Kodak says it might have to cease operations [updated]

There is a reason that newspapers had old saws about their business such as "if it bleeds, it leads" and "dog bites man isn't newsworthy, man bites dog is."

And there is the Gell-Mann Amnesia Effect that was coined by Michael Crichton back in the early 2000s.

It certainly feels like there is no journalism in our zeitgeist. It’s been replaced by propaganda, and sensationalism.

I think about this a lot, because I feel it too. Some of it seems to be a result of these "higher callings" becoming just jobs. The closest example is how I'm often perplexed that so many people with "computer science" and specializations in software "engineering" seem so... clueless. Not all, but a lot. At a certain point I met a few people who were old electrical engineers that worked in computers. They knew more about software and seemed more like "engineers" and it was because there was no "computer science" when they came up. They were electrical engineers that ended up in computers because it was interesting to them. To them it was a higher calling. To the new school, it is a job. There's still genuinely curious people and those that have the "call" but they're mixed in with people who just heard this shit pays well. And since these things are now integrated into society, the pool is extra diluted.

And that doesn't even start in on the parts perverted by our present stage of capitalism and the monsters at the top of it. So uh, it's nuanced, but yeah it feels like it sucks - there are people trying though.

> - 2010s: Kodak tried to become a Blockchain company, issuing KodakCoin. It was a flop.

Its hard not to laugh at that. At least the pivots before that point kind of made sense. I guess 2010 came along and the executives just decided to yolo.

Interestingly, Fujifilm has pivoted to a like a dozen other industries successfully and it's now a full blown conglomerate.

Maybe they should pivot into human robots, self-driving and robo-taxis next. I heard it pays out well regardless of whether your product being sub-par or non existing at all

The chemical thing kinda worked out. Eastman Chemical is the spinout from that and they're a $9B annual business.

The folks running Kodak kind of forgot that Kodak was really a chemicals company that supported photography, not a photography company. Hence why the pivot into that was ill-fated and doomed.

> - 2000s: Kodak tried to become an Inkjet Printer company, which was doomed and eventually pushed it into bankruptcy.

Those were actually dye sublimation thermal printers and...they still sell them!

Or the pension fund has positions marked at given value which aren't updated to current reality (commercial real estate, private equity shares etc.) so they try to off-load it to some poor sucker before it blows up.

They did do more than just chemicals for film, but then decided to spin off the business so that they could focus on the film business:

https://en.wikipedia.org/wiki/Eastman_Chemical_Company

One really must admire their determination to throw all of the life boats overboard to go down with the film ship. Every time they have a chance to save themselves if they move away from a single minded focus on film, they discard the opportunity. They just needed to mimic Nikon and Canon to stay in business, but refused to do even that.

The only way I see Kodak having a happy ending would be if Eastman Chemical purchases their former parent company to put it under sane management.

Fujifilm succeeded at it (before Kodak tried). Interesting case study between the two companies.

Interesting idea. Rather than the tired "they missed digital photography"... they could have seen it coming and pivoted to something where the experience transfers.

When the brand is your main asset, licensing it to a scam is pretty bad.

Didn't Kodak sell off Eastman Chemical long before the first bankruptcy?

Is that a surprise? A chemical company doesn't have the in house chops to build a tech hardware?

Same things happens all over. Ford (a car company) completely failing to make a reasonable UI / App / Interface for their infotainment systems (something a tech company would do). Pivoting away from what you are good at is hard for a 3 person startup, but nearly impossible for a giant corporation.

KodakCoin is still a stupid idea no matter how well bitcoin might be doing.

The price of bitcoin being high does not mean your weird altcoin is a good investment. That would be like saying that because USD exchange rate is up it means every usa business is a good investment.

Cryptocurrency did well, anyone who built things assuming crypto-related tech would do well lost their shirt.

Yeah, and why not spaceships too.

They should've started in the late-90s for that. And it wasn't obvious then that cameras and phones would go together so well.

Not only that, they really dropped the ball on photolithography for making chips

https://en.wikipedia.org/wiki/KPR

The problem was that they were fundamentally a chemical and imaging company, not a consumer electronics company. That would have been a hard shift. When they tried to do consumer electronics, it was crap. Now, if they had merged with an actual consumer electronics company (see: Sony buying Konica) they might have done better.

