Kodak Digital Photography - The Kodak Killer? Jan 17, 2012 12:07 by John Sollars
The recent news that Kodak have brought in a team of legal experts renowned for dealing with bankruptcy cases raises serious concerns about the health of the ailing digital photography and printer ink company. But how did such a massive company come upon such hard times and were they, as many suggest, the architects of their own downfall?
It’s a sorry state of affairs for a company once ubiquitous in photography. The Eastman Kodak Company held a dominant position in photographic film throughout the 20th century, capturing 90% of the market during its peak in the mid-70s. Their presence in the public conscious was such that their old advertising slogan, “a Kodak moment”, became embedded in the vernacular much like Google has today. Their most popular brand of film – Kodachrome – was popular enough to be the subject of a song by Paul Simon. Not only that, Kodak is responsible for capturing some of the most iconic images of the 20th century; the piercing stare of The Afghan Girl would have never been captured were it not for Kodak’s film.
A Colourful Past
It had come a long way from its origins in Rochester, New York, in 1880. Founded by George Eastman, Kodak saw an opportunity to simplify the byzantine process of developing photographs for the burgeoning photography industry of the late 1800s.
Those inchoate days of photography bear little resemblance to today’s world of digital photography where a photograph can be captured and put online where reviews by photo aspects can be made by hundreds, if not thousands of other people, all within minutes. Despite Kodak seemingly being irretrievably linked in the mind of the public to the increasingly out-of-date film processing business, Kodak’s downfall was not due to it being a lumbering dinosaur unable to escape the meteoric progress of digital photography. In fact they pioneered the new technology – Kodak had developed a primitive prototype of a digital camera as early as 1975. By 1996 they had their first point-and-shoot digital camera.
Kodak’s problem was that the new digital cameras were too popular. By April 2001, Kodak had debuted a range of EasyShare cameras which proved so popular that customers couldn’t get hold of them. By 2005 they were the number 1 digital camera manufacturer in the US with sales worth $5.7 billion. An enviable position to be in, except that Kodak were cannibalising their own business model.
Kodak had long been battling to preserve margins in a competitive market place. During the 1980s and 1990s their market share was being steadily eroded by competition from Fujifilm who offered a cheaper alternative to processing film. With their entry into the digital photography market, Kodak suddenly found themselves trying to compete in a commodities market where margins were tight and profits were hard to come by.
Worse, for every digital camera sold, that was one fewer customer looking to use Kodak’s profitable film processing service. Kodak were simultaneously investing in less profitable digital cameras and driving customers away from their lucrative film processing.
Digital photography was not a complete misstep for Eastman Kodak Company however. A valuable technology portfolio landed them with enough licensing money to branch out into printer ink in 2007. Here was a market they were more comfortable in – not only were they able to sell the hardware (as with cameras) but they were also able to offer high margin consumables for the lifetime of that hardware.
Unfortunately the strategy is yet to yield fruit. Kodak’s printer ink division has so far failed to turn a profit. And now, with the news that chapter 11 filings are looming, it seems unlikely it ever will.
It’s a sad end for a company with such a storied past. But with the rising ubiquity of commodity digital photography appearing in phones, laptops and tablets, it seems inevitable that a company which built its fortune on the antiquated concept of developing film should struggle to survive in a world of digital photography.