Kodak: The Rise and Fall of an American Tech Giant

[Sirius Glass]

The Rise and Fall of an American Tech Giant
Kodak changed the way Americans saw themselves and their country. But it struggled to reinvent itself for the digital age.

Read in The Atlantic: https://apple.news/APaJPrxjjRoa7RvLa9EPCbQ

Go to the website and type in "Kodak"

 

[Alan Johnson]

Link:
Rochester, New York: The City Kodak Built - The Atlantic
I was always puzzled why Kodak spent the declining film sales income on risky tech ventures , local loyalty maybe.

 

[pentaxuser]

Shouldn't that be Rise and Fall and to an extent at least Rise Again given the revival in film sales. Kodak can't keep up with demand at the moment. I base this on what Henning Serger has told us

pentaxuser

 

[Helge]

The premise is fundamentally untrue.

And much the same thing happened to other giants to various degrees like Xerox, IBM, Ford and right now with Microsoft (well deserved more than the rest I might add).

Next will be giants that seem unshakeable like Unilever, Nestlé or Proctor & Gamble.
All it would take is different distribution methods, a shit storm and/or different tastes/more token “aware” consumers.

 

[Paul Howell]

My understanding is Kodak did not understand how quickly film and paper sales would decline, a decline of 80% in paper and film alone in just a few years. Second Kodak had massive plants, had a hard time scaling down. Third unlike Fujifilm they bet on the wrong products for divarication, inkjets, really?

 

[pentaxuser]

The premise is fundamentally untrue.

What is the premise that is fundamentally untrue?

Thanks

pentaxuser

 

[Helge]

What is the premise that is fundamentally untrue?

Thanks

pentaxuser

Exactly!
It’s a long meandering article. A pile of badly understood basic research, with no real point or thread running through it.
Quite typical of Atlantic articles, much other pseudo intellectual web journalism and big glossy catalog journalism.
It’s like a cheap Chinese buffet. You eat a lot but you leave hungry, and get too much salt.

It does fire off the usual platitude in the text wall of mud:

“So, by 1993, Kodak had spent $5 billion on digital-imaging research, yet that year it only reluctantly entered the digital-camera race—neck and neck with competitors like Sony, Canon, and Olympus, not miles ahead, as it could have been. And it failed to rearrange its business model to make the new cameras profitable.”​

That’s not even an oversimplification. That is just untrue.
I don’t even know where to start. I’ll just have to say DYODR (do your own damn research).

The trap of not knowing when to let the goose that lays golden eggs step aside a bit, is an age old story. And something that has happened numerous times to big companies in the twentieth century alone.

It’s more a tragic part of the human condition than anything else.

 

[Helge]

My understanding is Kodak did not understand how quickly film and paper sales would decline, a decline of 80% in paper and film alone in just a few years. Second Kodak had massive plants, had a hard time scaling down. Third unlike Fujifilm they bet on the wrong products for divarication, inkjets, really?

They had amble warning with first instant photography, which showed how much simple and immediate (quality takes a backseat at best) speaks to some very basic emotions in humans (Polaroid was allegedly founded on Lands little daughter asking “why can’t I see it know‽” after seeing a photo getting taken).
And later on how very quickly Super 8 got killed off by video tape. There is nothing people like more than perceived free.

They knew very well what was happening.
There was just not anyone at Kodak willing to risk going all in.

 

[cmacd123]

There was just not anyone at Kodak willing to risk going all in.

PLus they were hoping (against the odds as it turned out) that they could come up with something that had the same "Hook" as their consumer film cameras. which used film AND processing materials on a regular basis in almost every home.

 

[MattKing]

The biggest reason that Kodak foundered is that they were structured in a way that depended on selling high margin products. That was what funded the large, well paid employee workforce and extensive dealer network support infrastructure.
The digital photographic market has never offered those sorts of margins, other than perhaps the printer ink market.
Their institutional shareholders were not willing to accept years of low return restructuring, so attempts to replace the revenue streams with other, potentially high margin alternatives were the choices that management made.
All of the possibilities available would have resulted in tremendous amounts of disruption and job loss.

