Reasons Behind the Demise of Kodak

pbahra tips a story that goes into the reasons behind Kodak's decline and fall. Quoting: "With digital, a significant shift in mind-set occurred in the meanings associated with cameras. Rather than being identified as a piece of purely photographic equipment, digital cameras came to be seen as electronic gadgets. The implications of this shift were enormous. With digital devices, newcomers such as Sony were able to bypass one of Kodak’s massive strengths: its distribution network. Instead, digital cameras became available in electronic retail outlets next to other gadgets. Kodak was now playing on Sony’s and other entrants’ turf rather than its own. Similarly, Kodak’s brand came to be associated with traditional photography rather than digital."

Comments

Pretty simple

[Severus Snape]

They failed to react to changes in their market.

Re:Pretty simple

[jellomizer]

More to the point their Marketing failed to convince their consumers that Kodak was changing with the market.

Right when Digital cameras were getting popular, Kodak should have gone all out in their marketing trying to sell their own Digital Cameras and far more effort on their Printers and such.

The problem with their Printer Campaign was they were trying to sell that they have lower Total Cost of Ownership... It is really tough to sell Lower Total Cost of Ownership, They should have pushed High Quality Images... And TCO is one of the benefits that customers will get later.

Re:Pretty simple

[icebike]

Not true, Kodak actually adopted digital technology extremely early. They ventured into inventing many of the first generation digital photography technologies in association with Apple (and that’s biting them in the rear since now the patents they got from that and are using to sue Apple, among others, are being disputed by Apple as also or exclusively belonging to them.)

What really killed Kodak was the structure. The company had an extremely high profit margin business model in the film arena. So profitable they own[ed?] their own silver mills. When digital photography came to be, and film finally died, a humongous branch of their business died.

I'm not so sure it wasn't failure to adapt after all. In fact, your own description pretty much says it was.

It was a given that film was going to go away fairly early. While Kodak did make some forays into digital photography, they did not lead the charge into a whole new way of doing business. It happened without them. They were not a significant player.

Additionally they ceded the only other remaining aspect of the old methods to HP. They pretty much dropped the ball on printing too.
That previously relied on a silver process, and Kodak simply could not get away from that silver technology in any meaningful way.
So both sides of the company got hit with a new technology, and rather then leading the way, Kodak hung on to the past.

Their only chance for survival would have been to wholeheartedly embrace digital photo printing, where they at least had the chemical expertise, and the possibility to retain a "consumables" portion of the business, in ink, paper, and also devices (printers). But HP beat them in that market as well.

While a dozen companies make photo printers, (even Kodak) they are a huge pain in the neck, the ink is always dried out when you need it, the paper is way too expensive, way too finicky, and the archival quality is abysmal. Few people bother to print family photos as a result.

Sadly lost in all of this is the family photo album, or the shoebox of history. Nobody prints photos anymore. Entire family photo history is lost
to the first hard drive failure, and the one at a time viewing of computer files on a monitor is simply unsatisfying.

Re:Pretty simple

[Crypto Gnome]

THIS!
To say that by the time the market had turned they were too deeply embedded in THE OLD BUSINESS to ever have a snowballs hope in hell of changing is merely to say THEIR CEO WAS INCOMPETENT.

There's ONLY one real thing a CEO has to do, and do well, and that is STAY AHEAD OF THE MARKET.

What they have done is NO DIFFERENT to what the RIAA/MPAA are trying to do other than KODAK is not suing every man and their pet fleas attempting to prop up their no-longer-sustainable business.

So, let them die.

[Geoffrey.landis]

I'm not sure why people think that it wasn't a right and proper thing for Kodak to die.

Kodak's strenght was film photography. There turned out to be plenty of other companies with strengths in digital, why should Kodak have colonized that market? Let them produce the stuff they're good at as long as people want it, then quietly go away. There's no reason corporations need to be immortal.

Re:So, let them die.

[Tharsman]

I am not sure if anyone is arguing to "bail them out" or anything like that, but it is an interesting experiment to try to figure out what exactly went wrong and what way would had it been possible to save the company.

I think in the future, during economy or enterprise management studies; Kodak's history will be deeply dissected and studied.

Re:So, let them die.

[cshirky]

But this assumes that the natural lifespan of a company is infinite. What I think Geoffrey is saying is that when Kodak went out of business, the answer to "what exactly went wrong?" is that nothing went wrong.

Here's an analogy: Imagine I offered you one of two things: 200 millions tons of granite rubble, or a cathedral. Which would you pick?

The cathedral is the obvious choice -- the stone in its raw state is fairly dull, while a cathedral is a spectacular work of architecture, the fruit of countless hours of skilled human effort. The cathedral has value right now, while the rubble isn't good for much without an enormous amount of additional labor.

What if labor was part of the equation, though? What if I gave you a choice between the beautiful cathedral and the chaotic rubble, with the stipulation that, after you chose, it was your job to build a bridge.

Now you want the rubble. Though the cathedral and the rubble are made up of about the same amount of stone, building the bridge out of the rubble will consume all the energy required to build a bridge, but building the bridge out of the cathedral will require all the energy needed to build a bridge plus all the energy required to dismantle the cathedral. For some tasks, it's simpler to start with raw material than with a beautiful structure that has to be dramatically altered to serve your purpose.

