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

[what2123]

Just wait until they use their remaining resources to legislate their existence for another 20+ years. +1 for Corporation Lobbying.

Re:Pretty simple

[Tharsman]

They failed to react to changes in their market.

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.

The only way for them to survive would have been to axe a gigantic percentage of the company, firing insane chunks of their manpower and getting rid of a lot of physical assets. The problem with such a move with a publicly traded company is that it makes it sound like the company is dying; investors will pull back in a heartbeat if the company suddenly axes over 60% of their manpower (and I’m being generous, they likely would have had to cut back even more.)

Another issue was that Kodak had too many eggs in one simple basket. They did go into photocopiers and printers, but those are two shrinking markets. In fact, now that it’s dying the company finally decided that they may as well axe the entire photography business and stick to printers. At this point they have little to lose since everyone knows they are walking dead. Investors that would had pulled out already did.

Kodak could have expanded in other fields, like computers and displays or TVs, spread their boundaries. This would have made them a bit more resilient to any given branch drying up. Or they could have gone the Apple way and not expand like crazy just because they can, keep a huge stockpile of cash in the bank and not expand operations just because they can afford to, only if they had to. Actually Apple did both. They expanded from computers into music, mobile smartphones, and TV setup boxes (business that is rumored to expand even further) not to mention invent a brand new computing branch with content consumption focused tablets.

So, Kodak did try to adapt, react and even be proactive, but restricted themselves to the familiar grounds (photography) and decided to live (like most companies) using up almost all their income nearly as quickly as they acquired it.

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

[na1led]

When I purchased my first Digital Camera for under $100, that's when Kodak's film cameras died!

Re:Pretty simple

[poetmatt]

That's what bankruptcy (restructure) is for.

If you have to cut out a shitload of people and start fresh, then that's what it takes.

Or they can give up and cut their losses.

Re:Pretty simple

[Anonymous Coward]

That sounds like failing to react to changes in their market. Yes, they had some nifty science projects in the '70s, but they bet the farm on the market not changing. The market changed, the execs cared more about padding their salaries than keeping the company successful, and here we are.

Re:Pretty simple

[DesScorp]

What killed Kodak was simple marketing. They were too late to associate digital photography with the Kodak brand. They invested in the tech early, they just didn't push hard enough for mindshare. There's no reason they couldn't have succeeded the way the Japanese camera companies did. They just made bad choices in promotion.

Re:Pretty simple

[Tharsman]

You can't file for bankruptcy just because you see that the market is headed in a different direction than you. You must be in very bad position already for that to be an option.

Re:Pretty simple

[Gerzel]

Except that isn't what it would have took.

You have to do that AND keep your investors from bailing out.

There is no invisible hand of the market to keep things fair or level or insure that good business decisions get rewarded. There are only buyers and people who act irrationally and without full knowledge of what they are acting upon.

Re:Pretty simple

[gl4ss]

their corp. culture seemd like that even if they had a digital camera thing going, they would have spinned it off..

Re:Pretty simple

[Anne Thwacks]

No body is mentioning the fact that they had an image problem - at least here in the UK, they were seen as having started as a low price company, worked their way to raising the prices with improvements in quality, and then ditched the quality while retaining the high prices. Kodak could have done loads of things, but with an image of selling over priced tat, they were probably already doomed. (Like Carly Fiorina and HP).

Meanwhile Samsung has gone from selling cheap tat to top of the range. Who is is making the profit? Is there a lesson here?

Re:Pretty simple

[The Phantom Mensch]

I think it's fair to say that Kodak adopted digital imaging about as well as Xerox adapted all of the ground-breaking technology out of Xerox PARC. That is, not well at all.

Many people say they should've gone into the camera business but I don't think that would've worked. Not many American companies can compete in the world of consumer electronics these days and the digital camera business is mostly a consumer electronics industry.

Maybe they should've tried to create the iTunes and iPod of photography. Take your pictures with whatever camera you want, but if you want to make your pictures look their best plug them into the eKodak kiosk or iKodak software for your home computer and we'll make them look better, and allow you to share them with Granny online or send her some pretty photo albums. Sort of iPhoto meets Flickr meets Facebook.

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

[icebike]

Exactly. Film was going to die. Printing was all there was left.

They pretty much let HP take that away from them.

There is no reason Kodak could not have pushed both high-end pro-grade printers as well as home-snap-shot printers. They didn't do either with any gusto, and thereby gave up everything they had.

Photo printing, as a result, still sucks so bad that we put up with digital picture frames!! OMG, what an abomination.

Re:Pretty simple

[mwvdlee]

Here's another take; Kodak was primarily a chemical company, now trying to compete in electronics.
Kodak might have been more succesful if they dropped photography and focussed on areas where their expertise was still valuable.
Ofcourse, any "might have been" is just hindsight.

Re:Pretty simple

[amorsen]

They failed to react to changes in their market.

The market didn't change, it disappeared and was replaced with a new market. Kodak tried to switch to that new market, but since it had no particular advantage over its competitors, it failed.

Kodak had two real strengths, its chemical products and its widespread distribution where people could always get their film to somewhere who could develop them and get the finished prints/slides back. Suddenly it is producing electronics and the distribution network is mostly a hindrance rather than a help.

The prudent way to handle such a situation is to extract as much profit from the existing market as possible, give as much money to the shareholders as possible, and downsize operations as the market shrinks. The shareholders can then reinvest in companies which are competitive in the new market. Doing this is not a failure, it is simply good business sense and good for society as a whole.

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.

Re:Pretty simple

[aaarrrgggh]

No, what you have to do is spin your market segments into different public entities, and make the top level a holding company. Slowly try and divest yourselves of assets that won't perform long term. ...kind of what HP tried to do, only the exact opposite. (Or do exactly what they did, and try to be in management of Aligent...)

Re:Pretty simple

[Tharsman]

Without axing branches of the company, I guess the only other path would had been to go Sony-Like: offer good quality digital cameras very cheap, cheaper than anyone, and then equip them with a proprietary media format that is sold at an expensive premium. Market this media format as having some imaginary brand related quality to it, same as they did with Kodak brand film.

Perhaps it's also an issue that they headed into digital too early, at a time where the market didn't care for digital because it was still not good enough.

There are many many ways to analyze this company and with a time machine, perhaps there is more than a couple of ways to save it from it's impending fate.

Re:Pretty simple

[owlnation]

What killed Kodak was simple marketing. They were too late to associate digital photography with the Kodak brand.

Maybe. Though, I'm curious to understand why Fuji succeeded and Kodak failed.

There seems to be very little external difference between the two companies. They both made film for stills and motion pictures, they both made basic consumer cameras. I'm not personally aware of any more marketing that Fuji did that Kodak didn't. Kodak most usually had the advantage of being the first in most of its technologies, with Fuji following.

That makes me think that the real problem must have been internal. Layers of entrenched inflexible management and processes, resistance to change, etc -- all the usual things that all corporations inevitably stagnate from, due to internal bureaucracy and the curse that is HR.

Re:Pretty simple

[Tharsman]

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.

Forgot to answer this: tablets are very likely going to do a very nice replacement for family albums.

Re:Pretty simple

[jythie]

Meh, this is like 'Netflix killed Blockbuster'.. a common and accepted meme but ignores the destructive buisnes practices going on. Kodak had, essentially, a raider for a CEO. He kept selling off profitable divisions in order to boost short term profits and then found a company with everything that worked owned by someone else. At which point he took his millions and did fine.

Re:Pretty simple

[jonbryce]

The problem is that Kodak never really made much money from cameras. They made it selling film, not necessarily used in Kodak cameras. If you were a professional photographer, you would probably buy your camera from Canon or Nikon, but you would put Kodak film in it. The professional photographers still use Canon and Nikon cameras, but they now put memory cards in them.

Re:Pretty simple

[jd]

Yes, that is true. But it's for a very stupid reason. To buy a digital camera that has the resolution of a film camera still costs many thousands of dollars. To buy one that also has the dynamic range is even more costly That is unlikely to change within the next decade. (The odds of being able to buy a digital camera with a sensor large enough to compete with medium format film, never mind large format, is practically zero.)

As for longevity of media - I am currently working through family archives of negatives going back to 1909. Is your flash card guaranteed to hold data 103+ years?

You could argue that most people don't care about quality that high or longevity that great. That is true, but those same people are happy to bitch about the crappy quality of archival material that does interest them. I don't know if the irony is lost on them (the photos they are taking will be someone else's archival material) or if they just don't give a flying about how much it'll seriously bother other people.

Re:Pretty simple

[Endo13]

Yeah I think that had the most to do with it of anything. Kodak set themselves up as the producer of cameras and film that anyone could afford. Then digital photography came around, and they were right there... but digital cameras are expensive, and Kodak wasn't perceived as a high quality manufacturer. And then as digital photography became cheaper, it also became integrated into cell phones. Now cell phone cameras are the true successor to the cheap Kodak cameras and film. And we all know Kodak doesn't make cell phones. But then, no one really could have seen that coming until it was probably too late for Kodak to adapt. That's the inherent problem with marketing based purely on affordability. When another company comes along with a different cheaper, more convenient replacement for what you're selling you don't even have a niche to fall back on.

Other companies like Canon had a much better chance to adapt because they were already selling themselves as high-quality photography equipment manufacturers, and there's probably going to be a niche market for that kind of product for a long time. And even if there's not, it's much easier to sell your consumers on a new (even unreleated) product simply because they'll assume it's high quality like your other stuff.

Re:Pretty simple

[roc97007]

Exactly. Film was going to die. Printing was all there was left.