There's quite a lot of interesting literature on this. Unfortunately the best work looks at Polaroid [1] rather than Kodak so I'm on slightly shaky ground, on the other hand I think that if Clay Christensen can point at Kodak as a exemplar of the same processes [2] it's all ok.

Anyway the issue seems to be that Polaroid (also Kodak) had what's called a razor blade business model. In Polaroids case they actually sold the cameras for the film, but they sold them cheap cheap cheap so as to encourage the use of the high margin product that they really wanted to shift - the film. Kodak went one better (sorta) by becoming a category killer in film so everyone who wanted to use a non-polaroid camera probably ended up buying Kodak film (razor blades).

There isn't really an equivalent consumable in digital, the action is in the camera (which ended up being connected to the smart phone). Now, Polaroid had consumer goods experience and consumer product R&D capability from making instamatics, and they had a management culture of investing big to create the next big thing - but even they just couldn't get past the "I'm telling you there is no business case for this" conversation in the C-suite. And here comes Clay with the Innovators Dilemma. The Polariod and Kodak executives both struggled to see past the investment cases which said things like "invest $100m to get $40m a year from efficiency savings in film manufacture, 100% for sure for ever here is proof that can't be discussed" to see "invest $20m to get $5m next year, growing 200% a year for the next 10 years maybe, I promise, honest that's what the future looks like fellas". Worse than that - investment in the digital industry would clearly kill the film industry, and the future for a digital Kodak looked radically different to the future for a film based Kodak and therefore there was a big constituency that didn't want to see their lovely chemical factories and lab based R&D shuttered in favour of a basement filled with computer geeks, also a bunch of people saw that their million $$ sales commissions for selling to corner store processors would go out of the window.

The turkeys... they do not vote for Christmas.

So the innovation cases that could have saved both companies didn't get the bucks and the rest is history. Sucks to be the shareholder left holding that stock when the veil of corporate propaganda masking the collapse finally fell. I remember a presentation from a Kodak team in about 2009 that would have convinced you that the future was indeed filled with Kodak moments spilling through everyone's life forever. Unless you actually knew what a digital camera was and how good they were then.

In the last few years a new thread of work [3] that unifies these kind of insights into a theory of innovation processes has emerged. I am a big fan but it hasn't got the kind of profile I think it should, probably because of Quantum AI Crypto flaps. It's quite instructive to use it to understand the Quantum AI Crypto stuff as well, but no one likes to hear about that because it's more fun to look at the pretty pictures I guess.

[1] Tripsas, M., & Gavetti, G. 2000. Capabilities, cognition, and inertia: Evidence from digital imaging. Strategic Management Journal, 21: 1147–1161.

[2] Christensen, C., Raynor, M.E. and McDonald, R., 2013. Disruptive innovation (pp. 20151-20111). Brighton, MA, USA: Harvard Business Review.

[3] Grondal, S., Krabbe, A.D. Chang-Zunio, M. THE EVOLUTION OF TECHNOLOGY. Academy of Management Annals 2023, Vol. 17, No. 1, 141–180. https://doi.org/10.5465/annals.2021.0086

I'm presuming they were trying to say "Doomed from the start of the digital revolution"

I cannot imagine the "instant camera" market is too big. The cameras are expensive and the film is too, while the margins are likely terrible.

If you want to make money in the US, stay away from making hardware and cling to making software.

Many tech companies still deal with physical goods and employ enough people to fill a city - but no longer in the US and Europe, generally. Whether we want them back is up to us.

Apple and Microsoft are the 2nd and 3rd largest companies in the US (by market cap), Kodak never came close to that

It's also changing political and social landscape though, Cadbury's (though now Kraft-owned) still makes physical chocolate but not from an employee-only model village. Ditto Clark's Village (shoes).

(They both happen to be Quaker I believe, but I mean the point more generally.)

Heh, I was musing on something I'd read recently that had Kodak as a case study. It was compared with Instagram which had about 10-15 staff when it was bought for USD 1bn. WhatsApp similarly small.

I hear tech can be big employers, maybe I'm overselling my point a bit there. That said, the trend is very much towards smaller operations, and a large headcount is not at all required for large money.