Now imagine I offered you one of two things: You have to build a digital photography business, and you can start with Sony, or Kodak. Which would you choose?

The problem Kodak faced wasn't that they couldn't have become a digital photography business. The problem Kodak faced was that the digital business was so different from what they are good at that the restructuring costs were crippling, *precisely because they were perfectly adapted to the previous era.*

Re:So, let them die.

[nightfell]

But this assumes that the natural lifespan of a company is infinite.

No, it doesn't. It assumes the lifetime is indefinite, which is different.

Unlike, for example, humans who live to around 60-125 tops, companies don't have a built-in expiration date (they used to in the US, but haven't for over a century).

What I think Geoffrey is saying is that when Kodak went out of business, the answer to "what exactly went wrong?" is that nothing went wrong.

Nothing went wrong with the market. It did what it's "supposed" to do. The question is what went wrong with Kodak. They didn't do what they are supposed to do.

What if labor was part of the equation, though? What if I gave you a choice between the beautiful cathedral and the chaotic rubble, with the stipulation that, after you chose, it was your job to build a bridge.

With business, labor is always part of the equation. Digital photography and film photography aren't like a building and a bridge. It's like a building and a building. Would you rather have a pile of rubble to turn into a restaurant, or a cathedral to turn into a restaurant?

And stone is much more difficult to rearrange than a company, in terms of labor. It's only harder, potentially, in the mental task of coming up with a solution.

Now imagine I offered you one of two things: You have to build a digital photography business, and you can start with Sony, or Kodak. Which would you choose?

Or Nikon or Canon?

The problem Kodak faced wasn't that they couldn't have become a digital photography business. The problem Kodak faced was that the digital business was so different from what they are good at that the restructuring costs were crippling, *precisely because they were perfectly adapted to the previous era.*

Nonsense. The problem wasn't that they couldn't change, but that they didn't change. Nikon and Canon (and Olympus and Fuji and countless other film-era companies) made the switch just fine.

Just because Kodak failed (or, "is failing" might be more appropriate) doesn't mean failure was the only possible outcome for Kodak. The *film* side of Kodak must fail, but the *camera* side of Kodak was under no such restriction.

Canon

[El Lobo]

That didn't prevent other giants of traditional photography like Canon and Nikon to evolve and adapt to the new era, successfully competing again the new kinds.

Re:Canon

[fahrbot-bot]

I think the difference is, as someone else pointed out, that Kodak was primarily a photochemical (and film) company, whereas Canon and Nikon are primarily camera companies. With the decline of film, came the decline in photochemical usage. As for other photochemical uses, like printers, companies like HP, Brother, etc... have long-standing reputation. As for film itself, I have friends that have preferred Fugi film for many years.

Re:Canon

[Artagel]

Kodak was in the black and white picture printing business since the 1880s. It was in the color printing business by 1835. Hewlett-Packard was not founded until 1939, and it did not start in printers. Brother made its splash in dox-matrix printers in 1971. Kodak could have been far, far ahead of these companies with what we now consider printers. It would have moved in the direction of Xerox and gotten into the printer business. It just did not. It did not ask itself: who is going to cannibalize me, and how do I get in front? Change hit the accelerator pedal, and Kodak was left in the dust.

It's about the film.

[Animats]

What killed Kodak was the demise of the photographic consumables business. They had a 70% margin on film. The margin on photographic paper was probably even higher. And the developing business was profitable, too. All the consumables products had strong repeat business. Digital cameras offered none of that.

Kodak kept trying to somehow attach a consumable to digital photography. They tried PhotoCD, printer paper, and ink. They even tried selling flash memory cards. They bought Ofoto, an early picture-sharing site, and tried to make it a pay service. None of those offered the margins or market presence that film did, and none were notably successful.

Without a consumables business, Kodak had no competitive edge.

The end came when cameras became a component of phones. There was no longer a defined low-end photography business at all.

Re:It's about the film.

[starfishsystems]

They tried PhotoCD, printer paper, and ink.

Unfortunately, Kodak charted a doomed strategy with PhotoCD by making the format proprietary. Rather than locking customers into the format as Kodak may have intended, the decision created a huge disincentive for the emerging digital image processing industry to go anywhere near it. And it created a perception that Kodak was not a credible player in that industry.

Re:Absolutely.

[ZeroSumHappiness]

I think I just realized why we have this derisive and abusive notion that a person who uses a point-and-shoot cameras is "just some dork with a camera." We're conflating the art of photography with the practice of recording an event in a visual format using the science that allowed for both. Unfortunately, these two acts do not have separate words in English so I will coin one now...

Let us call the act of taking pictures to record events "picturing" instead and things become far more clear:
This lets us say: "Casual picturers always regarded cameras as just a do-hickie: a means to an end."

You would be an amateur photographer (yes, amateurs can still be called amateurs even when on a shoe-string budget) rather than a picturer. I am "only" (though to be derisive about such a thing is to misunderstand) a picturer. I have no interest in the art of photography but I would like to have a keepsake to help remember that time I climbed a mountain. However, to call me "some dork with a camera" is unfair to me. It is not my intent to make great art, only to have a memento of the past that I can show others.

So can we stop being pompous jerks about photography so that I don't get chided for having poor composition skills and not understanding what f-stops are for?