Kodak Files for Bankruptcy Protection 1/18/2012

2F/2F said:

I can understand "horror," in this case (at least in the figurative sense; I'd probably say "dismay," myself.), but not shock or disbelief. For at least 10 years now, it has been pretty-much plain as day that this day would come.

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I did qualify my "shock, horror and disbelief" wording with the sentence that followed. I was indicating that however much this had been anticipated, it still came as a pretty momentous event when it actually happened. Getting back to the Woolworths parallel, I've always wanted to title this shot "Wo, wo and thrice wo" - and that's exactly as the sign was - no tweaking!



Steve

zinzin said:

Eastland adds: "Kodak's got to go back and crunch their numbers about the film market. All people want are these little yellow boxes of film, and that should be their core business, even it means reducing the company's size further. Kodak needs to hire people that actually know about film photography. It needs to market it properly and set up some great labs in strategic places with great customer service."

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Wow, whatever Eastland is smoking, I want some!!!

But it's true, Kodak's film sector could be profitable. Highly profitable.

Aristophanes, what I think you are perhaps missing is that in order for any sector to remain profitable, you first have to invest in it. This is not like selling heroin to a bunch of desperate junkies. Not quite that simple. The film market needed to be nurtured... with advertisements, announcements of continued commitment, working with distributors etc. No product that I can think of will simply earn profit indefinitely without that kind of brand cultivation. Professionals and labs and even amateurs won't commit to a product line if they think it will soon be gone- most of us migrated away quickly because Kodak sent very clear signals that they were leaving film altogether. So to blame their film numbers (which I do not deny, of course) on the atmosphere of declining film sales is too simple. This is a crisis of their own making- no upfront investment, no return.

My worry would be the raw materials suppliers, who could get hurt or even go out of buisness if the courts decide their outstanding invoices are to be paid out at pennies on the dollar. I would guess the manufacture of film is more in line with market demand than digital cameras comming out of china and therefore, could suffer if suppliers are effected.

That being said, Kodak's digital cameras use to be OK, my mom still enjoys printing from her print dock right out of the camera. But lately, their digital offerings have been disappointing.

Disposable film cameras however, still show a huge potential. I get 35mm cartridges from a local lab who saves them for our club to use for bulk loading - the majority of that film is from disposable cameras.

Wolfeye said:

That Kodak's film sales, and revenue, have fallen deeply, is not the real issue. The real issue was that Kodak ceased marketing these products. At all. Try and find film on their web site. Show me a print ad in a recent photo magazine. They gave up on film and hoped legacy loyalty (and of course, the finest film products in the world) would suffice. It didn't.

Kodak as a company would probably have been better off coming clean. Abandoning film altogether.

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No one looking at a digital screen wants to delay their gratification about getting an image, and pay the costs to get their product when they incur no additional processing costs with a digital. It's a complete consumer slam dunk for digital.

Kodak will abandon film because as a publicly traded company with creditors, the film division bleeds revenues due to the scenario above. It will never get those customers back again no matter how much it plows advertising back into film.

Local labs are disappearing as print services are losing out to online sharing. Most print services will be centralized mail order systems. I have 3 national chains of drugstores in Canada about to suspend all association with film processing, and all supermarket chains have already done so. They will only deal with digital from now on. Film processing is going to be a custom process only in large population centres, or mail order at even more cost and delay to the consumer vs. digital.

Ideally Kodak's film assets need to go into a private capital corporation that can find a bottom to the demand and scale down production likewise. It can then apply its resources to satisfying a niche market with integrated film production, processing, and perhaps even go back to incorporating camera manufacture (likely through outsourcing). Ideally they would do this with motion picture assets first because for every roll of 135 coming off the line, there is a kilometer of film stock rolling out. That's the basis for an economy-of-scale. Kodak's creditors will put zero down on the film side because there is no end to revenue decline. the motion picture industry over the last 24 months is now in the last stages of completely abandoning film output to cinemas, and the switch to digital production is relentless. To survive, film needs vertical integration of assets and a small niche. It cannot compete against digital; it has to be a market different and apart.

Ron could say whether this is possible, but it seems to me that Kodak's current filkm product formulas and key techniques could be sold off very quickly. There is *certainly* profit there for a company that can catch that ball and run with it. Your Ektar and whatnot might be made in India...

