Kodak’s First Digital Moment | Hacker News Reader

Kodak’s First Digital Moment

lens.blogs.nytimes.com

59 pointstysone22 comments

I spent 7 years (02-09) working for Kodak in their Windsor, CO manufacturing plant. It was an incredible lesson in [not] taking risks that I'll never forget.

The writing was certainly on the wall about the digital photography revolution when I started but nevertheless every year the story was the same as the losses continued to mount: "Digital continues to eat into our film business faster than we have predicted. We've accelerated our plans [to switch to digital] for next year."

Meanwhile, in the middle of all that I remember picking up the WSJ and reading an interview with Netflix's Reed Hastings. They had just debuted streaming and were fielding questions from reporters asking if they were worried about cannibalizing their successful DVD business. Reed's response was "We have to obsolete ourselves before someone else does."

I cut the article out and hung it in my office at Kodak with that quote highlighted. It was pretty well faded when I finally took it down, laid off as a part of another "digital transformation" restructuring.

Kodak could have owned this market, Xerox could have owned personal computing, etc, there are stories like this all over where a big dominant company invents the next generation of technology, but because of internal company forces cant (or wont) actually bring it in a meaningful way.

Kodak couldn't deal with cannibalizing their existing business (for film, and less extent, printing supplies) and Xerox sales couldn't wean itself off the 'click' (per imprint commission) enough to figure out how to sell the PC.

Interesting to think what Rochester might look like today had this been the case...

Indeed, but it's not so bad now. Rochester is still among the cities with the greatest number of patents per capita. The technical skills and infrastructure that fueled Kodak and Xerox are still around; many engineers operate at smaller shops or do consulting. RIT and the University of Rochester are still graduating quality students. Optics is still prominent in Rochester, and there's a good deal of defense tech you don't hear about (Harris RF, Exelis Geospatial Systems, Pictometry, TeledyneOptech, Tyco, et al.). Though I'm more in Cambridge, MA now, I'll put on my Rochester emissary hat and expose a secret: quality of life in Rochester is fantastic. It's affordable; the median house price is <$75k (maybe triple that in the affluent suburbs). There's no traffic, there's abundant water, energy is cheap, food is inexpensive and local, and people are civically-involved. There are bike trails and there is Wegmans. The geographic location is not one prone to natural disasters (except blizzards if you count those). The parks are beautiful, and there's a festival every other weekend during the warm months. Unlike cheap places in the midwest, it's a short hop to NYC, Boston, or Toronto. I think Rochester is poised for a comeback as people and companies look for more cash-efficient places to operate. My Rochester house even has gigabit Internet; that's not something I can get at my apartment three miles from MIT.

Could Kodak have held a monopoly in digital cameras? Kodak had a monopoly on film. A virtual monopoly, Agfa and Fuji also made film but they did not pose much a threat to Kodak profits. And Kodak's monopoly profits were incredibly high!

Kodak could have had a monopoly on consumer cameras, they might be in trouble now, but would have been good for a long time.

Maybe. They could have been first to market with a digital camera. But if they kept prices high enough that digital photography profits were as high or higher than the film business they cannibalized from, they would have had their lunch eaten when the patent expired anyway. The profits simply weren't there with digital to sustain the size of a company that film did.

They could have used dominance in digital camera sales to invent and patent ways of using digital photographs, too.

But at the end of the day, big companies have an extremely hard time adapting to new paradigms, and likely Kodak would have had to shrink anyway.

big companies have an extremely hard time adapting to new paradigms

And yet all the big players in digital photography - Nikon, Canon, Sony, Apple - are massive companies who've made the transition. Even Fuji is a lot healthier than Kodak, although their bet on SuperCCD sensors is just not paying off.

Another good ones are:

- Blackberry - who could have seriously overtaken the touchscreen market if they had pivoted to be pro-consumer, not just pro-enterprise - Nokia - who could have spearheaded the smartphone market

Isn't this the whole premise of the much touted "disruptive innovation" theory by Clayton M. Christensen?

Kodak could have owned this market

People keep saying that, but it doesn't check out. Look at who owns the camera market: Canon, Nikon, Sony, Pentax, Olympus and Apple.

None of these companies are new, two thirds of them had huge analog camera businesses 30 years ago. The major shift in digital photography was people going from spending $500 on a camera and $1000 on film and $1000 on processing, to spending $1000 on a camera and $500 on a computer.