They pretty much let HP take that away from them.

There is no reason Kodak could not have pushed both high-end pro-grade printers as well as home-snap-shot printers. They didn't do either with any gusto, and thereby gave up everything they had.

Photo printing, as a result, still sucks so bad that we put up with digital picture frames!! OMG, what an abomination.

That's the real tragedy in this -- Kodak had clearly superior printing technology. Had they moved the technology in their kiosks into home printers at a wide range of features/price, HP would not now own low end home printing, and Epson would not now own high end (8 cartridge, roll paper) home printing. They tried to market pixel-based inks and Kodak paper into the homes, but wayyy too late, giving HP the consumer market, and concentrated on low end home and home office, letting Epson have the home pro market they should have owned.

It seems like the upshot is that Kodak couldn't make themselves believe that film was dead. It wasn't out of ignorance -- Kodak was first with a working digital camera in the mid seventies I believe, and had digital cameras (based on Nikon bodies) available before anyone else did. They had a 13 megapixel full frame professional camera back in 2003. I remember that because there wasn't anything like it available when it came out, and the pro photo media was all agape at it. (To give you an idea of how advanced this was for the time, the Nikon D4, released in 2012, *eight years later* has virtually the same resolution.) Kodak had digital technology early and did it well. But for some inexplicable reason, they opened their hand and the bird flew away. Printing wasn't *all* that was left, but for some reason, perhaps unwillingness to move forward, they let others own the high end digital market as well.

Re:Pretty simple

[sjames]

Part of their problem is that they assumed their name would carry as much weight in consumer electronics as it did in consumer photography and they priced themselves accordingly (high). As it turned out though, they really weren't as good at consumer electronics as their more experienced AND cheaper competition.

They did get a jump on things and that was enough for a year or two, but as time went on, cellphone cameras and cheap no-name dedicated units became more than good enough, first for casual snapshots, then for pretty much any consumer use. They failed to adjust their prices accordingly downward.

Re:Pretty simple

[sphealey]

I'm with your story, except: the APS debacle. I'll agree that it would have been difficult for Kodak to productize and market the digital technology it already had in-house much earlier than anyone else. But with that digital technology already in-house, as noted, why on earth did they think it was a good idea to embark on developing a new generation of film cameras incompatible with the 200,000,000 million units already in use? That money could have been used to buy Minolta (which was certainly on the market by that time), bring out a line of 35mm compacts that loaded existing 35mm film automatically, and start developing some usable digital technology.

sPh

Re:Pretty simple

[eulernet]

Is there a lesson here?

The lesson is well known: http://en.wikipedia.org/wiki/Disruptive_technology

Re:Pretty simple

[newbie_fantod]

tablets are very likely going to do a very nice replacement for family albums.

Looking at high quality digital images of the snap-shots my grandfather took during WWI is one thing, but handling the the actual photographs he carried in his pocket throughout that war is totally different experience.

Re:Pretty simple

[Tharsman]

As some one that carefully preserves 50 year old photos around, I fully understand.

But as the same person having a dog eat one of said photos, and others eaten by termites over the years, I also got to say most of them will not survive many more years without digital preservation.

In the year 2062 my grandchildren may talk equally nostalgically about that old cracked glass screen relic iPad they managed to get to work so they were able to see obsolete PNG files that no system bothers supporting anymore. They may look at their holocubes and gasp how its not the same as that digital screen that I actually held on my hands before their parents were even conieved.

Re:Pretty simple

[Tharsman]

I may had gone too verbose on my post. My point is that they adapted but they were encumbered by huge branches they were not able to axe.

We see companies go under every day despite them being slightly profitable, simply because certain standard can't be sustained without huge sacrifices, and in the corporate world those sacrifices are not accepted.

Look at Borders. There were plenty of extremely profitable stores in many areas, stores that were packed and busy all day. In theory, the chain would had been able to survive by axing every single unprofitable store and retaining the profitable ones, even if that meant going down to 10% of the former store number.

Corporate and investors do not accept such moves, though and thats the same type of move Kodak had to move (and is trying to do now but too late by axing the camera business and just keeping printers, under the protection of bankruptcy law, though.)

Re:Pretty simple

[kermidge]

You get it. Kodak got it. The market doesn't; or just as correctly, the number of people who value physical living history was too small to make a difference.

IIRC in the early 90's Kodak offered to make photo CDs with or without prints when you sent them film or files. I think I remember that service being available at some drugstores, kiosks, and photo-finishing labs.

Re:Pretty simple

[Compaqt]

Well, wait, what exactly is meant by "investors bailing out"? Selling their stock?

Does that matter to the Eastman Kodak Company?

Consider: an initial investor gave $1000 (or whatever) to buy shares in Kodak. Today, he sells his shares. He won't get $1000 back from Kodak. So how does it matter to Kodak.

Yeah, stock price may go down, but, again, so what? It doesn't prevent Kodak from restructuring.

Re:Pretty simple

[mug funky]

interesting. Kodak made the best neg film in the world, and (maybe?) continue to do so.

their motion picture stocks are crazy high latitude, and crazy low grain. good fun to work with. the latest stocks barely even need light metering - you'll get a picture even if you fuck up completely.

cinematographers would only use fuji as a special effect or if they had bucketloads of light and could use a slow stock (which would be a little bit sharper than the kodak, but at the expense of less latitude from having a "thinner" emulsion).

of course, everyone shoots RED now because they're pov. but they still dream of having the budget to shoot film.

Re:Pretty simple

[electron sponge]

They failed to react to changes in their market.

I worked in a Kodak paper mill at Kodak Park in Rochester, NY at the most recent turn of the century. I. WORKED. AT. A. PAPER. MILL. AT. KODAK. Might as well say I was one of the last people in the buggy whip factory.

We were developing a new kind of long lasting paper then. Welp, here's to all you other saps at Building 50 at Kodak Park. I quit in 2000 because I knew that shit was going nowhere. The video of our building getting dynamited is on YouTube. It was still a very cool place to work. They had cigarette lighters mounted in the walls of the break rooms. Cancer was so easy! You didn't even need to disturb the asbestos!

In all seriousness, there were few employers in the United States who treated their employees as well as Kodak did. That's why Kodak is pretty much no longer around, that and the fact that the state was a life-sucking vampire that used windfalls from upstate industry to fund its social programs. Look at all the other industrial giants from a bygone era who grew to greatness in upstate NY - IBM, Xerox, Bethlehem Steel, Union Carbide, General Electric, Carrier... it's like if a state could say "don't do this", they'd just put New York up as an example and not say anything else. Now, the areas that claim the most dependency on our state can claim they pay the most in taxes to balance the equation. So Goldman Sachs elites pay pennies on the dollar compared to what the old, solid industries upstate once paid, and we scrape by with a smoke-and-mirrors balanced budget. Meanwhile upstate gets depopulated as their children move south for low paying jobs. Yay, New York. We got fucked by a combination of our industries failing to adapt and our in-state brethren selling us down the river.

Re:Pretty simple

[tftp]

The odds of being able to buy a digital camera with a sensor large enough to compete with medium format film, never mind large format, is practically zero.

Resolution of the film is limited to resolution of the scanner, unless that negative is all that you will ever need.

Also, resolution of the sensor is improving over time, whereas resolution of the film is more or less static.

Is your flash card guaranteed to hold data 103+ years?

It's not required to do so - not any more than an undeveloped film has to retain a latent image for 100 years. The film gets developed and becomes stable; the flash card gets read and the data is copied onto a variety of media. If you take even minimal precautions (one backup) you are already good because only simultaneous failure of both storage devices can deprive you of your data. Once recorded reliably, your digital photo can be read millions of years after capture. No pattern of dye particles that are suspended in layers of organic substance can be hoped to survive that long, let alone to retain correct colors.

You could argue that most people don't care about quality that high or longevity that great.

This is indeed an easy position to argue. Besides, many digital cameras are not limited by the number of pixels - they are limited by the lenses, and then by accuracy of the CCD.

Digital cameras have many other advantages; for example, instant review and deletion of unnecessary images; zero cost of each image; higher reliability (few to no moving parts); easy integration into the modern digital life. Those advantages alone were good enough to choose digital even back in days of VGA sensors. Today, with a 10MP sensor in every low cost camera, the quality of the image is just a factor of how much you are willing to pay for a good lens.

Re:Pretty simple

[freedom_india]

Kodak was actually more strategic and forward thinking than most American companies. It is easy to fault Chrysler, GM and American Steel, since their CEOs were interested only in next quarter. But not Kodak. As you rightly said, they entered Digital photography and could have been the leader if they had leveraged their huge distribution network. To add to that, they allowed digital cameras to become a commodity, like kerosene and calculators and PC's. Once something becomes a commodity instead of a product, the costliest manufacturer gets clobbered. That is why Apple products are NEVER a commodity. They are special products. Kodak was right in everything, putting all its eggs in one basket, but somehow they failed to make the leap that Canon or Olympus did. Hell, Olympus or even Nikon is more respected than Kodak for its digital cameras. You can't pinpoint Kodak's failure on bad management, bad products or bad quality ( i still buy Kodak films for my camera), or even bad strategy. They did not fail due to internal reasons. They failed because they fought on the enemy's territory instead of under their own skies under their radar cover.

Re:Pretty simple

[Opportunist]

And, IMO, they should not have tried. The article says it pretty well, Kodak was a brand associated with "analog" photography. If anything, they should have created a secondary brand for their digital market and leave Kodak alone. Nothing tarnishes a brand worse than trying to dip your fingers in every sauce on the table, people tend to think that you're a jack of all trades, master of none.

