Kodak's travails provide multiple lessons

1/6/2012 1:08 PM EST

A family of four would pay between $36 and $40 to get into a movie theater. My experience is that purchasing popcorn and soda more than doubles the cost. At $75 - $100 a pop, not to mention driving, parking, waiting and pre-movie commercials, it doesn't take many skipped trips to a movie out to pay for a big screen TV and sound system.

Certainly, the theater is more of an experience and sometimes it's nice to get out of the house, but simple economics do a very god job of showing reason for a decline in theater ticket sales. Even the rental stores are in rapid decline.

It will be sad if Kodak follows a host of other companies into oblivion. I have many thousands of images preserved on Kodak film. But the world changes. Markets evolve. As stated in this article, it's easy to say that a company like Kodak should just change to selling digital cameras. The reality is that the vast majority of their workforce, infrastructure, business model, philosophy and methodology is oriented to something completely different than consumer digital cameras.

Even if they did make such a transition, it would be pretty much a completely different company the same in name only. The stockholders and people like me with a sentimental attachment to their history would very much like to see them stay away, but the odds are very long against them.

1/6/2012 4:47 PM EST

In the 1980s, when e-mail became a "killer app" for PCs, I thought that the US Postal Service should hastily reinvent itself into a nationwide ISP. Or at least, it should add that function to its repertoire. It didn't.

I've been predicting this problem with Kodak, for the same reason. It's a crying shame, but I agree with Bill that the business model for digital photography is quite different from what made Kodak famous. Kodak cameras tended to be the cheap, ultra simple, and highly compromised non-enthusiast variety. Their films were superb, on the other hand.

Perhaps Kodak could have reinvented itself into producing state of the art image sensors in large scale. I believe it did offer film to digital conversion services, and it even invented a photo CD format, so it's not like they didn't try. The problem with anything digital is that the production of hardware seems to be ultra competitive, with razor thin margins, and it mandates very large scale production capacity.

For what it's worth, as an amateur photographer myself, I completely lost interest in film photography when Kodak stopped selling its top of the line films (Ektar 25 and 100, which morphed into Royal X), in favor of ho hum high-speed films, designed for point and shoot cameras with slow lenses.

1/6/2012 5:26 PM EST

I worked for Kodak in the 1970, and still have good friends there. They were a truly great company, so it's sad to see how they have fallen.

I started as a bright young EE, full of energy and ideas. I found that while Kodak had great people and great technologies, their management was out of touch. We EEs knew that the future of imaging was electronic. We built not only the digital camera being talked about above, but also pioneered the first laser printers, laser disks, digital color images, inkjet printers, and many other innovations that have become commonplace today.

In each case, management told us to "quit wasting time on electronic imaging. Film is forever. You should be working on that." One by one, we left to find jobs in other companies that *did* understand where the technology was going.

Sure, times change and there are always competitors hot on your heels. Kodak was in the lead, but their timid management was too conservative and too unwilling to embrace change to let us "run" with our ideas.

1/6/2012 6:13 PM EST

The last century is littered with hundreds or large technology companies that don't exist today. They just didn't keep up with the times. Where is PR1ME Computer, Gopher Protocol, Hallicrafters, Pan Am, and the TRS-80? Sorry, but bad management and/or technology passed them by. Who can use that old technology (other than collectors?). Sorry, I won't miss Kodak. They had plenty of good engineers pumping out interesting new stuff but management ignored the handwriting on the wall. They tried to milk the film cash-cow and whoops, it's gone! Now they all have to find something else to do. Go stand in the unemployment line with the morons that were running Blockbuster.

1/6/2012 10:47 PM EST

I have several carousels of Kodachrome slides (and Fuji Velvia which was giving Kodak some competition).

It is interesting that as the tv screens have increased in size for home theater, movie theaters have shrunk their theaters to "shoebox" size. I'm sure the shoebox theaters will continue to subdivide, and home theaters will continue to grow, and at some point in time they will pass in the middle of the night unknowingly and not even say a word!

1/12/2012 8:43 AM EST

What would happen if they made digital cameras? When is the last time you bought one? They are all integrated into cell phones, iPads are whatever.
Don't forget that they have a huge pending liability for lots of retirement packages from the good old days of the film money machine.
It is not just a management failure. It is the legacy of any old line manufacturing company.

1/12/2012 2:37 PM EST

Well, I tend to agree with most of the writers above (not about bad management, you are correct there). I believe that what could actually save Kodak is film. Whatever digital thing they should care about should somehow be related to film.

Film was (is) their crown jewel and film is the one thing that the competition cannot touch Kodak.

So I believe that Kodak should have moved fiercely into scanners, into printers, into film developing/scanning/printing services (offer a combined scanning/bookmaking service like a Blurb for the analog world). They should have focused on providing leading edge scanning software and photo-editing software.