Steve Roberts said:

I did qualify my "shock, horror and disbelief" wording with the sentence that followed. I was indicating that however much this had been anticipated, it still came as a pretty momentous event when it actually happened. Getting back to the Woolworths parallel, I've always wanted to title this shot "Wo, wo and thrice wo" - and that's exactly as the sign was - no tweaking!

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Steve

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Ahhh, Woolworths. Frito pies on the plaza in Santa Fe. I never liked them *that* much, but when having one you got the feeling of being part of something bigger. A shared history. I don't get that when I'm at my (already obsolete) little computer, allegedly connected with the world. I'm not a Luddite mind you, but there's probably more genuine connection eating that Frito pie with a stranger on the plaza.

By the way, I do have a market where Kodak could play very effectively, in my opinion. And I told them about it, oh, almost a decade ago. Thin film photovoltaics. Too late now though.

The reason Kodak is bankrupt is because they forgot their mission statement.

Yes, film, cameras, chemistry, digicams and computers are integral parts of photography but they are not what the mission of photography is about. Photography is about thoughts and ideas and imagery. It is about transmitting those images from one person's mind to another's.

Back at the turn of the last century, Kodak revolutionized photography with one simple slogan: "You pull the string. We'll do the rest."

The original Brownie camera was not the best camera available. There were a lot of better cameras available at the time.
The reason the Brownie was so revolutionary is because it allowed people to SHARE their lives, their vacations, their family events and their history with other people. For all the people who bought those Brownie cameras cared, there could have been little fairies inside those boxes that painted the images. Wasn't there even some jokes floating around to that effect at the time?

The technology of the Brownie camera was all behind the scenes. It doesn't matter HOW it happened. It matters WHAT happened. You mailed the camera back to Kodak and they mailed your memories back to you. Technology is less than 1/10 of the heart of photography. Imagery makes up the other 90 percent.

Go listen to the song "Kodachrome" by Paul Simon.
Go ahead. Do it right now. I'll wait for you.......

Listen to the WORDS of that song. How many of the lyrics talk about cameras or film?

Answer: ONE LINE -- "I've got a Nikon camera. Love to take a photograph."

That's IT! The rest of the song talks about IDEAS and IMAGERY: "Nice, bright colors" "The Green of Summer" "Makes you think all the world's a sunny day."

Paul Simon knew this in the 1970's. Kodak forgets this in 2012. This is why they failed.

There has been a fundamental shift in the way the general public thinks about images, the way they use them and share them. Where once, we pasted them into photo albums, we now e-mail them and post them on FaceBook.

It doesn't matter how I get the photo. It matters what I do with it.
It doesn't matter whether I used a 1953 vintage Rolleiflex or the latest Nikon digital. It matters that I used those cameras to tell you the story about my last vacation or my last family gathering. It matters that I was able to use Tri-X Pan or Photoshop to tell you my story. Nothing else really matters.

If Kodak remembers their mission statement, they'll survive.

If Kodak doesn't remember, they'll be reduced to a label that somebody sticks on boxes like what happened to Polaroid.

When my girlfriend still worked for Walt Disney World, the significant other of one of her coworkers worked at Father Yellow as a manager, IIRC.

This coworker told my girlfriend that his SO tried to get Kodak to listen to his ideas. They were ignored. This person also went on to predict Kodak would find itself in bankruptcy "in less than ten years."

That was circa 2003-2004.