 

[Helge]

The biggest reason that Kodak foundered is that they were structured in a way that depended on selling high margin products. That was what funded the large, well paid employee workforce and extensive dealer network support infrastructure.
The digital photographic market has never offered those sorts of margins, other than perhaps the printer ink market.
Their institutional shareholders were not willing to accept years of low return restructuring, so attempts to replace the revenue streams with other, potentially high margin alternatives were the choices that management made.
All of the possibilities available would have resulted in tremendous amounts of disruption and job loss.

Kodak held many very important patents on electronic image sensors and processing. Far more than the usually mentioned Bayer array.
It wouldn’t be too much to say that Kodak created the fundamental ideas and concept still in use in all digital cameras.
One example of a more tangential significance but easily explainable, is that the tiny plastic lenses that is in every phone today, originated in the tremendously high resolution Disc lenses made from molded plastic and glass into aspherical lenses. With a technique invented and pioneered by Kodak.
A Disc camera with a CMOS sensor wouldn’t look out of place today.

Their digital cameras sold really well from the nineties to the early two thousands.
They didn’t make much profit though.
But that goes for a lot of stuff from that time.

2003 - 05 wouldn’t have been too late to do something drastic, when they still had funds and enthusiasm.
That’s sixteen years ago, not long ago at all. Though people act like digital cameras, that you could take seriously, has been with us forever.

A two pronged strategy with continued development of film, and better scanning (dedicated scanning, home or lab, has not moved at all since about 2000), and a real try at producing their own digital cameras.

The one thing wrong with their flagship
cameras was that Kodak didn’t realize that software is the product.
From user interface to the basic de-mozaicing.

Not that any UI for a phone or any cameras are anywhere near exemplary. But at least they are fast and responsive.

 

[Rudeofus]

@Helge there is a radio interview with Ron Mowrey, in which he explained Kodak's reasoning. The were a company run by chemical engineers, not computer scientists, and as a result they did not grok the implications of Moore's law. They expected digital photography to be acceptable to amateur customers by 2010. Kodak invested big in a massive coating facility in the late 90ies and was totally caught off guard, when digital cameras became popular in the early 2000s.

Their whole behavior since 2000 followed Sun Tzu's teachings "when on desperate ground: fight". They did try to maneuver into all kinds of digital domains, albeit with very little success.

 

[Paul Howell]

They had amble warning with first instant photography, which showed how much simple and immediate (quality takes a backseat at best) speaks to some very basic emotions in humans (Polaroid was allegedly founded on Lands little daughter asking “why can’t I see it know‽” after seeing a photo getting taken).
And later on how very quickly Super 8 got killed off by video tape. There is nothing people like more than perceived free.

They knew very well what was happening.
There was just not anyone at Kodak willing to risk going all in.

That's true, Kodak lost a patent infringement suit brought by Polaroid, had to buy all the Kodak Instant Cameras back and pay a large settlement to Polaroid. Selling cameras was not going to make the same profit margin as selling film camera then film and paper for years to come. Sell a razor at a loss then sell blades for life.

 

[gone]

This is easily explained. The people at the top were idiots, and it looks like not much else has changed over the years. Stealing Polaroid's technology and having to pay out nearly a billion dollars on the lawsuit which followed was incredibly dumb. Who or what in their company had the stupidity to OK this enterprise?

I'm a betting man, and would bet that Kodak the company will not be around much longer. It will break into little companies. Good riddance. This is a perfect example of cause and effect. All I want from them is an occasional roll of Tri-X, and I now buy slightly expired rolls of it from individuals to make sure that Kodak doesn't get a dime on the deal.

 

[AgX]

That's true, Kodak lost a patent infringement suit brought by Polaroid, had to buy all the Kodak Instant Cameras back and pay a large settlement to Polaroid.

Not quite. That applied only to the USA. Well, the patent infringement case would have practically effect worldwide, but that buy-back was a US thing.

 

[Don_ih]

https://www.forbes.com/sites/chunkamui/2012/01/18/how-kodak-failed/?sh=6546dda96f27
Interesting, at least.

 

[Kodachromeguy]

Here is another short note on Eastman Kodak with more personal memories: https://worldofdecay.blogspot.com/2013/12/not-kodak-moment-demise-of-industrial.html

 

[Lee Rust]

Digital took over much faster than expected and Kodak was too hugely invested in film to change direction that quickly.

