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Rise and fall of Kodak

Analysis of rise and fall of Kodak

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Rise and fall of Kodak

  1. 1. Contents • Dry plate-film to color Film • Color film-dawn of Digital technology. • Competitive Strategy & threats. • Fall of Kodak. • Rajan Nhemaphuki • Kusal Kafle • Pushkar Khanal • Rajesh Dhakal
  2. 2. Back in the 19th Century the Eastman Dry Plate Company produced the 1st camera that weren’t invented for the professionals.
  3. 3. How Eastman did it? Technology as innovation trigger George Eastman developed & patent a machine to coat plates in 1879 Dry plate/ gelatin process by invented by Dr. Richard L. Maddox in 1871 In 1878, Bennett improve the gelatin process
  4. 4. In 1880 Eastman began commercial manufacture of dry plate. Businessman Henry A. Strong was impressed with its success. On January 1, 1881, Eastman and Strong partnership to form Eastman Dry Plate Company. Innovation to Entrepreneurship
  5. 5. • In 1884, Eastman patented the first film in roll form. • In 1885 it started manufacturing paper film named “Kodak”. • The cameras were so successful that the “Kodak” word was incorporated into the company name. Disruption From Dry Plate to Roll Films
  6. 6. • The Eastman Kodak Company was founded in 1892. • By targeting non photographers, Kodak created a huge market.
  7. 7. Snap-Shot Feature • In 1900, Eastman introduced Brownie, a simple and very inexpensive box camera with snapshot. • Brownie camera allowed consumers to take their own pictures. • They could then mail the roll of film to Kodak to develop.
  8. 8. Kodak brought photography to the people, just like Ford brought cars to the people.
  9. 9. Marketing
  10. 10. “Simplicity is greatest Complication”
  11. 11. Kodak became a household name.
  12. 12. Growth • People loved to take photos, and as they became richer, they took more photos… • And thus, Kodak made more money and kept growing, and growing.
  13. 13. Kodak Vest Pocket Camera (1912-1926)
  14. 14. Cine Kodak for Home Film Making (1923-1935)
  15. 15. What Next??
  16. 16. Color film was the next big thing.
  17. 17. Disruption from non-color to color film
  18. 18. In 1957, the Kodak Brownie Starmatic was launched. Over the coming five years more than 10 million of them were sold!
  19. 19. But even greater revenues were made by selling film.
  20. 20. Continues…..
  21. 21. Just like Gillette made great money by selling razor blades, Kodak made great money by selling film. The main source of profit was not the razor or the camera, it was the continuous consumption of blades and film.
  22. 22. Film could be bought and finished everywhere.
  23. 23. 1960
  24. 24. In mid-1960, NASA photograph 99% of moon surface by using photographic system develop by Kodak Kodak technology was also on board Apollo 11, when first men walked on moon.
  25. 25. 1971
  26. 26. With signs, Kodak also sought to encourage people to take a lot of photos…
  27. 27. 1st Digital Camera • Steven Sasson invented the first digital camera at Eastman Kodak in 1975. • It weighed 8 pounds (3.6 kg) and had only 0.01 megapixels. The image was recorded onto a cassette tape and this process took 23 seconds. • His camera took images in black-and-white. • He envisioned for the future was a camera without mechanical moving parts.
  28. 28. HOW DID KODAK RESPONSE? But it was filmless photography, so management’s reaction was, ‘that’s cute—but don’t tell anyone about it.’ via The New York Times (5/2/2008)
  29. 29. 1976:The Bayer Pattern color filter array (CFA) was invented by Eastman Kodak researcher Bryce Bayer.
  30. 30. Kodak management’s inability to see digital photography as a disruptive technology, even as its researchers extended the boundaries of the technology. Kodak continued producing film roll cameras.
  31. 31. 1976: Kodak introduced the first Kodamatic, instant picture cameras, using a similar film and technology to that of the Polaroid company.
  32. 32. • 1976: The company sold 90% of the photographic film in the US along with 85% of the cameras. • New Kodak Moment: A $19M profit
  33. 33. Kodak kept neglecting Digital technology
  35. 35. … However, in the late 1970s, the rise of the Japanese camera industry threatened Kodak…
  36. 36. When Fuji sponsored the 1984 Olympics in Los Angeles it became clear that the threat was real.
  37. 37. Sony electronic camera “Mavica” 1981
  38. 38. In Japan it was referred to as “the Mavica shock”
  39. 39. Continues…..
  40. 40. Kodak quickly identified the threat
  41. 41. CEO, Barabba conducted a very extensive research. Good News • It would take about 10 years Digital Photography to take over film based business. • And Kodak has roughly ten years to prepare for transition. Badness • Digital Photography had potential to replace Kodak’s film based business.