I would have tried a different approach: Show off the strength of the non-digital photos, their ability to last. A lot of photography has its value for the memory value. Take all the baby pics for example, these are memories parents want to keep forever, they are treasured and people want them to be safe. Give people a survey and ask what they'd safe from a burning home and they will with some likeliness mention their photo album. It's kinda hard if said album is stored on a computer. Not to mention the ever looming threat of a HD crash.

All digital storage is fleeting. CDs rot, HDs crash, even tapes are prone to failures due to magnetic fields. And how do you read them in 20 years when every possible jack they offer you has no socket in then-current hardware? Pictures on paper can be watched any time. Today, tomorrow, and when that baby of yours wants to show his grandchildren what their grand-grand-grandparents looked like.

That was the angle Kodak should, IMO, have aimed for.

Re:Pretty simple

[GRXGC]

good point, but i feel that their printers were terrible too. They are not a printer company or printer heavy, like lexmark or even HP. They also only made the printers for their cameras, or at least the quality was a slave to the kodak cameras themselves. Thing is, the cameras' they made were never really all that great, even from the beginning. kodak was at one time the Wal-Mart of cameras. you could literally buy a camera out of a vending machine. There are STILL cameras like that in the U S and places like japan and europe still have these camera vending machines. that is the level of quality they were willing stoop to, in order to sell cameras. I don't think i have even seen a digital system camera from them, let alone a micro 4/3 compact digital system camera like Lumix, leica and Sony's NEX series cameras. they, for some reason never wandered in this territory, which became very dismal for kodak fast.

Re:Pretty simple

[Tharsman]

The APS is not something you were able to prevent; it's just part of the cost of maintaining that business branch alive.

If you are keeping the film branch alive, it IS expected to keep operating and innovate within its own bounds, and thatâ(TM)s what the APS was.

Doomed to fail? Perhaps, but I lived that window of time and digital cameras were widely regarded as still not-viable in 1996. Actually, I was studding art at the time and recall a conversation between a graduate student friend of mine and his former photography professor talking about digital photography in 1998. The professor stated that maybe in another year or two it would be required to jump into that wagon but it still was a bit too early. Given the APS was introduced to the market 2 years before that and likely in R&D for longer than that, I would not call its development time and cost brainless.

Image quality was not the only issue; storage was also a huge issue at the time. It was not until the late 21st century that mass storage large enough to replace film in long trips or photo shoots became viable.

Still gives Kodak 11 years to catch up but how do you justify to investors you just have to axe the film branch, that constitutes perhaps 60%-70% of your company? Even Steve Jobs saw a lot of negative feedback when he axed huge chunks of Apple after his return (he axed about every product line but 4 computer models, the Newton PDA between them.)

Re:Pretty simple

[Tharsman]

Kodak could had survived the same way as Canon and Olympus have so far, if they had not been overburdened by sustaining a dying film business (and axing that business was not acceptable at the time.)

But donâ(TM)t take Canon or Olympus side yet. Cellphone cameras are killing the point and shoot camera market and all current manufacturers are feeling that. It wonâ(TM)t be long before those are also gone.

DSLR may survive until someone starts making zoom lenses for cellphones, and that is already starting to happen.

Re:Pretty simple

[Tharsman]

I donâ(TM)t know what to say about this post... for one, you can print digital photos in the same quality you were able to develop film.

Also, if my house is in fire, I donâ(TM)t have to worry about my photos. They are either in my cellphone (the first thing I'll reach for) or held in some cloud storage space.

Digital is very little "fleeting" about digital media. Film and developed photos, though, are extremely flammable and rather heavy. I dare you walk out of your house with 100 thousand photos in film format under a fire without getting burnt yourself, having to leave many behind, and having any damaged by fire or smoke. I'll be waiting outside with my internet connected cellphone.

Re:Pretty simple

[WarlockD]

As Tharsman said earlyer it wasn't that they couldn't, its that they couldn't admit that they lost. What do you tell investers, workers and even the world: "Thanks for hanging around and investing in us these 80 odd years but we are going to have to axe half of you."?

I am sure once the digital camera tech got high enough people in the board room were looking like zombies but there wasn't much they could do. Take a chance with a bunch of upstarts in California? Sell their silver mine for a foxcom like company in china? Anything they do sounds like they are losing badly or at worst, if any of these ideas fail, like their blatantly incompetent. I bet that's why we get these fancy CEO's in charge to take the fall when things go south.

Toy's R Us is still around because they did the hard decision to kill allot of the non profitable stores, But it took being bought out by hedge fund company and having THEM make the hard decisions rather than the board to get where they are today. Hopefully that will happen to Kodak and we might see them again.

As a dying printer company:P

Re:Pretty simple

[Eravnrekaree]

Not many have mentioned this but one of Kodaks mistakes was not going into high end SLR digital camera market. Kodak did go into digital, but in fact, the low end market, which odd enough, the market for low end standalone cameras is shrinking. That is due to cell phones.

Re:Pretty simple

[jd]

Resolution of the film is limited to resolution of the scanner, unless that negative is all that you will ever need.

My cheapo Epson negative scanner will handle up to 12,000 dots per inch. The largest negatives I'm dealing with are around 3" x 3.5". This gives me a theoretical resolution of 36,000 x 42,000 (1.512 gigapixels). Since there are many better scanners and many larger film formats, this cannot be considered the upper end.

Ultimately, all cameras (digital or otherwise) are limited by the lenses. A foot square negative plate with a low-grade lens will capture no information not available with a much smaller negative and the same lens.

CCDs have one major problem - most are accessed serially. This means the time interval you're reading for the first pixel is NOT the same as the time interval for the last pixel. This doesn't matter for small CCDs - the number of high-energy particles and photons that can get through the shutter over a very small time interval is insignificant. Even so, scientific CCD devices will take background readings before and after, then adjust. If you were to build a 1.5 gigapixel CCD, that difference is going to become more significant. You can build cameras that compensate, but that is going to add to the price.

Film is parallel. So whatever the background levels, it will affect the film evenly. Well, unless there's a radioactive source in the room.

The next problem is the ADC. Technically, here digital should be far better than film. You can certainly get 24-bit ADCs and although film is analogue, it is not truly continuous. The reality, though, is that a lot of digital cameras use 8-bit ADCs per colour, which film can certainly beat without breaking into a sweat.

Yes, digital cameras have a great many advantages and -could- be better in every area. My point is not that digital is "bad" (it isn't) but that film still has an edge in certain domains and that within those domains the correct choice is always to go with what is currently best. Eventually, 3CCD cameras with 24-bit ADCs and 1.5 gigabit CCDs will become the norm. Those will be so far beyond anything film could realistically achieve that digital will then be absolutely ideal.

For now, digital is "correct" for general home usage, where massive numbers of pictures is more important than a few great images. But general home users aren't the only ones who want cameras.

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.

[Kamiza Ikioi]

Because they invented the digital camera. They should have capitalized on that fact, my like Xerox should have capitalized on the GUI/mouse system that they had.

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.

[jellomizer]

I think it is because Kodak was an American Company. Centered in Rochester NY close by to a lot of popular collages. So when such a company goes out of business it is sad for the community that was built around it.

Re:So, let them die.

[Tharsman]

I think there is plenty wrong to find in Kodak's history, but not as obvious as many think.

I went deep into another post in this article here: http://tech.slashdot.org/comments.pl?sid=2695641&cid=39177755

There is one common trait that Kodak shares with every single other company out there (and most American households, ironically) and it's that they lived nearly month to month. Unlike households (that tend to just want to enjoy the moment so they don’t save for a year of potential unemployment) most companies don’t like having too much money "burning a hole in their pockets" since they feel every unspent penny is missed opportunity.

They live with barely enough money to pay operational costs for a month or two. If profits go down, they are forced to fire people left and right (why we see investors go crazy for small 2% profit drops.) Some drastic thing happens that changes your market within a year and you will go bankrupt quickly, even if you are willing to adapt or even if you are yourself the first to start such a market trend.

Re:So, let them die.

[Rob the Bold]

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.

I don't see "people thinking" Kodak should or shouldn't die in TFA . . . more of a postmortem analysis.

Anyway, I understand that there's no reason for corps to be immortal, but most people working at a given firm would just as soon it didn't go belly up right now while they're working there. Even if you're looking to quit a place, you'd rather do it on your schedule than the liquidator's.

A sibling of this comment mentions Xerox missing the boat with the GUI, but they seem to have re-invented themselves nowadays doing OCR and image recognition and document and photo management and analysis. Probably too soon to know if this will work, but they did hang on when their market changed.

Likewise with Kodak, you'd think they could have found other things to do in the photography arena. You've got websites like Flickr that store and share photos, Shutterfly and Snapfish that provide hard copies in formats that an ordinary home or office printer can't produce. Kodak probably should have gotten into those areas, among others. But as TFA mentions, they had such an emotional and physical investment in film they didn't want to let go of it.

And what about Fuji? They do plenty of digital stuff, but you can still buy their film. TFA doesn't mention what they did differently.

Re:So, let them die.

[Anonymous Coward]

Any business that chooses to die peacefully rather than adapt to changing market conditions is lousily-run and the executives responsible for strategy-making should be run out of town. Corporations have a firm and unending responsibility to deliver value to investors. Saying "we're going to lay down and die" is a big "Fuck You!" to anyone who ever invested anything in the success of your company.

They pioneered digital photography and then cast it aside in their business model, despite the fact that it had very strong potential to cannibalize their film sales. Kodak's cash cow (film, not cameras) starved and died because they lacked foresight and thought if they just closed their eyes, plugged their ears and went "lalalalalala" people would keep buying expensive and now-irrelevant film.