Now, I bet Kodak could have done very well as a sensor supplier (like Sony or Samsung), but thinking that they could've somehow "owned this market"... It's been 15 years since Nikon released the first pro DSLR (D1) and Canon released the first affordable DSLR (the Canon D30), and look how many competitors are chomping at their heels. That's because Nikon and Canon both have lens systems with a huge range of glass, much of it designed before 1999. If you bought a D1 or D30, you could go to your local camera store and pick up everything from a super-wide to a long telephoto. Kodak had none of that.

Kodak did have a near monopoly in consumer cameras though, and they could have had a monopoly in sensors too - what they could have done by leading it rather than playing catchup is changing how adoption worked.

Had Kodak led it, we for example might print a ton more digital photography than we do now, because the charge was instead lead by Sony (in my opinion) and their early mavica - and for a long time you couldn't print digital photos onto real photo paper using a lasting process - because kodak controlled something like 70% of the processing market, they could have led the ability to print in store.

As it was, high quality printing from digital didn't come until much later.

Kodak did lead in digital cameras. Their $17K digital camera for news photographers in 1994 was the first digital camera that took good pictures and was reasonably compact. (Kodak's 1991 model required a backpack for data storage.)

But Kodak didn't get the price down. Casio, Sony, and Kyocera did. In 1999, Nikon came out with the D1, the first good DLSR, and the beginning of the end of pro film photography. It's the five years between 1994 and 1999 that Kodak blew it.

This story is the precise reason why innovation usually comes from outside, from the startup. Why did Mercedes see value in Tesla's technology while the Big 3 did not? It pains me greatly to see the tech leadership mantle in automobiles slowly pass from Michigan to California.

I'm not sure it's been in Michigan in a long time. Somewhere in Germany probably, based on the number of "xxxx shows new technology" headlines I've seen.

There are significant exceptions, though. The old Bell Labs and Xerox PARC stuff was a great example of funding basic but directed research that had long term payoffs.

Nikon is a startup?

The camera market is dominated by big companies. And not only that, many of those companies were actually also big film camera companies. Obviously there’s Nikon and Canon. Sony (which has been coming out with some wickedly cool and innovative digital cameras and certainly worked its way up to become a huge digital camera company) is not an analoge camera company, but it’s also not a small company.

The biggest disruption to the (low end of the) camera market have probably been smartphones and their cameras. (The market segment of cheap point and shoot cameras is practically dead and camera makers have already moved on to new and certainly more exciting products, targeting a very different audience.) That’s chiefly Apple and Samsung (as the biggest drivers of bringing smartphones with good enough cameras to everyone), certainly not small startups.

Even the hippest of the hip current digital cameras tend to be made by some really, really old companies that have been making cameras (and analog film!) for ages, namely Fujifilm (it’s right in the name!) and Olympus.

Selling cameras is still dangerous terrain and I think it pays off to have great ideas and to know your audience, but some very old and very big companies have been quite excellent at doing that, actually. Of course, all around them there has been lots of death and destruction (including Kodak), but that doesn’t mean no one made it.

> Sony (which has been coming out with some wickedly cool and innovative digital cameras and certainly worked its way up to become a huge digital camera company) is not an analoge camera company

It's not, but it did buy one of the (fading) high-end camera businesses to get access to an SLR system and lens portfolio that they used grant them the credibility they needed to base their current charge on.

I know! (I didn’t mention it because my comment was getting long enough already.) It seems if you can’t sell to the low end you absolutely need to show off your analog film chops in some way to be really taken seriously. Or at least you had to. (I mean, Sony’s current cameras are certainly thoroughly modern and you can’t really accuse them of nostalgia.)

Yeah, although their lens strategy seems a bit of a mess - Minolta, Alpha, and Alpha Full-Frame.

>Selling cameras is still dangerous terrain and I think it pays off to have great ideas and to know your audience, but some very old and very big companies have been quite excellent at doing that, actually.

For good reason. People can still use their $10,000 pro film lens collections on new digital cameras. Lenses don't evolve like bodies do, most glass from the 70s and up is still amazing by today's standards and these companies with their proprietary mounts that haven't changed in ages offer a massive legacy lens market that a startup couldn't.

Fujifilm and Olympus have been doing great in this area relasing new mounts and lens systems that are catching on. Fuji makes some of the best APS-C lenses available and Olympus has done great with their m4/3 format.

Mercedes was back then most likely just interested in patents.

Nowadays not much happens at Mercedes in terms of a-mobility, mostly just PR and raking in on government subsidies for accelerating adoption of electric cars. The second main reason why German automakers keep a minimum level of electric cars in their portfolio (although most of them can't even be purchased regularly) is to keep the overall average emission levels low enough to meet recent environmental standards.

Mercedes and the likes are huge and really really slow moving giants and their main interest is to keep the status quo.

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