Dieter Zakas

This may be coming out of left field, but it seems to me this (inevitable) demise of Kodak is not much unlike a lot of massive companies in America. It's like taking the "American dream" past it's threshold. You can climb that mountain, but all mountains have a peek and it can be a dangerous venture if the peek is not in your vision. In my opinion, Kodak reached the peek and then fell off a cliff instead of hovering right below the top with focus. As another user here mentioned, they lost a focus of their mission. I have a different look on what the mission of photography is than that user, but that is part of what photography means to you as an individual and topic of another conversation. I relate this to a smaller lab I worked for here in my town. They incurred so much debt by trying to grow beyond their realm as means of keeping up with technology, that they have virtually buried themselves without a way to dig out. In their (local) case, they have nothing to sell off outside of physical machinery and that will not cover their debt. At this point clientele will go where the product or service is being offered and therefore not a viable selling point of the company. Too big, trying to gather up all the avenues from all directions as means of growing your company. Eventually, you will have to offer more, more, more just to cover your growth and stay afloat. The more you offer, the less time you will be able to offer your customers personal service. That pisses people off and ultimately loss of customer base. In very large companies, this loss of customer base is not recognized until it is far too late. 1% decrease is fairly small unless you really pay attention the the actual number of customers as 1% could be 10's of thousands of people. This small lab I worked for used Fuji everything unless they had no option. Why? "Kodak doesn't care. They will tell you one thing, you invest, and then find they had a different direction planned the whole time". (Example: R3.) I can not tell you how many times I heard statements like this while working there. This small lab was just one small customer for Kodak, but served 1000's of customers in our city.Some people say customer service is the key and Kodak trashed that a long time ago. Of course, I am not a business major, so this is just my personal opinion and thought I might share, since sharing is what we do here.

Kodak Gallery came out way ahead of Flickr but Kodak put so many limitations on it that it floundered. Flickr set up a simple sharing system and server farm and became another missed Kodak moment. Kodak did not "get it" that digital sharing would not necessarily be tied to Kodak film and camera products but would be a whole new online vector unto itself.

Yep, Kodak could be the photographic version of facebook now, but no...

I agree with the astute observation that they forgot their mission.

They are trying to mix the digi/analog though, remains to be seen if the below venture is profitable or just noise, too little too late...

Over 1 Million Users Enjoy Printing Photos from a KODAK Picture Kiosk Making Printing Pictures from FACEBOOK More than a Status Update
http://www.kodak.com/ek/US/en/Kodak_Continues_to_Innovate_Offering_Brilliant_Ways_to_Do_More_with_Your_Pictures.htm

http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak

well ... let's see for how long ...

maarten m said:

http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak

well ... let's see for how long ...

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Despite the comments by Aristophanes, this article seems to agree with my comments!

As for the on-line galleries, Kodak was never very good with software from the very beginning except for mechanical devices. Even there, they failed when interfacing with DOS. I was there! I've seen first hand the flaws in their approach and the results.

PE

It was a perfect storm, a convergence of several factors, not just Kodak's management's lack of foresight. As others have already mentioned people no longer acquire and share images using paper. I can certainly see a future where even galleries have only electronic frames with images. You pay the gallery and your image is downloaded to your device and you upload it into a frame at home. It's just the Jetsons, really. Plus, most of today's images are considered temporary and with little historic value so the threat of data loss causes no worries to the consumer. (Yes, and there's endless duplication via that cloud thing that's always going to be free and open and private and up.)

But that's not the problem. The problem is 'how valuable is a photographic image on paper?' Valuable enough that someone continues to sell the materials to create it? I don't know. Nobody worries about painting: Super ancient, it should be super-old-fashioned if it weren't noble, right? Photography was supposed to kill painting but became itself painting for the masses. Painting to record pedestrian images is a super-niche but I can still easily buy anything I need to make one, from any number of old, old suppliers. Or I can make my own paints and brushes at home.

That's not the case with Photography. Photographic film and paper is extraordinarily complex; modern even, something that Media knuckleheads and Internet pundits miss over and over again in condemning it. Photographs are being relegated to a geriatric supporting roll like painting but with vastly more complex and specialized manufacturing requirements than have paintings. It's a multiple whammy on a company that doesn't handle those as well as its major competitor. Perhaps a smaller specialized Kodakish company will sell film and paper to us. Or perhaps Ilford will have the market to itself. That should secure continuing supplies but what would Ilford do with that newfound market control?

s-a

semi-ambivalent said:

what would Ilford do with that newfound market control?

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Well the first thing you do is get in a lotus position and meditate on your most important brands, raise prices on the corresponding products, streamline the existing line and lower production costs as much as possible. And start hunting very aggressively for new consumers, while preparing to enter adjacent markets and focus marketing on places where it will pay off. That is a liberal paraphrase of the very successful strategy adopted by the cigarette makers after all-out war was declared on them several decades ago. My jaw almost hit the floor when I visited a certain tobacco company to meet their marketing execs and found out what they were up against, and how deftly they maneuvered through it. Don't get me wrong: I am no fan of big tobacco. I don't smoke and I constantly encourage young people to stop. But man oh man, their business model... it's amazing how they handled unprecedented business adversity. Makes Perez look like a schmuck with an MBa from Walmart. Wait, no! A Walmart degree would be far better than whatever he's got- Walmart is profitable.