If Kodak had recognized digital photography's potential and taken that opportunity to jump into the solid-state storage industry, they would have easily thrived in the film-to-digital transition.

Re:So, let them die.

[nightfell]

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

Because most people think fondly of Kodak. I'm not sure why you think people should be cold and calloused about things they like.

Kodak's strenght was film photography.

So were Nikon's and Canon's, but they both jumped into digital with both feet.

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.

No, there isn't. But there's also no reason a company can't go from one market to another. Look at Nintendo, Sega, IBM, Apple, etc. The key is the ability to change with the markets.

Kodak failed in this regard. And sure, that does mean the company itself "deserves" to fail in the market, but that doesn't mean people can't miss them. Polaroid did the same thing, and now lives on essentially as a brand, the original company no longer really exists.

Re:So, let them die.

[bennomatic]

There's no reason corporations need to be immortal

Nor, if they're well managed, do they need to die. There's no reason that they couldn't have found a way to evolve to better embrace the digital photography economy, even if they did not own it.

That being said, I'm mostly going to miss it for the nostalgia value. I grew up in a world where "Kodak" was the "Kleenex" of photography. Everyone I know who is my age or older has owned at least one Kodak camera, and to me, it's a little sad to see the guard change.

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.

Re:So, let them die.

[clairity]

I went deep into another post in this article here: http://tech.slashdot.org/comments.pl?sid=2695641&cid=39177755

There is one common trait that Kodak shares with every single other company out there (and most American households, ironically) and it's that they lived nearly month to month. Unlike households (that tend to just want to enjoy the moment so they don’t save for a year of potential unemployment) most companies don’t like having too much money "burning a hole in their pockets" since they feel every unspent penny is missed opportunity.

the previous point you made is well taken, but this second one is overly broad in that companies vary in the padding they maintain. the amount of cash a company keeps on hand (or doesn't) depends on industry characteristics, competition, regulatory environment, supply chain risk, and other factors like that. apple is a prime (counter-)example here with $98 billion in cash on its balance sheet. this cash is kept for a variety of reasons, but a few to note: the highly dynamic industry that apple competes in, the supply chain risks it's exposed to (including currency risk), and the competitive threat that such a large amount of cash represents to its potential competitors. elsewhere, someone pointed out the adverse tax consequences of paying out dividends with this cash, which is another valid (but tangential) reason to keep lots of cash.

Re:So, let them die.

[funwithBSD]

Another difference between Kodak and Nikon/Cannon is that those companies continued to develop high end cameras and the trickle the technology down to consumer goods.

Kodak fell into a mushy middle ground, with no Professnal or pro-sumer products for serious buyers and not enough differential at the low end of the market.

When I went to buy my first digital cameras, I stuck with the names I knew from film: Cannon, Pentax and Sony (Minolta)

The Kodaks looked like Modern day Brownies. Functional, but very basic.

Re:So, let them die.

[S77IM]

I believe the phrase you want is "They were victims of their own success."

It's a pattern that repeats constantly. Arguing against results is hard, and usually stupid. When some new kid comes along and says, "Let's stop doing X, which has been tremendously successful, and switch to Y, which is the next new thing?" the rational response is "How's 'New Coke' selling these days?" And yet, that new kid will be right some small % of the time. How can we determine when that guy is correct?

THAT's the question we should all be asking about Kodak.

  -- 77IM

Re:So, let them die.

[FaxeTheCat]

The problem is that although they invented digital cameras, their expertise as a company was not in cameras and electronics, but in manufacturing film, which is mainly chemistry.
Kodak were never a big company in cameras (proven by the fact that the high end model they had was just a digital back end for a conventional SLR from one of the main manufacturers, I cannot remember if it was Nikon or Canon).
Nikon and Canon were camera manufacturers. They adapted to the digital technology, because they had (and have) their expertise in cameras. Kodak's main expertise is in the very single part of a camera that is not needed anymore, the film. So whole Canon and Nikon had to adapt (they had already started to put electronics in their camera) by replacing the film mechanics with a CCD and some electronics,
Kodak would have needed to change the company to a completely different business. Not so simple. They tried, but the change was apparently too big to be possible.

Re:So, let them die.

[Aviation Pete]

And what about Fuji? They do plenty of digital stuff, but you can still buy their film. TFA doesn't mention what they did differently.

Fuji lives in the middle of many electronics companies, all potential or actual suppliers of all kinds of digital camera parts. Kodak, however, lived in upstate New York, in a Kodak company town (Rochester), and their potential suppliers for digital products a continent away.

Re:So, let them die.

[BetterSense]

It's also related to tax policy. Income which is poured back into assets and operating costs is not taxed. The goal for American corporations is to show 0 profit. To do otherwise results in paying more taxes.

Re:So, let them die.

[ikarys]

200 millions tons of granite.... That's a damned big cathedral.

Re:So, let them die.

[Tharsman]

Apple is a great example of a company that does not stick to the "little cash on pocket" rule, but it also has been heavily criticized for it. They are a rare exception, though.

Re:So, let them die.

[jd]

Many of the Japanese companies that are currently very profitable and successful have existed for hundreds of years. At least two are around 1,500 years old.

Companies don't need to be immortal, but they don't need to be mortal either. Companies aren't "alive", aren't "people" and aren't subject to decay. They are systems.

Re:So, let them die.

[couchslug]

"There's no reason corporations need to be immortal."

Some corporations may beg to differ, and even get government bailouts..

Re:So, let them die.

[Geoffrey.landis]

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.

Right. "Kodak" was an assemblage of people organized together into a group with particular expertise in manufacturing and developing (no pun intended, sorry) the chemical engineering technologies that go into making film.

Now, one might say "well, why shouldn't that group of people have changed their organization to become a group of people with expertise in manufacturing and developing the technologies for digital cameras?" Well, sure-- but why should they? Why shouldn't some other group of people do that? In what way is the world a better place if the people that were formerly the organization "Kodak" did this instead of some other groups of people?

They were a group of people organized for their skill mix, which was expertise in film; when that market went away, it's entirely proper that the organization dissolved. Bye. There's no reason it would have been "better" for that organization, instead of some other one, to be repurposed to make digital cameras.

In fact, in some ways it would have been worse, since Kodak did continue to serve their market even while it was being drained away by the competing technology.

Re:So, let them die.

[grim4593]

When I was moving I went through some old college books. I found a 5 year old project management book detailing Kodak's success at adapting to business changes. I threw it out with the rest of the trash.

Re:So, let them die.

[DerekLyons]

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.

Bit none of those were so heavily film dependent (except possibly Fuji) as Kodak was. The mistake both you and the OP are making is in mistaking Kodak for a camera company - it wasn't.
 
Kodak was a film company, with cameras being only a minor supporting player.. Film for consumer cameras. Film for x-ray machines. Film for radiography. Film for spy satellites. Film for printing plants. Film for movies, both consumer and commercial. Film for... every purpose under the sun. And backing up the film business, developing chemicals by the tanker full and photographic paper by the acre.
 
But, one by one, each of things went digital (in one form or another) or Kodak's marketshare fell to cheaper imports. (Fuji for consumer 35mm notably.) With 90% of their business gone, they were hardly in a position to retool around the 2% that consumer cameras represented. (The remaining 8% is various support services, consulting, etc...)
 
And as many companies failed in the digital transition as made is successfully.

Re:So, let them die.

[jrumney]

Kodak's strenght was film photography.

Specifically, their strength was the film itself, and printing. Their cameras were always at the low end, which is why, even though they reacted quickly to digital and were one of the first companies to offer consumer digital cameras, they were ultimately unable to compete. Companies that focused on the hardware in the film age are still able to compete strongly in today's market.

Re:So, let them die.

[Tharsman]

Sad, would had been an interesting read.

Re:So, let them die.

[tftp]

They were a group of people organized for their skill mix, which was expertise in film

And that was exactly their problem. A bunch of chemists simply had no job to fulfill in the new digital imaging business. The threshold of entry into the digital camera business was ridiculously low ($29.99 for a USB camera) and anybody could do it - and they did, every other company in China who couldn't possibly even dream of starting a film company. A unique technology that was a closely held secret became a commodity.

Re:So, let them die.

[nightfell]

Kodak was all about film and film processing.

Not at all. They were about cameras and film and digital.

Kodak didn't really make cameras.

That's exceptionally misinformed. Kodak has made cameras for over 120 years.

Fuji clings to it a bit, with disposable cameras, but was able to get some foothold in the consumer digital camera space. Kodak? They tried, belatedly, but failed.

Kodak has made digital cameras for longer than most people even knew what a digital camera was.

The cool stuff was made by the companies already making cool consumer-level gadgets (e.g., Sony).

By "(e.g., Sony)", you really mean "(the only example I can think of is Sony)". "I.e." would have been a better choice than "e.g.".

The cool stuff was made by Sony, and... Olympus, Nikon, Canon, Fuji, um... oh, Panasonic, that's another electronics company (though with a partnership with Leica, but I'll still count it).

And the "better" consumer cameras were being made/sold by the "real" camera companies, Olympus, Canon, Nikon, who were also able to bring in their existing film camera expertise into the "pro" level cameras, and we all benefit from the trickle-down from there.

They've all been making great consumer digital cameras for over a decade now, and non-digital consumer cameras for many decades.

Kodak had no chance, really.

Can't see why not. Why couldn't they have made nice, cool, compact digital cameras? Oh, that's right, they did. They just failed to execute successfully.