They should have provided a really cheap film, when film prices were going up, to support things that turned really popular such as lomos.

They should have made even cheaper the movie film process, when digital cameras started to appear.

They should have cooperated more with large camera brands to keep producing more film cameras.

The digital era gave an unexpected gift to Kodak that it missed completely. Outragely expensive film cameras (especially medium and large format) became rapidly extremely cheap. People now buy their wet dreams cameras that would cost several thousands for what? a couple of hundrend euros... Where is Kodak to exploit this?

And so on...

1/12/2012 11:59 PM EST

http://www.informationweek.com/news/global-cio/interviews/232400270?pgno=2

good article that covers Kodak and other high tech companies who have managed to drill themselves into the ground. These things read like a FAA crash report - "controlled flight into terrain" in other words someone took a perfectly good airplane and flew it into the ground.

So Cannon, Fuji, Olympus, Konika etc.. have managed to adapt - if you look at Kodaks website (as of this morning anyway) it still talks about film! They have a booth at CES this week with mainly sameo - sameo un compelling products but no film - surprisingly enough.

1/13/2012 12:01 AM EST

http://www.informationweek.com/news/global-cio/interviews/232400270?pgno=1

woops - sorry article page one starts here

1/13/2012 11:23 AM EST

Depending on which source is used, I've seen Kodak ranked in 4th, 5th or 6th place for market share in digital cameras. Unfortunately, Kodak seems to have concentrated on the low-end digital camera; a market that is suffering due to the in-phone cameras. Kodak is also one of the most respected brands in the high-end digital imaging arena.

So, they went from a dieing market (film) into a new and fast growing market (low-end digital) only to have the new market also turn into a dieing segment. The high end market, while likely a good high-margin business has volumes that are undoubtedly too low to sustain a large company.

Is that bad luck or bad business decision making? Maybe both.

1/13/2012 11:48 AM EST

For another example of a company that managed to successfully adapt, look up "Fisher Body" on Wikipedia. They were making horse-drawn carriages at the dawn of the automobile age, and made the transition to building cars.

I think the key is to take the knowledge and expertise you have and see how to apply it to the new products. The old machinery and the old marketing arrangements will lose their value quickly, so be ready to abandon them.

The markets for vacuum tubes, magnetic tape, photographic film etc. no longer can support anything more than tiny niche players. But a few of the companies that formerly made those products do still exist as large companies, serving different markets.

1/16/2012 6:29 AM EST

I recently tried to scan in some negatives and slides taken in the 1980s and
1990s. The Kodak film did not fade, (neither did Agfa), but many of the other negatives are hardly visible. Pity about their demise, but when they "applied sanctions" against South Africa, Fuji, Agfa and other simply stepped in. Their PowerPC823 or 821 digital camera was a real dog compare to others out there. The throw-away box camera for a "once-off" was short lived. Thank goodness for the likes of Sony, Canon, Nikon for forging ahead with digital technology. Others merged (Minolta and Konica), what happened to Ashai Pentax? etc. Look at the prices for 12 megapixel pocket cameras. Indeed a harsh industry to be in. Can't see Kodak getting ahead of Japan and China or Korea.

1/25/2012 12:53 PM EST

As an amateur photographer, I stood fast to chemical film until I couldn't find Ektar25 or the best Ektachrome. I still keep my Canon, Konica and Pentax empty bodies.
Remarkable films. Recently I compared some Ektar25 photos exposed with a Canon EOS-10 with Sigma lenses, to 10Mpixel digital photos taken with similar optics, and the level of detail and color dynamics of the film are still better. You have to compare with professional grade bodies, like a Canon EOS 7D, 18Mpixel to get better photos. But that costs today more than 4 times what you would pay for a good film camera.

There is one aspect of digital imaging that is common to several other "digital" wares, and that is the lowering of the quality expectation from the user. The average photo quality for film cameras was so much better than anything digital that the early adopters of digital cameras had to come up with excuses for why they were doing it. With time, the practicity and immediate results overcame customer demands for quality.

But it was clear to any observer that digital photography would completely dominate film in the consumer arena. As several others pointed out, Kodak management was in denial for too long. Kodak had extremely talented EEs that researched on digital image sensors, high-definition streaming video, digital image file formats, film scanning technology, high-end ASIC for imaging, and film printing technology.
Today it seems very hard to steer the company to become a major player in these areas, but back then Kodak had stature to participate in just about all areas of DSC and video, but apparently refused to do so.

The decision of cutting the manufacturing of high-end films was one of the worst decisions they could take. A significant masket, albeit smaller, of professional and enthusiast photographers would still shoot film, if those fabulous films were still available.

- Jonny

3/28/2012 2:08 PM EDT

Bad situation in a lot of industries. Good article http://www.informationweek.com/news/global-cio/interviews/232400270?pgno=1 Thanks for sharing this.
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