  42. 42. Kodak Strategy • Continue production of the film based camera technology. • Expansion in many countries. • Diversification in medical imaging, pharmacy, batteries • And also R&D in Digital Photography
  43. 43. Kodak’s Challenges • Kodak used to be exceptionally integrated vertically, owning the entire value chain, from basic research to photo finishing. • However, in the digital world, everything would be different. • 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.
  45. 45. Solutions • 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 cross licensed thousands of patents in digital imaging.
  46. 46. later on Kodak developed the sensor into a digital back, which was built in to a Nikon camera in 1991. 1986: Kodak scientists created the world's first megapixel sensor
  47. 47. Kodak collaboration with apple (1994). Quicktake 100 Quicktake 150
  48. 48. Digital Back • 6 MP • Heavy • Moderate Performance
  50. 50. Kodak Digital Avantrix Preview (1996) • Kodak spent $500M to develop and launch. • Features • Shot preview • No. of print • But it still use Films
  51. 51. Why buy a digital camera and still pay for film and prints? Advantrix preview was huge failure
  52. 52. CEO GEORGE FISHER “regarded digital photography as the enemy, an evil juggernaut that would kill the chemical-based film and paper business that fueled Kodak’s sales and profits for decades.” via The New York Times (12/25/1999)
  53. 53. Fall of Kodak
  54. 54. • In 1997-98, CEO 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.
  55. 55. Once the shift occurred, it was faster than anyone could have imagined…
  56. 56. 2004: Kodak announced that it would stop selling traditional film cameras in Europe and North America, and cut up to 15,000 jobs
  57. 57. January 2005: The Kodak EasyShare-One Digital Camera, the world’s first Wi-Fi consumer digital camera capable of sending pictures by email, was unveiled
  58. 58. Continues…..
  59. 59. Standard & Poor’s Equity Research Analyst Erik Kolb commented on the results: “They were late to the game in their shift to digital and they have been playing catch-up since.”
  60. 60. Christian Sandström holds a PhD from Chalmers University of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  61. 61. Kodak did embraced Digital Technology Then, Why If Kodak wasn’t late, why did the company encounter such great trouble…?
  62. 62. One of reason is Recession “During the last three months of the year, we experienced dramatic declines in several of our key businesses due to the slowdown in consumer spending and significantly reduced demand for capital equipment” // CEO Antonio Perez
  63. 63. Next: People stopped buying Films. • Many of Kodak’s key resources and capabilities became virtually useless with this change • The global distribution network lost its value. • People used PCs instead of photo finishing labs. • The supplier network for producing film was also rendered obsolete. • Knowledge in chemistry and film manufacturing became an obsolete asset. • The value of film and paper manufacturing sites was literally demolished.
  64. 64. Camera Battery Film StudiosChemicals Tape
  65. 65. Thus, the shift to digital imaging implied that Kodak’s capital in terms of skills, processes, market position etc was destroyed…
  66. 66. • To make thing worse, mobile camera started to disrupt the compact camera. • Sales of compact cameras actually decline in 2005 and continue to do so ever since
  67. 67. Kodak Dilemma So much investment has been made in Chemical, Paper, Film industries, it is almost difficult to suddenly shift into risky digital era
  68. 68. It choose slow pace to Digital Photography
  69. 69. The result is inevitable
  70. 70. In 2012 Kodak filed Bankruptcy & Also declared it will quit photography business.
  71. 71. Kodak sold its patent to companies like Adobe, Amazon, Apple, Facebook, Fujifilm, Google, HTC, Huawei, Microsoft, RIM, Samsung and Shutterfly. The portfolio was said to be worth around $2.5 billion, but Kodak settled for the $525 million. Partially, that’s because Kodak isn’t in the position to negotiate. But it’s also because Kodak extensively licensed these patents to other companies.
  72. 72. Lessons we can learn: • External environment can be deceiving • Change happens • Greatest strength can be weakness • Innovation is not the perfect solution
  73. 73. Reference • • • • y_of_Kodak/Building_the_Foundation.htm • 7-history-of-photography-an-introduction/ • • • ow-kodak-failed/
  74. 74. Reference • • demise-of-kodak-five-reasons/ • e • Special thanks to Christian Sandström & Chunka Mui