Re:So, let them die.

[nightfell]

The mistake both you and the OP are making is in mistaking Kodak for a camera company - it wasn't.

It's possible to look at Kodak as a film camera that sold cameras in order to sell more film and film processing equipment and services, but that doesn't mean in the slightest that they couldn't have built up their existing camera brand, which they did in fact try to do.

Which is, in fact, what they tried to do.

But, one by one, each of things went digital (in one form or another) or Kodak's marketshare fell to cheaper imports. (Fuji for consumer 35mm notably.) With 90% of their business gone, they were hardly in a position to retool around the 2% that consumer cameras represented. (The remaining 8% is various support services, consulting, etc...)

Exactly, "one by one". They could have seen the writing on the wall and made the transition before 90% of their business fell out from under them.

Which is, in fact, what they tried to do.

They tried, and failed/are failing. That doesn't mean failure was inevitable. The mistake you (and many others) are making is in thinking that companies can't change and refocus. "Kodak is a film company, so when film dies, so must they". Well, look at what sort of companies Nintendo and Toyota where. Look at Apple. Look at IBM over the years.

Re:So, let them die.

[GerryHattrick]

Older folk will remember the standard Business School case-study of 'Singer' sewing machines. They once even owned forests, to secure the best wood for the traditional bases. Then it all went wrong: opposite reason from Kodak - their product lasted forever, and no one needed replacements. But the fundamental error is believing that your 'distinctive competence' is your technology, or your vertical integration, when so often it is something quite different and unexpected.

Re:So, let them die.

[thegarbz]

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.

I agree with you up to this point. Comparing a company like Kodak who is a premier chemical company to a company like Nikon or Canon who are primarily manufacturers of products is comparing apples to oranges. There was very little Nikon or Canon needed to do to adopt digital. Both of them already had the capabilities to produce cameras, both already had the capabilities to produce electronics, it was just a case of a different circuit and a slightly different body design, but still fundamentally sticking to what they do best, which is making cameras and lenses. The lenses also didn't change at all with the change to digital so there's yet another major source of income for these companies.

Kodak on the other hand were primarily a chemical company. They made most of their money from film, paper, chemicals, and machines to automate the developing process. They made relatively little from the camera business. The move to digital presented a fundamental change for them. They should really be compared to Fuji or Ilford, both of who have really struggled over the last few years.

Mind you the fact Fuji and Ilford both still exist is evidence to backup your argument that failure wasn't the only possible outcome. Kodak's biggest failing was not following and monetizing their own R&D. They INVENTED the damn digital camera yet steamed ahead with their film business while the camera companies made them obsolete. Fuji partnered with companies to jump on the digital bandwagon quickly (ever wondered why Fuji DSLRs look identical to Nikon's?) They adapted and they survived.

Re:So, let them die.

[DerekLyons]

The mistake both you and the OP are making is in mistaking Kodak for a camera company - it wasn't.

It's possible to look at Kodak as a film camera that sold cameras in order to sell more film and film processing equipment and services

In the same way it's possible to view General Motors as a audio equipment wholesaler - since it sells radios in order to sell more cars. Or, in other words, just because it's possible doesn't mean it's even remotely rational.
 

That doesn't mean failure was inevitable. The mistake you (and many others) are making is in thinking that companies can't change and refocus.

In some reality where I said any such thing, that might be true. But I didn't. What I said you (and others) are failing to understand why they died because you don't understand what kept them alive. (And it's equally apparent you don't understand the other businesses you cite either.)

Re:So, let them die.

[graphius]

I have seen a lot of people saying Kodak should have gotten into digital, blah blah.....
THEY DID
Kodak was a pioneer in early high end digital imaging. They had some of the first (if not the first) pro grade digital SLR's. basically Kodak backs grafted onto Nikon, and later Canon bodies. These things cost upwards of $30,000 without any lenses and required an external hard drive.
When I started to get into digital photography in the mid to late 1980's Kodak was by far the leader. I had a beautiful Kodak Dye Sublimation printer that cost over $20,000, and only printed 8x10's. Kodak software, especially colour management systems, were not only state of the art, they were often the only game in town. To calibrate a scanner you used a Kodak colour chart and associated software.
But then Kodak started to assume they would always be the only game in town. They stopped innovating. They kept the high early prices while everyone else started to develop lower cost alternatives. Nothing but poor management caused them to lose sight of where they were going. They stubbornly thought digital would remain a niche market, and film would always be used by the masses. By the time they were shaken awake, it was too late. Kodak consumer digital cameras were generally poorer quality than the competition. Their consumer ink jet system was a farce that was not cheaper than the competition, had worse quality than the competition, but they tried to market it as the next sliced bread....

tl/dr; Kodak invented digital photography and then fucked up....

Re:So, let them die.

[graphius]

The early Kodak digital SLR's were built on Nikon bodies, and later Canon, but so what, Most current cameras use sensors from a different company. IIRC Canon is the only SLR manufacturer, including medium format, that makes it's own sensor. and IIRC again, most Canon point and shoots don't use a Canon sensor.
As I said earlier, Kodak just fucked up. They had it all, and decided to throw it all away...

The industry disappeared

[demonlapin]

Kodak was a photochemicals company. Then film disappeared, and they didn't have expertise in any other areas that would enable them to keep selling something. A best-case scenario for them is liquidation.

Re:The industry disappeared

[peragrin]

The thing is Kodak sold off the non film production and R&d. Those companies are still profitable.

Kodak literally made one product and when the market for that product dried up so did Kodak. It all falls down to diversification. Kodak wasn't and so died.

Do we prop up car companies when someone invents the teleporter?

Microsoft will probably suffer the same fate. It has two products windows and office. Without those Microsoft wouldn't be profitable and would soon be in bankruptcy themselves

Re:The industry disappeared

[demonlapin]

Xerox had expertise in xerographic printing and might have been able to capitalize on that underlying tech when laser printers and, yes, digital copiers came out. Kodak's underlying technology went away. They had diversified into plastics in order to have a supply of film. And profitable businesses like that are why Kodak should liquidate - when you have some businesses that will continue to be successful, some that may be able to survive as smaller enterprises, and a core business that just died, it's time to sell the pieces off and give the shareholders their money.

Re:The industry disappeared

[jd]

No, film is extremely valuable because there are markets that digital CANNOT operate in at present and are unlikely to operate in in the foreseeable future. Kodak should have worked more in those niches and less in the trashy markets.

Re:The industry disappeared

[Stormwatch]

And that's a pity. No matter how many megapixels you cram into a cell phone, it simply has no room for the optics that make a camera any good.

Re:The industry disappeared

[Drishmung]

No, film is extremely valuable because there are markets that digital CANNOT operate in at present and are unlikely to operate in in the foreseeable future. Kodak should have worked more in those niches and less in the trashy markets.

But that doomed Kodak to being at best a niche player, and almost certainly a much smaller company.

It was foreseeable (if not at that stage inevitable) that film was doomed in the 1970s when astronomers abandoned film for CCDs.

Once the consumer digital camera was invented (1991, by Kodak!), the doom of film was inevitable. By the mid 1990s, with the rise of consumer grade digital cameras, no reasonable member of the industry could have doubted that film was a niche.

Kodak had somewhere between 20 and 40 years to react. They failed.

I suggest that what they should have done is acknowledge the problem and do something about it. As far as I can see though, they just never admitted that there was a problem.

Re:The industry disappeared

[j_sp_r]

I give Microsoft a bigger change, they do apply the shotgun approach to finding new markets to diversify in. Probably, something will stick in the end.

Re:The industry disappeared

[jackbird]

Where? Nobody does film separations for offset printing anymore (it's all digital straight-to-plate); X-rays use digital plates now; a growing number of feature films are shot, mastered, and delivered to theaters digitally; and microfilm is dead.

The only photochemical process still in widespread use that I can think of is light-sensitive emulsion goo for making silkscreens, and you can't run a multinational corporation with small T-shirt shops as your customer base.

I'm curious what you have in mind.

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

[Anonymous Coward]

It's time to realise that Abble's products are the biggest abomination these days. Just say NO to the dumb iAbble way!!

What the hell is an Abble? Whatever they are Apple will probably sue them for using iAbble as a trademark.

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.

Re:Canon

[gl4ss]

ever heard of kodak lenses?

me neither.

Re:Canon

[BetterSense]

You have it backward. The digital revolution was a boon to camera companies, not a blow. In the film era, cameras lasted decades. I'm still using my 1979 Olympus OM1, and I'm not sure it's ever even been overhauled. Digital introduced a market where pros and prosumers would be buying new cameras every year or two...especially in the beginning when technology was advancing fast.

Re:Canon

[fahrbot-bot]

Kodak was in the black and white picture printing business since the 1880s. It was in the color printing business by 1835. ...

All true, of course, but I was referring to laser/inkjet printers, not film printers - my mistake for being unclear - and their use in the age of digital photography. I believe Kodak vastly underestimated the popularity of digital photos/printing by the masses. Sure simple film prints are less expensive (judging by the price of laser/inkjet photo paper), but people are willing to ignore that for greater flexibility in handling things themselves.

As for personal Kodak printers, they may be good (I don't know), but I don't know anyone that owns one.

Re:Canon

[aaarrrgggh]

More specifically, Kodak was in the consumables business, and the consumable portion was replaced with a non-consumable solution. They needed to find something to do with all of the businesses focused on consumables, but that was political suicide since it was 95% of their workforce.

Re:Canon

[itsdapead]

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.