Kodak made their place in history by perfecting and marketing mass consumable products... photo paper and film... but aside from printer ink & paper, there really aren't any consumables with digital. Rapidly evolving hardware and software are where the digital dollars have been made, and Kodak could no longer compete. Perhaps the aggressive and innovative early 20th century Kodak of George Eastman and his immediate successors could have made the transition, but not the cautious and comfortable early 21st century Kodak of George Fisher, Daniel Carp and Antonio Perez.

We may console ourselves with the reminder that Kodak's instant film technology lives on as the very successful Fujifilm Instax, which was unaffected by the Polaroid settlement.

 

[Sirius Glass]

@Helge there is a radio interview with Ron Mowrey, in which he explained Kodak's reasoning. The were a company run by chemical engineers, not computer scientists, and as a result they did not grok the implications of Moore's law. They expected digital photography to be acceptable to amateur customers by 2010. Kodak invested big in a massive coating facility in the late 90ies and was totally caught off guard, when digital cameras became popular in the early 2000s.

Their whole behavior since 2000 followed Sun Tzu's teachings "when on desperate ground: fight". They did try to maneuver into all kinds of digital domains, albeit with very little success.

I ran into the same brick wall when I wanted to open up a new business branch on the west coast to get more electo-optical payloads on space projects. It was approved almost to the top and then squashed. My business are of the company employed 2% of the company and produced approximately 25% to 30% of the profit and was later sold to ITT.

 

[Paul Howell]

This is easily explained. The people at the top were idiots, and it looks like not much else has changed over the years. Stealing Polaroid's technology and having to pay out nearly a billion dollars on the lawsuit which followed was incredibly dumb. Who or what in their company had the stupidity to OK this enterprise?

When in college in the 60s our darkroom instructor, darkroom time was considered a lab and we had a separate instructor from the prof who a taught the classroom portion, hated Kodak, not the products the company. He had a long list of companies he claimed Kodak drove out of business, he felt Kodak stole patented process which included 3M and ANSCO/GAF. I think Kodak thought they could wear Polaroid down then make a settlement offer and keep on trucking with their version of instant film and cameras.

 

[MattKing]

The Kodak Polaroid litigation results were so inconsistent with previous law that they stand as an entire new branch of US patent breach law - patenting a "concept".
Kodak had good knowledge of the Polaroid manufacturing techniques - they had actually done a fair amount of it for Polaroid, before Polaroid developed their own capabilities.
So Kodak designed a system that, among other things, was designed expressly to avoid what was then considered to be a breach of Polaroid's patents.
Different chemistry, different physical design, lots of other differences as well.
And then a federal court judge changed the law.
Fuji developed an extremely similar approach at the same time, with the same considerations. Edwin Land elected not to accept a settlement offer from Kodak that would have permitted both companies to prosper.
And as far as I am aware, Edwin Land elected to never pursue a remedy against Fuji for exactly the same "infringement" as Kodak's.

 

[DREW WILEY]

Have some sympathy. Kodak worked very very hard over a number of the last decades to screw itself. It took a lot of innovation to slowly and publicly commit suicide in that manner. The same thing seems to happen whenever a large corporation forgets where they come from, and some bright-eyed and bushy-tailed CEO with a bunch or marketing MBA's comes up a some novel way to appease the hungry wolves on Wall Street doing something they have no experience with. It's even more remarkable how Kodak managed to do it over and over again. Those who never learn from their mistakes fully deserve the Darwin Award. Unfortunately, I need the quality of both black and white and color Kodak film, so hope someone in charge still has a soft spot in his heart for preserving a segment of their legacy, or else sells it off to a private party who does take it seriously.

 

[Agulliver]

@Helge there is a radio interview with Ron Mowrey, in which he explained Kodak's reasoning. The were a company run by chemical engineers, not computer scientists, and as a result they did not grok the implications of Moore's law. They expected digital photography to be acceptable to amateur customers by 2010. Kodak invested big in a massive coating facility in the late 90ies and was totally caught off guard, when digital cameras became popular in the early 2000s.

Their whole behavior since 2000 followed Sun Tzu's teachings "when on desperate ground: fight". They did try to maneuver into all kinds of digital domains, albeit with very little success.

