The Rise and Fall of Kodak - an Imaging Icon

The past months have been sad ones for anybody who ever used a film camera. Kodak, the 132 year old photography pioneer, is dying. Credited with bringing photography to everybody way in 1900 with the $1 Brownie camera, the Rochester, New York based company is opting for bankruptcy.  According to its CEO Antonio Perez, filing for Chapter 11 protection allows the company to pay off its employees (many of whom will sadly be retrenched) and creditors while selling off its assets. 

Founded by George Eastman in 1880, Kodak has been instrumental in making photography a part of everyone's lives. Few could forget the experience of using a Kodak film camera in the past, and the pleasures mixed with pain of waiting for the photos to develop from the photo lab. Kodak's commercial featuring Paul Anka's "Time of Your Life" in 1975 has also emblazoned its way into our hearts (at least the older ones like me).

So what happened in the story of Kodak?  Let me chronicle some "Kodak Moments" as we unravel its tale.

King of Inventions

Kodak was a huge generator of original inventions and pioneering technology.  It has a huge repository of some 11,000 patents which are worth about US$2 billion in total.  These intellectual property assets are the most valuable possessions of the company.  Quoting from BBC News, here are some of the company's imaging inventions over the years:

George Eastman (left) founder of Kodak with Thomas Edison (source of image)

- Kodak founder George Eastman produced the first camera film in rolls in 1883.

- The firm Kodak is set up in 1888 and launches the first consumer camera in 1888 with the slogan: "You press the button, we do the rest".

- In 1900 Kodak introduces a consumer camera for $1 called the Brownie, which goes on to become a best-seller in America.

- In 1963, Kodak launches the hugely successful Instamatic camera, which was the first point-and-shoots in the market.

- In 1969 a Kodak camera is used by astronauts Buzz Aldrin and Neil Armstrong during the first Moon landing.

- Kodak claims to have invented the world's first digital camera in 1975. It had a resolution of 0.1 megapixels and the camera was the size of a toaster.

That's not all.  Through the 1990s, the company splurged $4 billion on developing the photo technology inside most of today‚Äôs cellphones and digital devices. Sadly, it hasn't been able to effectively monetise these inventions in an effective manner, losing is foothold in the photography business.

Perhaps the most startling part of this story is that Kodak is now suing for licensing fees to get much needed cash to expand. To me, it is quite sorrowful that a company's main source of income now comes from litigation.

The Death of Film and a Century Year Old Monopoly

The greatest tale of triumph and tragedy for Kodak is film.  While the company was struggling to establish itself in the digital camera market, it still refused to let go of its fast dying celluloid cash cow.  Trying to keep its 100 year old business while venturing tentatively into the digital image capturing devices was a huge mistake.

By refraining from admitting that its dying technology was becoming obsolete, Kodak kept precious resources from being channeled to new areas.  As digital imaging dissolved its film business, Kodak shed 47,000 employees since 2003 and closed 13 factories that produced film, paper and chemicals, along with 130 photo laboratories. 

Kodak's reluctance to ease its heavy reliance on film allowed rivals like Canon and Sony to rush into the fast-emerging digital arena.  These companies were better able to tune in to the sentiments of both amateur and professional lensmen, investing in customer pleasing innovations.

Wrong Focus on Low End Compacts

The second strategic mistake was that Kodak focused on low end compact digital cameras when the rest of the world moved upstream.  Quoting from Chris Cheesman of Amateur Photographer magazine: "We repeatedly questioned why Kodak chose to concentrate its resources on low-end compact cameras and the sharing of digital images....  No-one wants to be in the low-end compact camera market any more. Other, more profitable, camera makers are gradually pulling away from this market."

Missing the Boat on Photo Sharing

Apparently Kodak also built the first WiFi enabled camera.  This innovation gave customers the ability to email images directly to their friends and family members.  Unfortunately, it doesn't have the capability to be integrated with photo sharing websites, considered a killer app in today's market.

According to Mashable, Kodak got into the photo sharing game reasonably early with its purchase of the Ofoto service in 2001.  Unfortunately, it took Kodak four long years to relaunch it as Kodak EasyShare Gallery, during which the emergence of Flickr, Picasa, Photobucket and others made it difficult for Kodak's platform to emerge.  The emergence of cell phone cameras and subsequent applications like Instagram and Path further intensified the market.

Digital Photo Frames & Photo Printers - More Strategic Misses

Kodak's bet on digital photo frames was another wager gone wrong.  When it invested heavily into frames with features like Wi-Fi and batteries, the product went quickly into commodity mode.  Prices sky dived and margins shaved to razor thinness.

Photo printers were another mistake as consumers increasingly preferred to view their images on a screen, or to use online services like Snapfish should they need a physical print done.  Anybody who has ever dabbled with home photography printing knows how tedious and painful the process can be!

Cultural Obstinacy - Its Greatest Crime?

Perhaps the huge legacy of Kodak founder George Eastman, one of America's greatest innovators, made it difficult for the company to discard the old and get in with the new.  Although Eastman died in 1932, his mark was still everywhere in the company.  This made it difficult for the century old firm to change its habits.

Such a tradition-bound culture was further accentuated by the hierarchical nature of the company, which believed so much in the omnipotence of leadership that people were not openly expressing their views. Said Perez, its CEO, "If I said it was raining, nobody would argue with me, even if it was sunny outside."

From Original Image Creation to Mass Production

Kodak will be selling its photography division and patents (yes your eyes are not kidding you) and focusing instead on faster, more flexible commercial and consumer digital printers and ink. The plan is to be a lean digital printing specialist, placing printers with high volume users (often at a loss) to profit from ongoing ink and service business.  This will also mean further shrinking its global payroll which has already diminished to 18,800 from a peak of 145,300 in 1988.

Honestly, this doesn't strike me as the most innovative business to go into. With numerous Asian (especially Chinese) competitors who are cheaper, faster and better, Kodak will find itself in an extremely competitive situation. Everybody knows that the printing business is the most competitive, lowest margin and hardest aspect of the entire imaging business.

Embracing Nostalgia - Its Biggest Selling Point

In my view, Kodak not only has to overhaul the clicks and mortar aspect of its business - it has to changes its entire consumer image.  There is incredible brand equity in the Kodak name due to its deep emotional connection with Baby Boomers and Gen X-ers alike who have grown up using a Kodak camera and developing their prints on Kodak paper.  It would be wonderful if the company can find a way to tap onto the fast growing nostalgia market and re-brand itself as a leader in that space.  While this would not put Kodak at the cutting edge of digital imaging or photography, it may at least stem the flow of red ink.

Let's end this post with this lovely tribute to Kodak, set to Paul Anka's "Time of Your Life", while we bid Kodak a teary farewell.

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