...but Canon and Nikon had a reputation for quality cameras. Companies like Sony and Panasonic were already associated with image quality via TV and video. Kodak's reputation was for film, processing and cheap'n'cheerful cameras built around new film/processing systems.

If you see several digital cameras for around the same price: a Kodak, a Nikon, a Canon, a sony with a big Zeiss label on the lens, or a Leica-branded Panasonic, which one is going to be at the bottom of your shortlist?

Actually, I wonder if Kodak's demise didnt start before digital, when compact, autoloading 35mm point'n'shoots became popular at the expense of cartridge/disc film systems. Of course, they still got to sell the film. Kodak also spent a lot on stop-gap systems like APS and PhotoCD (jolly useful as a cheap way of getting negatives scanned for multimedia development etc. but not a big hit with Joe public).

Re:Canon

[thegarbz]

Sure. If you ignore core competence. Unfortunately the business management world is full of competing and mutually exclusive theories on how to run a company. How and when a tactic works is entirely situational. Kodak chose to focus on it's core competence. Other companies chose to diversify; that was Kodak's undoing. It wasn't the wrong call, it was just the one that didn't work.

Kodak's printing business of the time was still part of it's core competence. Printing was a photochemical process. Photochemical investments is baggage that Nikon and Canon did not carry. It may seem obvious now, but at the time the whole "digital" thing was new, who knew if it would actually get anywhere, the technology was immature, and the entire world relied on photochemicals for image making.

If my foresight were as good as my hindsight I'd be rich too.

Re:Canon

[graphius]

I seem to remember Ansel Adams (you may have heard of him) used to swear by Kodak Ektar lenses...

They Did react to the market!

[drainbramage]

But poorly.
I never saw a digital camera from Kodak that I would want to use, let alone purchase.
--
I had use of a few of their film cameras years ago, none were great.
I think they were able to sell the cameras cheaper than other companies because they owned the tech for the film and it's packaging format.
Other than the cheap point and shoot market I never saw Kodak compete well against any other camera company.
--
Loved the film though....
I bought my first digital camera (Pentax) thinking it would make a nice backup to my various film SLR's.
I was wrong, I never bought film again.

They died because they didn't evolve

[IWantMoreSpamPlease]

They were arrogant, and their digital products reflected this. The DCS line of Pro cameras were hugely expensive with some pretty severe limitations, and their consumer line was a joke.
Rather than correcting that, they ignored the digital market and at the same time couldn't pick a new direction to go with their existing strengths and in the end, pissed it all away. Even now, they have no clue what they want to be, an ink and printer 'giant'? Give me a break.

Re:They died because they didn't evolve

[powerlord]

Even now, they have no clue what they want to be, an ink and printer 'giant'? Give me a break.

They should invest in 3D scanning/printing, and market a reasonable 3D printer. There are several interesting technologies that require consumables, which seems to be what they were best at marketing.

Re:They died because they didn't evolve

[amorsen]

They weren't arrogant so much as incompetent when it comes to electronics. There is nothing wrong with being a one-trick-pony as long as you know when to give up. It is not necessarily best for society if companies survive forever, sometimes it is better to let the old ones die and new ones appear.

Re:They died because they didn't evolve

[Osgeld]

They weren't that incompetent, they kind of sort of had the first digital camera in the 1970's, they were selling them to consumers by the 90's along with photo-cd systems, and have some very sophisticated professional grade printers (not like a inkjet that sits on your desk, like a chemical laser do dad as big as a pool table)

I agree with the assessment that they were arrogant, Kodak cameras to most people never really made it past the "isnt that a cute cheap camera", some reason Kodak felt that their little yellow icon and name would sell, frankly, featureless meh cameras, while everyone else is boasting about all the crap their camera does for about the same price. I dunno, I guess none of the suits at Kodak ever bothered to walk into a bestbuy?

Another perspective from a pro photographers view

[yodleboy]

read this: A Photographer's Eulogy for Eastman Kodak a couple of weeks ago and it's a good complement to TFA. Among other things, the author recalls a meeting with a Kodak product manager in the early 90's who's response to digital on the horizon was "How do we stop this thing?" He also notes this wasn't the first time Kodak's ego got in its own way. Anyway, an interesting read.

Kodak, Apple and Canabilization

[Anonymous Coward]

Kodak and Apple took completely different tactics when it came to seeing their markets disappear, and they've had completely different results. Kodak tried to hang on to film photography as long as they could for fear of destroying their market, which in the end happened anyway. Apple saw the iPod's days as numbered due to phones, and created the iPhone. The iPhone is killing the iPod market, but Apple now has a new, more profitable market. The same thing may also happen with the Mac and the iPad.

Reasons

[necro81]

The reason cited in the summary, the shift in a camera being a specialized piece of equipment to a more prosaic electronic gadget, is probably one of the weakest. Serious protographers, film and digital, have always had, and continue to have, a very...uhhh...special relationship to their kit. Casual photographers always regarded cameras as just a do-hickie: a means to an end.

The big reason, the one that will be cited in every case study on disruptive technology for the next couple of decades, is that even though Kodak invented the digital camera, they couldn't get past the notion of it cannibalizing their film and development business until it was too late. Probably the #2 reason that will be cited is the consumer's shifting relationship to images: the physical artifact, the print, became much less important in comparison to an image that could be emailed to 10,000 people in an instant practically for free. Or to be able to carry around 10,000 images in your pocket. What people wanted pictures for, and where/when/how they wanted to view them, moved away from the physical artifact with alarming speed.

Nope....

[Anonymous Coward]

Kodak's demise started years ago. The company was very diversified back in the 80's and 90's. Chemicals, pharmaceuticals, copiers, all over the place. Then someone took a look at the margins, and decided that the margins the company was seeing on film needed to be the benchmark for the company. Margins on film are ridiculous. Nothing could touch them, and it was a dangerous drug. If Kodak had to make a decision between diverting some cash away from film and into an emerging technology, they choose film. Then, one by one, less profitable areas were sold or spun off. Over the years they used those sales (and layoffs) to offset the dwindling returns from the film manufacturing.

Kodak was in a perfect position to take a major bite out of the digital market early on. But right around the time they decided not to make traditional film cameras any more and switched to disposables, they also decided that the market was rich enough to support digital photography.

In the end they sold and cut as far as they could go. Meanwhile many of the other properties that Kodak shed along the way are doing very well, and would have provided tentpoles for the company to survive under.

Re:Nope....

[amorsen]

It sounds like the other divisions were losing money. Why was it bad for them to be divested? Getting large dividends for 10 years beats getting nothing for 50 years. (I don't know if Kodak actually paid dividends at the time. They should have done at least.)

But...Kodak invented digital cameras

[MpVpRb]

From Wikipedia...

1975: Steven Sasson, then an electrical engineer at Kodak, invented the digital camera.

1976: The Bayer Pattern color filter array (CFA) was invented by Eastman Kodak researcher Bryce Bayer. The order in which dyes are placed on an image sensor photosite is still in use today. The basic technology is still the most commonly used of its kind to date.

They also produced the first digital SLRs

http://en.wikipedia.org/wiki/Kodak_DCS

And, their sensor division made extremely high quality sensors for scientific, industrial and consumer cameras.

Makes it even more ironic and baffling that they couldn't make it in the digital world.

Re:But...Kodak invented digital cameras

[FaxeTheCat]

They also produced the first digital SLRs

... and on the camera house it says NIKON. So they produced a digital back end for a Nikon camera (I once had a print from a picture taken by it. The noise level was nothing short of amazing...).
Which may explain why Nikon is still big in cameras, while Kodak is not.

Re:But...Kodak invented digital cameras

[tlhIngan]

From Wikipedia...
1975: Steven Sasson, then an electrical engineer at Kodak, invented the digital camera.

1976: The Bayer Pattern color filter array (CFA) was invented by Eastman Kodak researcher Bryce Bayer. The order in which dyes are placed on an image sensor photosite is still in use today. The basic technology is still the most commonly used of its kind to date.

They also produced the first digital SLRs

http://en.wikipedia.org/wiki/Kodak_DCS

And, their sensor division made extremely high quality sensors for scientific, industrial and consumer cameras.

Makes it even more ironic and baffling that they couldn't make it in the digital world.

They could've.

The problem is, they didn't want to.

The digital camera came about because Sasson didn't have anything to do, so Sasson's boss gave him a newfangled CCD sensor and a camera and asked him to do something with it.

The reason it never took off was Kodak shelved it, out of fear for their primary business, film and photochemicals.

The digital sensors Kodak made are good, but Kodak targeted them at markets where it wouldn't cannibalize their existing business.

And that, was Kodak's fatal mistake. Instead of trying to capitalize on the coming digital revolution, they buried it, wanting ot preserve their existing business.

Basically they needed a leader who was willing to adapt and cannibalize their existing business in order to grow into new markets. Like how Apple cannibalized their iPods with the iPhone (as well as very popular iPod models with new iPod models - e.g., the Nano vs. the Mini). They're cannibalizing the low end Mac market with the iPad.

Heck, Kodak's first foray into consumer level digital photography was the QuickTake (designed, built, manufactured by Kodak for Apple) way back in the early 90s and hailed as one of the cheapest digital cameras around (at several hundred dollars). Prior to this you only had digital backs, nothing for the consumer. A few years later (mid-late 90's) the digital camera revolution took off.

Commodification

[Anonymous Coward]

Kodak did reasonably well with digital photography -- hell, they invented the digital camera. Unfortunately it's a commodity business now, and Kodak never really differentiated itself, arrogantly thinking its name recognition alone would move cameras (and for a while it did, but that didn't last). Combine this with the fact that they've never been able to retool a product line in anything less than two decades. Whenever they do get a CEO with some vision, the board stabs him in the back, and he's usually out before his contract is even up.

