Kodak Destruction Part 3

The dawn of digital imaging

During the
20th century,
Kodak grew
up into large,
profitable
company.

People got
richer and
consumed
more and
more film.

Kodak built up a competence
base in precise mechanics…

… chemistry…

… manufacturing…

… And
consumer
marketing.

A global
infrastructure for
photography
had emerged. A
roll of Kodak
film could be
bought
anywhere in the
world and be put
into the camera.

For every
Kodak
moment,
the
company
made a
profit.

… However, in the late 1970s, the
rise of the Japanese camera industry
threatened Kodak…

The cameras and the film were
cheaper and had high quality.

When Fuji sponsored the 1984
olympics in Los Angeles it became
clear that the threat was real.

Winning a price war against these
guys was hard.

At the same time, Polaroid and instant
photography was improved, thus
undermining Kodak’s amateur market.

Kodak responded by diversifying
throughout the 1980s.

The company went into medical imaging,
pharma, batteries for video cassettes…

And digital imaging…

The development can be traced back to
Bell Labs in the 1960s and then to NASA
and the transmission of photos from
unmanned space vehicles in the 1970s.

Through digital imaging, photos
could be sent back to earth.

Kodak, Canon and RCA tried to convert
light into digital images.

In 1979, Emory Kristof was the
first to use an electronic camera
while photographing life at the
bottom of the ocean.

Electronic cameras were also
used when Kristof took photos of
Titanic at the bottom of the sea.

\"What does this development
mean? That the working newspaper
photographer in the not-too-
distance future could be using an
electronic camera.\"
// Edward Dooks photographer, 1979

\"It sounds like it (the digital camera) could
give us more speed, more time to do the
selection and cropping of photographs and
less time just doing the technical production
of it.“
// Ralph Langer, Dallas Morning News 1984

\"Electronic photography is going to replace
the silver image. We are going to have to have
an understanding of how to edit pictures, how
pictures are stored electronically and how to
edit them electronically.\"
// Charles Scott, Photojournalism educator

In 1981, the industry was shaken
when SONY launched their Mavica, a
camera that used floppy discs
instead of film.

Many companies feared that this
technology would eventually
substitute analogue photography.

In Japan it was referred to
as ’the Mavica shock’. They
feared that something like
this would happen.

\"When the electronic camera, and all that
goes with it, is finally in our hands --
and it will be -- it will not be because we
have sought it out, but because we are
no longer left with a choice.“
Ed Breen, News Photographer in 1982

Kodak recognized the threat and
invested extensively in digital
imaging during the 1970s and 1980s.

In 1986, Kodak scientists released
the first megapixel sensor, with 1,4
Mpixel.

The JPEG standard for compression emerged
in 1989 and further advancements were made
in digital imaging.

Later on Kodak developed
the sensor into a digital
back, which was built in to a
Nikon camera in 1991.

A sensor with 1,3
Megapixel, an internal
harddrive of 200 megabytes
at a cost of 13 000 USD
(about 21 000 USD today!)

It was marketed to photo
journalists, hoping they’d
be willing to pay for being
able to view images
instantly , take a lot of
photos and removing the
long process of turning
film into a digital format.

In 1994, Apple launched
the QuickTake camera.

The QuickTake had been
developed by Kodak.

It looked like a pair of
binoculars, could store
32 photos and was the
first camera that could be
connected to a PC.

The price? 800 dollars.

After a collaboration with Philips, Kodak
announced its Photo CD system in
1990. Pictures could be digitized, stored on a
compact disk, and then be viewed and
manipulated on a PC.

In the 1990s Kodak focused more on its core
business. The new CEO George Fisher
divested many business units.

Fisher now had formulate and
implement a digital strategy.

He thought that Kodak should
be an imaging company: “We
are not in the photographic
film business or in the
electronics business, we are in
the picture business.”

A couple of different ideas
came to define Kodak’s
strategy for how to handle the
digital threat.

Greater coherence.
Focus the digital efforts and
coordinate them in a better way.