And those of us who care somewhat about picture quality and even know a bit about how CCD arrays are made could understand that thought process. The consumer and even prosumer digital cameras of the entire 90s and early 2000s were *awful* compared to even a basic single use film camera in many ways. Some had great lenses, manual control of aperture and shutter speed...but still at the core were noisy low resolution sensors often around 1.3 to 2.4 megapixels. Storage was expensive so JPEG compression was far greater than today leading to poor images...you'd start with something like 2.3MP acquired by a sensor which was noise with low dynamic range compared to film and compared to today's digital cameras. The hardware and software weren't up to much so in order to have the camera ready for another shot in a reasonable time, little processing was possible with the AI. Memory cards were often 32 or 64Mb in size (my first was actually 8Mb). So images were squashed to under a Mb each quite often. They were dire in terms of quality but they gave people something they wanted....convenience. Probably around 2003 ish the first 3MP compact digital cameras with acceptable picture quality came out. But one could still buy a compact 35mm camera and a few films and blow such machines out of the water for less cost.

But as someone else pointed out....the success of Polaroid (and brief success of Kodak's own instant photo system) proved that most consumers value convenience and gimmicks over outright quality. As long as it's "good enough". Ditto video tape killing off super 8 film way before the quality of camcorder images got anywhere close that of super 8. On a 14" 800x600 monitor, a 2Mp JPEG at 700K didn't look as dreadful as it really was....kind of like a Polaroid looks acceptable given the nature of the product.

Kodak no doubt couldn't see how quickly digital imaging for the consumer would get better and take off. By the time they did, it was probably too late...but the series of consumer and bridge digital cameras they produced in the naughties were pretty good, I had two of the Z series at work and they were as good as anything else at the price point at that time, and a good deal better than many. At this point Kodak had invested heavily in APS, as had Fuji of course, and probably wanted to eke out what they could from the film market to make that investment back. Few industry experts, perhaps being chemists, had an inkling of just how fast amateur and digital imaging would improve. The digital market was already known to lack the ongoing sales associated with film supplies....users of film bought more film, used developing and usually printing services....there was a business model there. For digital photography unless you reckoned they'd buy a camera every year, there was no ongoing business model....except for printer ink. So Kodak launched a line of printers and ink with their name on it for home printing of photos, thinking this would provide an ongoing revenue stream including people who owned digital cameras of other brands. But this coincided with the birth of social media and an increase in people sharing photos by email....they weren't printing their digitally acquired images, or where they did they would choose a small handful of the very best to have printed professionally rather than use the then rather dubious quality of home colour photo printers.

Kodak made a lot of mistakes, but at the time they could be justified. Hindsight is always 20/20. Kodak weren't the only film manufacturers to suffer and as we know several fell completely or pulled out of the consumer film market. The industry changed very quickly, just as it had 20 years earlier when video equipment replaced cine film within a matter of three years or so. Could it have been predicted? Yes....but at the time it was far from clear that film had such a short life as the main medium people used to capture images.

 

[AgX]

Few industry experts, perhaps being chemists, had an inkling of just how fast amateur and digital imaging would improve.
The digital market was already known to lack the ongoing sales associated with film supplies....users of film bought more film, used developing and usually printing services....there was a business model there. For digital photography unless you reckoned they'd buy a camera every year, there was no ongoing business model....except for printer ink.
.

But to put the Kodak case in perspective, Agfa already as soon as the year 2000, in hindsight the world-peak in consumer film production, considered getting rid of their consumer branch, and in 2004 did so.

Their business model was to keep al non-consumer clients and supply them with film as long as needed, the same time going digital with them. Not all these approaches went smooth, their modular industry-printer line no longer exists. And furthermore they had to keep their remaining chemical plants running...

 

[Rudeofus]

But to put the Kodak case in perspective, Agfa already as soon as the year 2000, in hindsight the world-peak in consumer film production, considered getting rid of their consumer branch, and in 2004 did so.

Their business model was to keep al non-consumer clients and supply them with film as long as needed, the same time going digital with them. Not all these approaches went smooth, their modular industry-printer line no longer exists. And furthermore they had to keep their remaining chemical plants running...

And as a result, we still have excellent Kodak Portra, Tri-X. the TMAXes and now even E100 again. Agfa on the other side ...

Sometimes we as analog community benefit, if companies have less "superior insight", carefully step into any trap they can find in the market, and still somehow stay afloat through a barrage of true miracles.