It is absolutely possible to profit very handsomely, even as overall demand goes down within the USA.

Thanks for that link. I'm glad that my earlier post regarding Kodak film is wrong, according to the article.

maarten m said:

http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak

well ... let's see for how long ...

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well ... let's see for how long ...

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It never ends, does it?

OT diversion

keithwms said:

Well the first thing you do is get in a lotus position and meditate on your most important brands, raise prices on the corresponding products, streamline the existing line and lower production costs as much as possible. And start hunting very aggressively for new consumers, while preparing to enter adjacent markets and focus marketing on places where it will pay off. That is a liberal paraphrase of the very successful strategy adopted by the cigarette makers after all-out war was declared on them several decades ago. My jaw almost hit the floor when I visited a certain tobacco company to meet their marketing execs and found out what they were up against, and how deftly they maneuvered through it. Don't get me wrong: I am no fan of big tobacco. I don't smoke and I constantly encourage young people to stop. But man oh man, their business model... it's amazing how they handled unprecedented business adversity. Makes Perez look like a schmuck with an MBa from Walmart. Wait, no! A Walmart degree would be far better than whatever he's got- Walmart is profitable.

It is absolutely possible to profit very handsomely, even as overall demand goes down within the USA.

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In Wikipedia's entry for "nazi" it mentions that German scientists had shown in the 30s that tobacco causes both tumors and cancer, and the Nazi government had national level programs to get the populace to stop using tobacco. After the war all the tobacco research was quashed. (So sayeth Wikipedia.)

s-a

the sky is falling to some..... but hopefully BJP is correct, and Kodak will take heed. I'm not concerned yet though.

semi-ambivalent said:

In Wikipedia's entry for "nazi" it mentions that German scientists had shown in the 30s that tobacco causes both tumors and cancer, and the Nazi government had national level programs to get the populace to stop using tobacco. After the war all the tobacco research was quashed. (So sayeth Wikipedia.)

s-a

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Wow, Godwin's law satisfied out of nowhere!

Also, to the digital shill, Aristophanes, do you even shoot film at all?

I'm pretty much with all the other posters here who actually shoot film (not the guys who post while stroking their 5Ds) in that my desire is to see Kodak specialize in the film business for however long it remains profitable.

And whether it's 2 $ or 2 million $, profit is profit. People are still payed for their employment and current consumers are still able to obtain the product.

Kodak looks like it is off the NYSE exchange, on the OTC EKDKQ, $0.30 now....just amazing

zinzin said:

from the The British Journal of Photography

"Film division is still profitable," says Kodak

http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak

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Interesting how Kodak's angle on this seems to have subtly changed now that the emphasis is on the value of the company's assets. The future was digital, but now they suddenly find that have a still-profitable film division....when they might just soon be looking for a buyer?

(Or perhaps I'm just an old cynic.... )

clayne said:

Wow, Godwin's law satisfied out of nowhere!

Also, to the digital shill, Aristophanes, do you even shoot film at all?

I'm pretty much with all the other posters here who actually shoot film (not the guys who post while stroking their 5Ds) in that my desire is to see Kodak specialize in the film business for however long it remains profitable.

And whether it's 2 $ or 2 million $, profit is profit. People are still payed for their employment and current consumers are still able to obtain the product.

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Any profit is constructed by leaving out key liabilities, like the entire cost of reducing hard assets, pensions, etc.

Companies in a declining revenue situation do this precisely to make the sunset industry like more valuable than its book appears. Kodak estimates the book goodwill value of the FPEG at -$650 million.

There is no profit.

The digital effort at Kodak has long been partly to butter the FPEG group up for divestment, but the recent collapse of demand for motion picture product is a key factor in the timing of the Ch. 11.

The public, indebted Kodak has to dump film to keep creditors/new shareholders happy. The declining revenues to fixed cost revenues say so. The restructure will largely be around that and IP sales under Court governance.

I shoot 2 rolls a week.

And on the motion picture side most studios are reviewing all film production due to the risk
Kodak presents. This is the real story behind the bankruptcy.