' a lesson:
New technology *will* destroy your business model, so destroy the technology while you still have power!
XML is like violence. If it doesn't solve the problem, use more.
I wouldn't be shocked if a company like Pentax (who has good digital products but limited consumer name recognition) to buy the Kodak name for use in a new low end consumer product line.
But Kodak is still trying to cling to the film business. Their new products are things like a digital camera with a built in printer, sort of a hybrid version of their older instant cameras. People just dont seem interested.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
I worked on a project with Kodak to do a project for a company that dealt with disposable camera's and photo galleries. It by itself was an amazing idea and very useful even now, however they we're horrible and the project failed horribly. The world has left them behind.
In a world where they had to do little more than free image galleries and the brand could have killed off a flicker years late, they continued to throw away everything they built.
I wonder what part 'photogs' (why can't they call themselves photographers? weird.) played in this.
You know the ones, that - even as recent as 2 years ago - still claimed digital was crap, film was here to stay as a vastly superior medium, that no professional would ever adopt digital, etc. etc. etc. The very same people Kodak probably had intimate relationships with from marketing through research.
Not laying blame, just saying.. perhaps Kodak laid too much importance on their opinions, trusting them to be 'right' as they had been for decades earlier.
A few excerpts from Kodak develops: A film giant's self-reinvention (Feb 2010) seem to suggest they just couldn't transition fast enough rather than became irrelevant.
The usual explanation is that Kodak failed to see the approach of digital.
In fact, Kodak was more than ahead of its competitors: it invented the digital camera -- even though it lacked the foresight to exploit it.
No, they didn't make the first DSLR 20 years ago. What they did was basically sell an add-on that attached to your Nikon SLR to make it digital. Kodak never made any DSLRs themselves; they were always digital backs, or based on Canon or Nikon bodies, or sometimes just rebranded Canons or Nikons.
There's a huge market for camera components. Film is dead (at least for stills, film is slowly moving that way), but the DSLR market is alive and well, and companies like Sony are making a fortune selling camera modules to go into the iPhone and other devices.
Kodak could have been selling millions of mobile camera modules, or competing with Nikon and Canon for the high-end, but they're not.
And ironically Kodaks business plan of sell the camera for cost and over charge for the film is alive and well in the printer/ink business.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
I lived for many years in the UK town where Kodak had its European headquarters and plant - Hemel Hempstead. It's all gone now. Even the town only "skyscraper" which was Kodak offices has been converted to residential use. Makes me wonder where all those thousands of employees are working now.
Predicting the future is hard. Look at that scene in "The Man Who Fell To Earth" where Newton invents an instant camera. Instant is something anyone could see would be a winner, but no-one at that time saw it happening without using film.
I find it interesting that the Kodak name plus their patent portfolio, only nets a $300M market cap. They must have a lot of liabilities to drag them down that low.
I don't think so.
The problem for Kodak is that photography is more and more stratifying itself into two major categories:
1. High-quality digital camers
2. Cell phone cameras
Kodak built its business on cheap cameras that anyone could afford, and, of course, the film. Cell phones are now increasingly replacing Kodak's old niche in the photography world, and they've never really been known for expensive high-quality equipment. Going electronic & digital was simply not enough, they would need to break into an entirely new market or product type to stay alive.
There is no -1 Disagree mod. Slashdot.org/faq defines mod options. USE IT.
Kodak provided a good product, and it innovated both in the pro and consumer market. The stuff it did really brought photography to the masses, and high end photography to the pros. The cameras allowed us to take pictures. The film allowed us to accurately reproduce those pictures. The technology was not trivial.
The think is that it is simply not cost effective to do a good job printing pictures that can just be reprinted. Archival for the family is no longer an issue. So the quality that Kodak represented is no longer needed. Which means lower markup and therefore an inability to pay for the bloated management that all corporation build up over time. This is why we need firms to go under, fire all the management, and sell all the assets. It frees up managers that are good to start more efficient ventures, and allows inefficient managers to no longer be a drag on the system. With the current idea that corporations are imortal, we have manager vampires feeding off the workers and consumers without providing any real value.
So is there a lesson here. Yes, to the inefficient manager, be ready to be thrown out into the street. Which won't happen, as there will always be banks and courts that perpetuate the efficiency of aristocratic class. Kodak can go. They represent and inefficient past. Not buggy inefficient, but perhaps heating stove inefficient.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
They had an angle into that market; they made CCD's for high-end digital SLR's for a long time. I know they sold sensors to Olympus, among others, for years. Olympus wound up switching to Panasonic as a sensor supplier for technical reasons related to video capture, but lots of folks still swear by the old Kodak sensor cameras.
Pentax was bought by Ricoh, so that Ricoh would have a brand with better name recognition!
I worked as a designer for a market research firm in the late 1990s and Kodak (a client) was then trying to come up with ways to remain relevant. They were always testing new concepts and business models. Not products per se, but entire new ways of looking at imaging and how consumers would use cameras and images in the future. I guess they never found a solution.