My overall point is that profits that at one time would require a town, or be a major part of a city's economy, can be made with a small office's worth of staff.

What if you adjust by market cap?

Less people on earth back in the day; and more people in farming back in the day.

Yeah and how many of those people are on 0 hour contracts with a minimum wage that's barely been adjusted for 30 years.

How many Kodak workers had to pee in bottles, or needed suicide nets around their company dorms?

Amazon has 1.5m, it's more on the level of a small country. Google is only at 180k, just small city level.

Fair point, see my response to the commenter above.

Does that billion dollars actually provide a living wage for over 100,000 people for years on end? Because companies like Kodak did.

Order of magnitude, sure perhaps, even if not a given. But orders of magnitude? No, that doesn't match with my experience or historical evidence at all.

I’m having a lot of trouble parsing your post. You’re excited that billionaires will be able to swing around more billions than ever… to employ less people? What?

Ah - that's good to hear. Thanks for the extra information.

Kodak film products are (confusingly) handled by Kodak-Alaris, which is a separate company that spun out of Eastman Kodak around 2012-ish and shares the Kodak brand with Eastman Kodak. Despite the similar names they are entirely separate companies, AFAIK.

My team did an integration with Kodak-Alaris a few years back and we toured their main office in Rochester.

https://en.wikipedia.org/wiki/Kodak_Alaris

One important point I think is that Kodak, at its core, was a huge company specialized in photography related chemistry.

Not easy to turn a company around when the knowledge/qualifications/experience of most of your employees becomes almost worthless.

Thats also what made it easier for others (like Corning) to pivot (presumably).

Kodak managed the film and camera market about as well as they could. The mismanagement was a failure to diversify. The total digital camera market excluding cell phones, would be a fraction of Kodak's film business back in the film era. The film and camera story is a popular one but is fundamentally wrong. The shrinkage of the camera/film market was inevitable. You can look at Fujifilm who does sell cameras and basically owns the remaining film market with instax, however neither of those sustain the business they are effectively a chemical and medical manufacturer who dabbles in photography now.

Kodak on the other hand attempted to diversify to those markets in the 80s and 90s but made some terrible investments that they managed poorly. That forced them to leave those markets and double down on film just in time for the point and shoot boom of the 90s and the early digital market. Kodak was a heavy player in the digital camera market up to the cell phone era: they had the first dSLR and were the dSLR market for most of the 90s, they had the first commercially successful lines of digital point and shoots, they had the first full frame dSLR in the early 00s and jockeyed for positions 1-3 in the point and shoot market until the smart phone era. They continued to make CCD sensors for everyone during this time. Ya they missed the CMOS change over and smarthphone sensor market, but that was well after they were already in the drain.

We all know that being first does not mean success, and it’s not “gargantuan” mismanagement.

It’s rare to be first AND the leader 20 years later.

That was in 1975. It took multiple decades for digital camera technology to become cheap and practical for the mass consumer market, and another decade or two before it was good enough to be taken seriously by professionals.

There was no upside at all in being first with this particular invention. No lessons to learn, other than "Keep working on this and try to grab all the patents, even though they will expire before anyone cares."

> give the world the first digital camera... mismanagement on a gargantuan scale

Which why we're all flying on Wright airplanes, using Kenbak Personal Computers, and are all calling eachother with Bell telephones.

Being first to a market and not winning, or not even surviving isn't 'mismanagement on a gargantuan scale'. Especially when it comes to consumer devices, which have no moat or potential for monopoly consolidation.

-Sent from my BlackBerry(tm)

From the article it sounds like they had strong market share in Digital Cameras in the early 2000’s. What really killed then was phones becoming the dominant form factor

But switching to making digital cameras wouldn’t have helped much, because selling cameras was never really their business. Their main business was selling film, photo paper, developer, etc.

I always thought that this story is probably more nuanced, and indeed it is:

https://www.snopes.com/fact-check/kodak-digital-camera-inven...

In particular:

"While this may have been a motivating factor to some at Kodak, such concerns did not stop Kodak — or even Sasson — from further developing digital cameras and making several technical developments that led to Kodak's first publicly available digital camera in 1991, the Digital Camera System."