Their current leadership has decided to keep their manufacturing line and kill digital cameras. That's like if Apple decided to stop selling Macs and only sell XServe racks.

Re:cause of death

[MoldySpore]

But the real question is, Will Sales of Ice Boxes to Eskimos Finally Increase due to Climate Change?

Oversimplification

[Comboman]

They failed to react to changes in their market.

That's not entirely true. They saw digital photography coming before most people did (they still have many of the original digital photography patents to show for it). They had digital cameras on the market while Canon and Nikon were still saying bits would never replace film, and Sony was still making cassette Walkmans. Their biggest problem was public perception rather than reality. People still saw them as a film company rather than a camera company.

Re:Oversimplification

[Anonymous Coward]

I would say Kodaks biggest problem was corporate inertia, they had always made there profits on film and I think there was assumption that they always would. Pushing digital cameras would have cannibalized there film market so instead of embracing the emerging technology and going all out to establish themseleves as THE digital camera company, they instead invested in abortive technologies like the ill-fated APS in the hopes of staving off the digital threat.

In seems a shame that what was once such an innovative company, looks like its going to be reduced to nothing more than another parasitic patent troll because kodak's senior management put their heads into the sand and ingnored a changing market.

Re:Oversimplification

[vakuona]

This is such a geek perspective to an issue. That is like saying Sony had portable players before Apple. Yes they did, but they sucked. And maybe they ought to have waited a little until the technology matured. The public perception is nearly always right, much as geeks hate to admit it. The public want to buy something that can take their pictures, and in the 90s, print them. Nowadays, they want them on Flickr or Facebook. The first that they made a digital camera first is a complete red herring. Apple made one too, but still failed abysmally. The public is much more receptive to new ideas and brands than people give them credit for. Apple was not a very strong brand in the mid to late 90s. Now they are the top brand in the world. Blackberry pretty much didn't exist as a phone maker 12 years ago, but at one point was the hottest mobile brand in the world. Many companies' problem is that they focus too much on the bottom line. The products might as well be designed by the finance department. At times, companies need to bet on a product, and nowadays, it seem big companies are too timid to do that. Kodak was timid. It had its lunch taken away. Let this be a warning to any company on not going big. Go big or go home as they say.

Re:Oversimplification

[GRXGC]

that is a good point too, but they never had a fight in the digital space, even then, because if they did, then that would have took the place their film production in some way, if not the whole way. when you are a company and you have a medium that you use to drive sales and you ignore or are slow to produce quality products you get a kodak as a result. if they had any ground in the digital space, they would have never gone bankrupt. and if they did, it would have just been a matter of the quality, not film. At sporting events, you never see a kodak, unless it's from the audience. other than that, you see canons, nikons and some sony's. i feel whether they seen digital or not, they were still lax on make better cameras. there a crap ton of factors that were alongside sticking to just film production that killed their growth. now that they are gone as kodak, i wonder if people will still call good moments to take pictures kodak moments, lol..

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:It's about the film.

[Phantom Gremlin]

They tried PhotoCD

I don't remember if it was Photo CD or its successor Picture CD. But this thing was *worthless*. I paid about $7 extra exactly once for one of these. Never again.

The reason was quality. I was taking full frame 35 mm images. For $7 extra they put crappy 1 MB scans of those onto a CD for me. Really? That's $7 of value added? Screw them.

The Economist did it better

[PCM2]

This article struck me as pretty weak. The Economist has done a series of articles on Kodak and I think theirs were much more thorough and insightful.

Technological change: The last Kodak moment?

Kodak's woes: Out of focus

Kodak files for bankruptcy protection: Gone in a flash

I'm not sure how much of that is accessible to nonsubscribers...

Re:The Economist did it better

[FrootLoops]

I'm not sure how much of that is accessible to nonsubscribers...

All of it is accessible.

They tried and failed

[Oswald McWeany]

Ultimately- they did try changing to digital- and as pointed out above, they pioneered digital. That's not why they failed- they failed because they produced a low quality product. Their name soon became synonymous with sub-quality cameras. They could no longer fall back on the reputation with film- because it was a completely different product.

Re:They tried and failed

[marky_boi]

Ever tried to get a Kodak camera fixed???
Pay $x(read alot) up front for a quote, they send you someone elses fixed camera!!!!
who know how it was looked after, what environment it lived in etc etc etc....... that was my last Kodak...
Bought a Nikon DSLR and never looked back

no one knows

[vlm]

No one knows what destroyed Kodak. Maybe never will, because there are so many reasons and every little group wants to take sole credit for figuring it out, for their little group having the power to destroy a big company.

The techies think its digital cameras. After all, they destroyed all other former film giants; Oh wait, the didn't.

The photog-groupies think they failed technically or failed in marketing film beginning the slide (sorry for the pun) decades ago and they never really recovered from Fuji. Maybe if Fuji never existed then Kodak would have had the dough needed to transition to stay alive. This seems to be ... slightly overexaggerated.

The financial types think its because they were addicted hopelessly to high margin film and couldn't financially handle converting to a design, branding, and Chinese importing house. Based on previous bond and other financing structure, etc, better to continue 25% on declining sales, than lower percentage on increasing sales. This makes little sense, it hardly stopped HP from converting from "we make the worlds best electronic test instruments" to "we import junk from China and slap a nameplate and some marketing on it".

Journalists who convince people to read their customers marketing, according to the article, think the marketing failed and they didn't spend enough money on print ads convincing people Kodak = digital instead of film. As if people still read newspapers. I have a funny newspaper anecdote, my son was asking what Grandma's newspaper was; I thought about it for a few seconds and told him it's like yesterdays internet news, but printed out for people without the internet. Oh, OK.

Personally I think its a lot like the decline and fall of the roman empire No single simple answer other than the mental state of the entire world swung around to "I'm better off without these guys, than with these guys, so bye bye" Individually not interesting, multiplied across basically the entire population, that becomes interesting. Other than a bunch of now unemployed people, who really NEEDs Kodak? Why without them we won't have ... um...

Re:nostalgic moments

[Maltheus]

Actually, I had a Kodak "poloroid" camera. They eventually got sued and had to discontinue them.

Re:Absolutely.

[imemyself]

When the $40 point and shoot camera satisfies the needs of 98% of the market...then it's a bit different story.

It's very simple...

[Anonymous Coward]

Kodak made the vast majority of its revenue from photographic film (both retail and specialty) and the processing associated with said film (producing prints, copies, slides, etc). People using cameras would purchase 100's of dollars of film and film processing costs on a repeating basis.

Then digital cameras came out in the retail space. Many people were willing to tolerate the generally inferior optics and picture quality/stability (stability means how long does the printed photograph hold its image quality before fading) which were the primary playing fields for competition in the film industry. Very rapidly, people started buying a $200 camera may be once every 5 years instead of spending $100 every couple months on film because the public stopped valuing what they had traditionally valued with the film market.

It doesn't take a genius to do the math and see what that does to Kodak's revenue stream. Sure, they were selling cameras also. They were even selling digital cameras. They also tried to move into the scanner/printer/printer-ink market. But the majority of their revenue stream (from repeated sales of film and film processing) started drying up rapidly. Selling a $200 camera once every 5 years doesn't make up the ground that they lost due to lack of repeated film sales. Now their entire internal infrastructure, which was built out to support their film technologies and the associated revenue stream, is suddenly starving for cash. Nor is there any easy way to convert that existing infrastructure into producing an entirely different product (digital cameras instead of film), so not only is the infrastructure sucking up Kodak's cash, there is no easy way to reclaim the money that was sunk into that infrastructure and re-purpose it to the new market.

Imagine what would happen to companies like Gillette if a new product emerged which used lasers to shave one's face in a couple seconds. Suddenly all those people who were buying razors on a repeating basis would stop because they would buy the ronco-matic laser-shave. Could Gillette survive such a shift? Even if they got into that new market, they would be saddled with the infrastructure and sunk costs that they had from their old business model, and they would start getting sucked dry. The companies entering the new market would not be burdened with pre-existing sunk costs and could compete at price points that the established company could not.

It was simply a shift in the market place (possibly driven by the wide spread availability of a new technology at a low price point) which caused the incumbent companies to suffer and allowed relative new comers, or those who were more closely aligned with the new technology, to prosper.

Re:It's very simple...

[k6mfw]

I wonder what if [something] be invented that would obsolete the laser printer. Could it be HP's demise?

Kodak made the vast majority of its revenue from photographic film (both retail and specialty) and the processing associated with said film (producing prints, copies, slides, etc).

Imagine what would happen to companies like Gillette if a new product emerged which used lasers to shave one's face in a couple seconds. Suddenly all those people who were buying razors on a repeating basis would stop because they would buy the ronco-matic laser-shave. Could Gillette survive such a shift? .

Re:The REAL reason

[GerryGilmore]

You have a very, very strange definition of "diversifying its business". Last time I checked, being allowed to prevent competition in parts and service is hardly "diversifying", but - yes - anti-trust level of behavior that justifies bringing in those nasty, evil gummint boorocrats and their attack dogs to get a ruling from the Supreme Court that backed up the "attack dogs". If it was, say, Intel or MS, would you have the same opinion?

Re:nostalgic moments

[saintlupus]

Those were called "Instamatics".

Kodack digital was poorly thought out

[the_Bionic_lemming]

I would of kept purchasing kodak if they hadn't pulled the stupid bit with their docking stations being different for each line of cameras they sold. It's bad enough when many companies can't settle on a simple USB plug in but when you have to throw away your old docking station and printer because you changed to a different model line just so they can force you to rebuy stuff - that was too much for me.