They did that -- they made CCD's for several DSLR's for a long while. Olympus got their sensors from Kodak for their DSLR's for years, and they also made some very high-end medium format sensors for Hasselblads and so on. Not sure why they wound up failing in this market, really; Olympus left them because they wanted a partnership with Panasonic for other reasons, not because there was anything fundamentally wrong with the images from the Kodak sensors.
Kodak may have a fighting chance in an "expensive camera, free film" market. Unfortunately for Kodak, it's becoming a free camera, nonexistent film market. The article argues Kodak's problem is worse than the auto or entertainment industries because their core products are still in demand, they just need to adapt.
Even in hindsight, I'm not sure what they could have done other than using their capital to move into another industry. Digital cameras and picture frames, printers, printing services... they had relative success with many of those technologies and it didn't help. I agree with you, sadly, Kodak is a lost cause.
For many years Kodak also produced a lot of the film used in x-rays. When a small hospital is producing over 100 chest x-rays a day (on a piece of film that is 35 by 43), that's a LOT of film. The chest x-ray is probably *the* most common film taken (simply because you can tell a lot about the state of a patient's heart and lungs very quickly, at very little cost in terms of money or radiation). It's a big sheet of film - funnily enough about the size of your chest. They made a lot of money with it.
Then digital technology arrived, and Kodak did adapt - producing both CR and DR equipment, printers, and PACS archives. They even won a very large contract with the NHS in Britain to supply many of the hospitals with their radiography equipment.
Quite what happened then I don't know but they got out of medical imaging, but they did at least attempt to adapt to the new scene. Perhaps their financial models revolved too much around the silver they were putting on the old films.
Right, but at that point they should have been making their own cameras instead of just the sensor. They had a lock on the entire camera market at one point, but for some reason it seems that they never actually made their own digital cameras, just rebranded or added on to other companies'.
The make-your-own-camera-module thing became more important as cellphones started getting cameras integrated (even when they were crap, a lot of phones had them, and there was money there even then). It wasn't (and isn't) realistic for Kodak to have made their own cellphone, but they could have gotten a chunk of the camera module market. At this point, that's probably even a much bigger market than the rest of the camera market combined; every cellphone, tablet, handheld game console sold, they all have camera modules, and Kodak isn't the one making them. Sony makes a lot of them, even for their competitors. And I've no idea who makes the camera modules in the 3DS, but it's got *THREE* of the things. More and more cellphones these days have at least two cameras...
I worked for a digital imaging reseller back in the early '90s. We were a Kodak agent and sold the Kodak DCS series of camera and the LEAF camera backs. The Kodaks used a standard Nikon SLR camera body. There were options for an infra-red and aerial photography filmbacks. They were fairly advanced when you think about it.
They released a DCS with burst capture and voice annotations for the '92 Olympics for sports photographers.
Sara
Designer, Gamer, Macgrrl in an XP World
And ironically Kodaks business plan of sell the camera for cost and over charge for the film is alive and well in the printer/ink business.
For now... printing is already on the decline. It's probably not going to drop off quite the way film has, but there are already a lot of things that people used to print that they now just carry around on smartphones, or display on cheap LCD screens. The printer/ink business model will survive a while longer, but it's going to get steadily less profitable as people use ink at slower rates.
The VP of research at EK told us a story that back in the 1970's, Kodak had a billion dollars in the bank to invent. They had to choose between instant photography and digital imaging.
Kodak chose instant photography. I think they ended up spending another billions dollars on lawyers and on a settlement with Polaroid. In the meanwhile, Kodak cancelled a large part of its digital imaging program, after already bringing the world's first consumer camcorder to market.
Blaming the paper industry for deforestation is like blaming the pork industry for the lack of pigs. Deforestation is happening in places, obviously, but it has little or nothing to do with cutting down trees to make paper. Canada and the US are both large consumers of paper (and have been for a long time). They've had the pretty much the same levels of forest for 100 years.
You don't cut down expensive old wood in sensitive places to make paper. Maybe you don't think farmed forests are environmentally sound, but they definitely produce oxygen.
Let's not stir that bag of worms...
People who made stuff for the horse industry could find new employment in the car industry. People who worked at Kodak have no such replacement. The replacement for film camera's comes from the east and I am not talking about California. Sony for instance makes a LOT of the cheap cheerfull camera's that once used Kodak film. Those are made in Japan. Not the US. Jobs for Japanese, not Americans.
You might look down on a job at a film development line but it gave a lot of people the income to lead their lives. And now their jobs are gone. Read up for how societies are affected when an industry leaves for one reason or another and is not replaced. Rochester, Detroit. These are not happy stories.
This is not about brand names, this is about the erosion of full-time, life-time employment being replaced by temporary work at minimum wages for less then full weeks.
And that matters.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Kodak also manufactures many of the high-end sensors in medium-format digital backs. The Hasselblad H4D-40 and the Pentax 645D use the Kodak KAF-40000 sensor.
