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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

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.

watmough 15y ago
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/B00005QFZF http://www.amazon.com/Canon-PowerShot-S30-Digital-Optical/dp... Pretty nice example image: http://i.imgur.com/0WcnU.jpg 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!
speby 15y ago
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.
- ShabbyDoo 15y ago
  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.
  - throw_away 15y ago
    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".
- watmough 15y ago
  Here's a link to the hilariously primitive looking 1.3 MP F3 based DCS100. http://en.wikipedia.org/wiki/Kodak_DCS_100 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)
flomo 15y ago
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.
- 6ren 15y ago
  "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.
- justincormack 15y ago
  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.
- andrewvc 15y ago
  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.
- yohui 15y ago
  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/node/21542796 http://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived http://www.economist.com/blogs/schumpeter/2012/01/how-fujifi...

watmough 15y ago

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/B00005QFZF http://www.amazon.com/Canon-PowerShot-S30-Digital-Optical/dp... Pretty nice example image: http://i.imgur.com/0WcnU.jpg 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!

speby 15y ago

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.

ShabbyDoo 15y ago
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.
- throw_away 15y ago
  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".
watmough 15y ago
Here's a link to the hilariously primitive looking 1.3 MP F3 based DCS100. http://en.wikipedia.org/wiki/Kodak_DCS_100 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)

flomo 15y ago

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.

6ren 15y ago
"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.
justincormack 15y ago
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.
andrewvc 15y ago
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.
yohui 15y ago
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/node/21542796 http://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived http://www.economist.com/blogs/schumpeter/2012/01/how-fujifi...