Incrementality.
The shift will be the
consequence of many
small efforts.

Fisher said: “The future is not some
harebrained scheme of the digital
Information Highway or
something. It is a step-by-step
progression of enhancing
photography using digital
technology”

During the 1990s, digital imaging
emerged in those segments
where transmission and
manipulation of photos was
important. At the same time, film
was doing well.

Kodak thus developed a hybrid
approach, developing digital
imaging while making money on its
established business.

In 1994, Kodak launched a
digital news camera,
it cost 15 000 USD and was
co-developed with The
Associated Press.

Kodak also
developed
digital backs
which could
be attached
to
professional
cameras.

It looked like this.

Yes, big and bulky.

But the business utility
was great. Many film
photos were digitized
sooner or later anyway.
With a digital back, one
step in the production of
photos could be removed.

The first digital backs were
expensive and had a moderate
performance. Kodak launched one
with 6 Mpixels.

Press and Studio photographers
loved it and NASA was very
interested in the Kodak sensor.

6 million pixel resolution is
good enough for most
applications. The
perception of colour is
more important than the
perception of sharpness.
Kodak, 1996

In these years, Kodak also launched
software which could be used for editing
and cropping digitized photos.

Kodak also developed a digital
infrastructure that could be used by
photofinishers throughout their network.

In a press release from 1997, the following
quote can be found:
Four years ago, when we talked about the
possibilities of digital photography, people
laughed. Today, the high-tech world is
stampeding to get a piece of the action,
calling digital imaging perhaps the greatest
growth opportunity in the computer world.
And it may be. We surely see it as the greatest
future enabler for people to truly “Take
Pictures. Further.”

Kodak did everything to enter digital
imaging – consumer cameras,
professional cameras, storage
systems, software, printing
paper, you name it…

However, in the digital world,
everything would be different.

Kodak used to be exceptionally
integrated vertically, owning the entire
value chain, from basic research to
photo finishing.

The digital value chain could not be
dominated in the same way – Compaq, HP
and others were leaders in the PC market,
Adobe dominated image software, in printers
Canon and HP were leaders.

Kodak therefore launched many joint ventures
with these firms, since the company did not
possess these resources on their own.

With the launch of the digital DC40 in
1995, Kodak teamed up with Microsoft,
HP, IBM and tried to create an
infrastructure for digital imaging.

Kodak, Olympus and Sanyo all had thousands
of patents in digital imaging, they cross-
licensed much of this in order to speed up the
shift to digital imaging.

Thus, Kodak developed the digital
business both in-house and through
collaborations and partnerships.

Kodak had a strong brand and a global
presence, these resources were crucial
in the shift to digital imaging. The
company offered digital services such as
digitizing film all over the world.

The company had a strong technology
presence in digital imaging. The company had
more than 5000 engineers and scientists,
more than 600 PhDs and had invested in
digital research since the 1980s.

Kodak had a leading position in
image sensors for a long time and
sold those to many other camera
companies such as Olympus.

At the same time, the price war with
Fuji put Kodak into trouble. In 1997-
98, Fisher had to fire 20 000 people,
mainly because Fuji lowered their
prices and expanded.

Kodak also responded by entering
emerging markets such as China.

During the late 1990s,
Kodak kept launching
smaller, cheaper and
better digital cameras.

At the same time, the company
created various digital consumer
products and services.

Thus, Kodak did not only recognize the
threat at an early point…

… The company pioneered digital
imaging and pushed it further…

… Despite the fact that digital imaging
would render film obsolete…

… Kodak embraced, developed and
commercialized digital imaging…

Daniel Carp, Kodak’s
new CEO said in 2000:
\"Kodak is convinced that there has
never been a better time to be in the
picture business…. Digital can
change the way people take and use
pictures. Suddenly there are no
boundaries to how often you can
take pictures because cost and
availability are no longer issues.\"

With all these preparations, all R&D
and successful digital business
development in the 1980s and 90s,
what could possibly go wrong?

Image attributions

Christian Sandström
www.christiansandstrom.org