Not only did they make CCDs for high-end digital SLRs, but they sold high-end digital SLRs in partnership with Nikon and Canon early in the switch to digital cameras in the 1990s. Kodak was a genuine innovator, and for a while these Kodak/Nikon cameras were THE camera that journalists used world-wide. The cameras weren't cheap ($10k+), but they were the first cameras that could legitimately be called a replacement for film, rather than the simple cameras with pathetic 640x480 resolution that were available for general consumer use for a few hundreds of dollars. These "professional" models were cameras that had high resolution (thousands of pixels by thousands of pixels), a camera with good optics, and battery life that lasted a day of shooting. They were bulky but functional. This was in the days when it was a novelty to shoot digital, upload the photo to a wire service via satellite, and have the photo sitting in the newsroom within hours of an event in a remote location somewhere in the world rather than days later via film. Now it's routine. It was obvious that as the technology improved and prices came down into the range that ordinary people could afford, this was the way things would eventually go.
The point is, Kodak wasn't backwards. They were THERE at the forefront of digital photography, they should have been very aware of what was coming, and they blew it. The camera manufacturers basically outsourced their CCD manufacturing elsewhere and then it was game over.
Kodak's main thrust was overall image quality and print quality, but look what has happened. People use crappy cell phone cameras for most things and hardly print anything.
Telling example of arrogant thinking: When the disc film camera system was introduced, there was a big presentation in the Kodak auditorium explaining in gory detail why it was so wonderful. The lens was a miracle of optical engineering. It was an impressive display of whiz-bang charts and 3D graphs of the photographic space etc. Only problem was you could not take a good photo with a disc camera; all the pictures were uniformly mediocre. Kodak took years to develop the disc system and Fuji had a copy-cat camera for sale in 6 months. This from the company that invented video tape recording and decided "Nobody would want a VCR in their home." Similar logic was applied to ink-jet and thermal printing and to a lesser extent to image sensor micro-lens arrays.
More recently, Kodak tried to sell image sensors into the cell phone market. Have any of you tried to sell anything to a cell phone company? We thought they would be impressed with the Kodak name, image quality and our proprietary image processing algorithms. They are so big they didn't care. Pricing is brutal. They want millions of parts on time or else! VGA devices are so cheap you can't make a profit. HD devices are low-volume so you can't make a profit. That leaves the middle ground of...nothing! We were earnest and naive.
Ranting against the dumbness of big business is popular and there is certainly blame to be placed on a management that could not see into the future, relied on a high-profit fading technology and approved only boring products. I have no doubt that all the fantastically wealthy managers that have driven this once proud company into the ground will enjoy their retirement. The technical people I worked with were GREAT!
Sorry, but gray text on gray background is making my eyes bleed.
A lot of people have argued that Kodak laked the foresight to go digital. I do not believe this is true. I remember when I worked in printing reading a Kodak paper about 1990 which predicted the rise of the digital camera, and how it would replace the snapshot first, as those users would compromise quality for getting to see their pictures quicker (us older folks rember taking a year or so to use a 36-exposure reel of film). The top end where people used traditional equipment, and wanted high resolution and a long exposure range with latitude for over- and under-exposure would hold out longest, but the end of film would come sometime in 2010-2015. It was not clear how the motion picture market would go because there were no digital projectors back then, but the early TI research was beginning to show the way.
Kodak knew what was coming. They tried to move to digital. They made the first digital cameras. They make the first 1k by 1k area detectors. However, in the end, they were a film company, and despite having plenty of money and clever people back then (and probably now, too), you can't just become an innovator in a new field because your manager tells you to. Plus, there must be a certain squeamishness about gouging your own market while film is actually filling your pay-packet. Heigh-ho - it was never really likely to end any other way...
And what if she had seen those glories fade, Those titles vanish, and that strength decay; Yet shall some tribute of regret be paid When her long life hath reached its final day: Men are we, and must grieve when even the Shade Of that which once was great is passed away. (Wordsworth)
Chemical film photography used to cost $1 (1990) per 4x6 print, you could horse it around as low as $0.30 if you really tried, but just going to the corner drugstore for film and developing worked out to $1 per 24 square inch print for a very long time.
I just bought a couple of 24" 1080p monitors for $150 each. That's 246 square inches (about 10 4x6 prints) for $150, infinitely "re-printable" and luminous. We currently take about 2000 digital photos a year (on our $200 camera), obviously we couldn't afford that on chemical film, but the cost per square inch of print is vanishingly small, especially when you mail copies to relatives and friends all over the world for virtually free.
Of course, my Great Depression raised Grandmother won't leave a digital photo frame switched on because it is "burning up electricity (which costs money)", but she will leave the wall-wart plugged in.
Interesting, I wonder if my 2001 Olympus Camedia C-3040Z has a Kodak sensor. It still takes great pictures and has image quality that revealed modern entry level 5MP cameras that were released years after it (despite being only 3.3MP). No rolling shutter either since its CCD and not CMOS.
Or about the value of a small sd-card of mp3.