I ran into that on a warranty repair. They no longer supported that model and sent me a replacement that had a different dock than the original - so while the camera was fixed/replaced - the entire setup I bought was rendered useless. When I called and complained they weren't helpful at all.

That's all it took to never buy kodak again.

Re:The REAL reason

[roman_mir]

Oh, and in case of Intel and MS, it was all a standard shakedown, that's how government mafia operates - they want money, they'll shake you down for it.

Crappy consumer cameras

[formfeed]

Yes they embraced digital, but not full heartedly. And they had a good brand name but did not capitalize on that with their cheaper cameras.

When digital cameras came out, people bought Kodak for brand quality. Over the years it just turned into cameras with a Kodak label slapped on. The attitude: We have to be in this market, but these aren't the real camera buyers.

I got an older 8MP non-Kodak, which allows for manual focus, manual stops, and exposure settings! The 7MP Kodak Easyshare has none of that, just "modes". Well, it at least has some bracketing, where it lets you take three pictures in a row. With the 14MP Kodak Easyshare that was gone as well, instead it has exciting new features like smile detection...

In the old analog world, that stuff used to be Polaroid's brand image, not Kodak's. Don't do Disney if you have a professional brand name. The same hardware could have provided an "expert-mode" and -even if most people wouldn't use it- been seen as a limited beginners version of a better camera.

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?

Failed at Digital

[__aazsst3756]

They failed to produce compelling digital products. It really is that simple. Kodak had an early lead on the consumer space based on brand alone, much later than most would have imagined, especially among female buyers. The software bundled with the cameras was equally bad.

Being very close to it

[guruevi]

I know several people that worked at Kodak and I interviewed quite a few times with them. IMHO these are the problems:

- They didn't want to believe digital was going to take over the market. They believed analog was superior (which it was back in the day) but also that it wouldn't improve and people always would need analog copies. This is true to an extent but their developing process was horrendously overpriced and the stores that developed internally went with Fuji or any other competitor.

- Bad management. They had several layers of management and most of them were incompetent. There were entire divisions being ran without the knowledge of Kodak leadership. Duplicated efforts, bad building, bad quality assurance, several layers of customer service and technical service. Even their later printer divisions suffered from the old structure.

- Patent warfare. Instead of trying to compete they started using patents and contracts as an offensive measure which brings some cash in the short term but it burns out really quickly as their competitors could easily pay for the settlements and the limited settlements they did have (as many of their patents were invalid) could not account for the waste that is still going on to this day.

Re:Being very close to it

[ed1park]

Surprised the following book hasn't been mentioned. Steve Jobs thought highly of it:

Innovator's Dilemma
http://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244/ref=sr_1_1?ie=UTF8&qid=1330405831&sr=8-1

And Bill Gates called it way back in the 90's during a conference which Warren Buffett attended where they were discussing the great companies of each decade and why they eventually failed. They were trying to predict future failures. (Read from the Warren Buffett bio Snowball.)

Re:Absolutely.

[Crypto Gnome]

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?

Seriously, NO!

Photography is just about the last thing I have left to (at least vaguely) legitimately be a pompous jerk about.

I've probably spent more in glass than you spent on your last car!

Hell, they *invented* a new term for people like me! (Pro-Sumer aka people with more money and delusions of competence than any real-talent, although sheer force of good-luck does occasionally turn up some diamonds).

Re:cause of death

[Crypto Gnome]

Crossbows seeing sudden resurgence: Could unreliability of easy to make ammo be to blame?

Personally I blame incompentent and/or tyrannical governments for that one.

Its not rocket surgery

[Osgeld]

once digital got decent enough where people actually wanted them, then every electronics maker in the world started making them, and where was Kodak? Sitting around with a mediocre "me to" product on the shelf with 1000 others.

I always kind of thought it snobby of them, why should I buy this camera? cause it says Kodak on the front? that Toshiba has more features and better image quality for about the same price, and the last Toshiba product I bought wasn't a chunk of shit ...

My own experience

[mattr]

I once had a contract on the president's desk to bring Snapfish to Japan. They were very enthusiastic and about to sign. It was early time in that market in Japan. However when the economy is on a downturn American companies tend to get tunnel vision, more conservative and domestically oriented. It's predictable. The Board of Directors said, "Japan? Who's that?" and decided to nix it. This left such a bad taste in my mouth that I started working more with European companies which had a slightly longer view even though I'm an American. Now there are output shops all over the place in Japan and it has morphed into a kind of shop where you can plug a phone or camera memory card into a card reader, use a custom application to pick the photos you want, and have it printed in an hour or burned to CD. Using the awesome high speed color photo printers Kodak pioneered, too. The same shop (like Pallette Plaza) also sells phones too, and it is profitable enough that there is a very nice one on one corner I know where the real estate is pretty expensive. This is just one experience and not so recent, but I always wondered about how Kodak was going to hang on if they didn't want to try new markets.

The flipside of embracing change

[tjstork]

Well, its all well and good to point to Kodak and say "see, they should have gone hog wild with digital." From that, we would infer, companies should ditch profitable core businesses and competencies whenever a technology billed as disruptive presents itself.

But...

What about all the times investors pour billions into some new technology or concept that completely flames out. Perhaps that new technology is too much, too soon, and it is better to let someone else take the risks. De Havilland invented the passenger jet, but was nearly bankrupted by it after a series of crashes and had to be bought out. Concord was a money loser from the get go. Chrysler, back in the day, spent lavish sums on trying to put a jet turbine into a car. Wankel Rotary engines pretty much destroyed AMC and almost destroyed Mazda as well. Boeing's massively composite 787 has seen delay after delay, the original investors of the super modern Empire State Building took a beating. Finally, there's IK Brunels Great Eastern, which was a wonderful piece of technology for its day that ruined everyone who had a shilling to stand near it.

So... yes, there's plenty of people out there that say Kodak should have changed. But, if you look at FY 2000's annual report, Kodak was actually making 3 billion a year in digital sales... and the company was paying a decent dividend.

http://www.kodak.com/US/en/corp/annualReport00/financialHighlights.shtml

Besides, nobody has stated the obvious. Kodak had a reputation as a maker of film, not cameras. For Kodak to have survived, it would have had to either develop enough FAB experience to try and corner the market on CCDs, or establish itself as a premium maker of cameras and that would mean going up against some stiff competition where brands who have a proven track record in optics and glass were the brand differentiators.

Sure Sony is doing "ok" with its digital cameras, but really, for photographers, the people that have the best reputation of making cameras were always the ones poised to win from the digital transition. Nikon, Canon, Olympus, Minolta, all those -camera- brands flourish, because people buy cameras... and they didn't need film anymore, and that's why Kodak died.

Re:The flipside of embracing change

[tbird81]

Besides, nobody has stated the obvious. Kodak had a reputation as a maker of film, not cameras.

Okay, sorry to waste a post just to complain about yours, but about two dozen people have said that exact same statement! I'm getting sick of reading it!

No FIAA

[Fulminata]

They failed to found the Film Industry Association of America, which could have then lobbied Congress to either outlaw digital photography, or attach a special tax on all digital cameras that would be used to subsidize companies that provide traditional film cameras and supplies.

for 100 years, Kodak=film

[rainhill]

Now noone uses film.

how do you destroy this public image? Kodak=film

Kodak is NOT Dead

[moorealx]

Kodak is not dead, they only filed chapter 11 bankruptcy. Chapter 11 bankruptcy allows for the restructuring of the business to make if profitable again. A look at three major bankruptcies — Continental Airlines, Kmart and Fruit of the Loom — shows that outcomes can vary widely. Citicorp Group just gave Kodak $950 million. Sounds like Kodak will be around for a while longer and that Citicorp is pretty sure they are going to get their money back with interest.

Also, not only is there still a significant portion of photographers still using film in their daily workflows, but quite a few professionals are actually switching back to film and leaving digital. Kodak has introduced several new film stocks over the past year that have been well accepted among the photographer's still shooting film. The film division is still doing quite well, and is still producing a profit. In fact, the film division reported a 20% increase in sales last quarter.

Kodak will look much different in the years to come, but I wouldn't give up on Kodak yet.

Re:Borders

[TaoPhoenix]

Sorry, I have a Pet Rant on Borders, and you walked into it.

From an Article about Adapting, Borders was a Moron-Company.

The Future of Physical Books is Print Live On Demand. Forget the shipping, the stocking, the overages, the underages. Just print the damn thing.

The tech is out there. I have three vitally important Case-Tomes from Harvard Bookstore *TwoYears Ago*. Forget Amzon and "Go Home, Wait Three Days". Just "Print the thing in an hour".

But no. They couldn't be bothered to spend $100,000 "Medium Peanuts" per machine and secure the Digital Rights per copy.

So no, I have zero sympathy for Borders.

Re:Borders

[Tharsman]

Although a super awesome idea, I don't think book publishers would had allowed it since it would had meant that the store would not only be in a position to demand a bigger slice of the sale but also to print it's own classic literature books on demand, cutting off publishers of that business.

Re:nostalgic moments

[Dogtanian]

Those were called "Instamatics".

No they weren't, Instamatic was the name they used for their cameras that used the cartridge-based 126 film (and then later for 110-film based "Pocket Instamatic" models).

Re:nostalgic moments

[saintlupus]

I stand corrected. My father worked at Kodak, and still had one of the Polaroid knockoffs when the lawsuit was settled; I could have sworn they were called Instamatics. My mistake.