Kodak: Gone in a flash | Hacker News Reader

Kodak: Gone in a flash

economist.com

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I'm glad this obituary pointed out that Kodak's demise fits a common pattern among successful behemoths -- failing to react to disruptive technologies. It must have been easy for Kodak to ignore digital photography at first when professional photographers, its core customer base, derided the first digital cameras as inferior toys. I am yet again reminded of an essay Dan Bricklin wrote (I couldn't find a link, anyone?) where he noted on a train how mobile phone users gladly traded the fidelity of landlines (dropped calls) for convenience (speaking while riding) -- a rational trade-off which cost AT&T dearly. Digital photography didn't produce better photos than film for quite awhile, but it offered up advantages which professional photographers probably didn't care much about: convenience, lower skill level (due to instant review), etc. And, of course, the rest is now history.

And it's not like they didn't have time to react, as the article points out. Digital cameras were moving farther and farther downwards in price, and upwards in capability quite slowly.

Digital cameras had been an expensive curiosity for years, but around 2001/2002, and for me, in May 2002, decent 3 MP cameras started showing up around $400 or so.

http://www.amazon.com/Canon-PowerShot-S30-Digital-Optical/dp...

Pretty nice example image: http://i.imgur.com/0WcnU.jpg

Until the Powershot S30 showed up, I was still shooting a Nikon F3 and a Yashica T4 compact.

It took another couple of years before the D70 appeared and could compete with a decent negative scanner, but it did, and I've been happily stuck at 6 MP ever since, though my small sensor compacts all pretend to be able to do better. (But can't)

edited: I messed up the dates, I've been shooting digital longer than I imagined!

It is ironic since Kodak itself pioneered the first digital camera technologies. Often rare that the behemoth itself invents the disruptive technology but it certainly happens: For example, IBM, with the PC.

I wonder if executive compensation schemes are at least partially to blame for failures like these? After all, next quarter's numbers will look a lot better if you stop spending money on R&D which, if it ever does pay off, won't for a few years down the road. So, if you're running Kodak in 1992 and you don't expect to be the CEO in 2002, why negatively affect your stock options by ensuring the company's future? Investors aren't given a breakdown of R&D spending by expected first payoff year, so no one can tell that your earnings look good because you've sold off the future.

I think the real problem may have been the margins they were making off film and film processing. a friend was wondering why neither canon nor nikon had any trouble making the shift, but afaik, they did not have big film or processing businesses to "protect".

Here's a link to the hilariously primitive looking 1.3 MP F3 based DCS100.

http://en.wikipedia.org/wiki/Kodak_DCS_100

The box next to it is the unit that holds images, and a 5 MB SCSI disk. (About equivalent to a 1st gen iPod I guess)

Digital photography is one of those things where terms like "disruptive" grossly understates the reality. (More like "destroyer".) 35MM film cost $5 a roll and prints were $10 to $50 a roll (including the bad ones). Meanwhile, digital photography was free to shoot, and a couple bucks to print per (if you cared). I can't think of any scenario where a company would give up on that magnitude of revenue for some small percentage of IP licensing on the "next big thing".

It's easy to attack Kodak in the abstract sense, but I have yet to see an analysis that shows a clear path out of this conundrum. If anything, I'm sympathetic to the arguments that Kodak did not support professional film markets longer than they did.

"Disrupt" is used here in its technical sense, as coined by Clayton Christensen in "The Innovator's Dilemma".

That book is advice to incumbents, such as Kodak.

Maybe it is the replacenent of printed photos with screen viewing that was as disruptive as the digital camera. Since 2000 pretty much everyone has a portable display, laptop or phone, that can display photos. Before then that wasn't the case, and people still thought printing digital photos was going to be a viable business.

Kodak needed to shift from film and printing accessories to hardware / software manufacture.

Kodak never really managed that transition, they should have been competing with Canon, Nikon, and Adobe. They had the resources to give it a shot, but they never took a serious one.

As icegreentea noted elsewhere in the comments, The Economist recently compared Kodak to Fujifilm, which has done rather better at transitioning from film.

http://www.economist.com/node/21542796

http://www.economist.com/blogs/schumpeter/2012/01/how-fujifi...

It should be noted that Fuji was more on the $5 film roll side and less on the $30 processing, so they had less to lose. Kodak supplied chemicals and paper to the entire industry.

It's worth noting that Kodak was a leader in digital cameras even in the 1980s. It's also worth considering the impact of vertical integration: companies like Samsung and LG also make phones, giving their own CCD makers a boost. In order for Kodak to survive, it would need to be a vastly trimmed down CCD maker or expand into the mobile phone market. That is, there was simply little way for Kodak to remain viable as an independent company.

Two other nice economist articles from this week's paper edition, published before Kodak filed.

http://www.economist.com/blogs/schumpeter/2012/01/how-fujifi... http://www.economist.com/node/21542796

Nice analysis there, and a nice contrast with Fujifilm. Makes a nice narrative as a bonus.

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