YOU PRESS THE BUTTON, WE DO THE REST : KODAK

"YOU PRESS THE BUTTON, WE DO THE REST," George Eastman put the first simple camera into the hands of a world of consumers in 1888. Since that time, the Eastman Kodak Company has led the way with an abundance of new products and processes to make photography simpler, more useful and more enjoyable. 

Kodak India Private Ltd. was established in 1913. Since then it has continued to grow and develop.In India, Kodak is strongly established as the leader in Imaging but present scenario speaks differently.  

Timeline: 128 years Long years of Kodak,

1884 : American inventor George Eastman, who later becomes founder of the Eastman Kodak Company, patents photographic film stored in a roll.

1888:  The Kodak name is trademarked. The first Eastman Kodak camera is released and costs around $25 (about £400 in today's money).

1891:  The company opens its first international manufacturing site in the London suburb of Harrow, taking advantage of Europe's booming photography market.

1900:  Kodak launches the Brownie camera, priced at $1, which is credited with bringing photography to the masses.

1922:  Kodak produces 147,000 miles of motion picture film a year, using one-twelfth of the silver mined annually in the US.

1925: George Eastman, now 71, hands over presidency of the company to William Stuber.

1969: The film used on the Apollo 11 Moon landing is manufactured by Kodak.

1975:  Kodak becomes the first company to make a digital camera. It took 23 seconds to expose each image.

1976:  More than 90 per cent of photographic film and more than 85 per cent of cameras sold in the US are made by Kodak.

1994: One of the first consumer digital cameras, the QuickTake, is launched by Apple. It is made by Kodak.

2004:  As the popularity of digital cameras grows, Kodak finally abandons the film camera.

2005:  Kodak is the largest digital camera retailer in the US, moving up to $5.7bn in sales.

2007:  Kodak falls to fourth biggest digital camera retailer. By 2010, it is the seventh biggest.

2009:  After 74 years of production, Kodak stops selling 35mm colour film.

2011:  Kodak shares fall by more than 80 per cent, partly because the company struggles to meet pension costs for its employees.

2012:  Kodak files for chapter 11 bankruptcy.

Aside from constant breakthroughs in chemical film, photography and processing, Kodak is responsible for a number of disruptive innovations that changed the course of history. The photo CD, the LED screen technology, CMOS sensors and a host of other technologies are now the basis for the way we take and share photos.

Kodak even bravely spearheaded digital photography and is credited for inventing the digital camera back in 1975 and was among the first companies to sell consumer grade digital cameras and memory cards in what would be an industry that was so successful it all but obsoleted chemical film and changed the way we take and share pictures forever.

What went wrong with KODAK that led it to file for  chapter-11 bankruptcy ? Did competition get better and offer cheaper solutions faster ?  

It seems that while Kodak managed to innovate and the products were good, bad business decisions and failure to differentiate themselves from the competition slowly did them in, according to experts.

If we see in past, we find that; 

The trouble began 20 years ago, with the decline of film photography. In the 1990s, Kodak poured billions into developing technology for taking pictures using mobile phones and other digital devices. But it held back from developing digital cameras for the mass market for fear of killing its all-important film business. Others, such as the Japanese firm Canon, rushed in.

Kodak’s greatest traditional competitor has been Fuji. Through the 1970’s and 1980’s Fuji has been the Kodak’s major competitor overseas, particularly in Asia where each have about one-third market share.

In the United States, Kodak had held a strong, but declining market share of 80% in the beginning of 1997.

Through aggressive marketing and developing strong relationships with distribution outlets, Fuji has also established a worldwide reputation for price, quality and marketing which has allowed it to have a strong following amongst professional photographers and gradually with the traditional consumer. Other potential threats to a company’s well being are as follows:

--Emergence of digital world (shift in buyer’s need)

--Increasing intensity of competition during late 90s

--Slowdowns in market growth.

--High bargaining power of customers due to availability of other manufacturing company.

And 2002 onward Kodak keep on loosing it grip on the market. Others were gradually capturing it market and Kodak was in capable of resisting this phenomena see in chart. The firm's inability to understand that others flooding the market with digital cameras, combined with the Internet, changed the process by which people captured and shared images, cost Kodak's market share.

According to The Telegraph, "Kodak's share price has fallen from $30 five years ago to just a few cents in the last month as hedge funds refused to extend its credit and the company tries to sell its patents to raise cash." As of this writing, Eastman Kodak stock is at $0.42 a share.

Very few, of the company's products or services are earning as expected and the losses have added up through time, as a last resort, Kodak now has tried to cannibalize and sell off its patents cache to avoid going bankrupt but that didn't helped.

Brent Goldfarb, associate professor of entrepreneurship and management, recently co-authored "Optimal Inertia : According to him;

Kodak has been faced with a particularly difficult problem. The production of film is a very sensitive process, and for this reason Kodak was a rigid organization – as small mistakes could have large consequences. This made the transition to digital costly. Ironically, Kodak was reasonably successful in their transition and quickly achieved a market leading position. The problem was that market leadership in a low-margin business is not a great prize. Kodak has not been a victim of poor management, rather, the poor circumstance of being on the wrong side of creative destruction; its fate largely unavoidable.

Instead of trying to pursue the digital photography market(Kodak) would have been better off slowly shutting down while profiting as much as possible from the dying film market. While this is a terrible outcome for Kodak stakeholders, particularly employees, history did not treat the company kindly anyway. They might have been better off trying to provide enough resources to the employees being displaced and to those managing the shrinking enterprise so as to ensure continuity and thereby extracting as much profit as possible from the market. They could then return what's left to the shareholders, whose dividends are increased further with the company not plowing money back into research and development.

SMARTPHONES ARE JUST LIKE ADDING FUEL TO IT:

Yet even standalone digital cameras were something you had to make an explicit choice to bring along. What used to be reserved for family weddings and kid's birthday parties was suddenly a fixture of any night out on the town. Then came the smartphone. 

Now, most of us are walking around with high-quality, Internet connected point-and-shoot cameras, complete with an array of photo-editing and filtering apps and social media integration for instant sharing. These gadgets are not something we choose to bring out for special occasions. They're on our person at all times.

Today, the most widely-used camera on Flickr (Flickr is the best online photo management and sharing application in the world.)  isn't even one of the many digital point-and-shoots or SLR's that had already chipped away at Kodak's dominance; But," It's the iPhone 4  ".

The ubiquity of digital and mobile photography didn't single-handedly drive Kodak into bankruptcy, but it may well have delivered the final blow. Even the company's attempts to get into the digital photography market with its EasyShare line of point-and-shoots couldn't keep up with the explosion of the smartphones

Smartphone with recent models offering HD video recording that was just as good as what these standalone $150 devices offered. Kodak has also been aggressively selling its printer and ink products but this segment is dominated by the likes of HP and Canon.

Kodak owns a number of patents pertaining to cameras in smartphones and is in court with companies like RIM and Apple on patent disputes.

In a way, Kodak is facing bankruptcy because it seems that the already small share it had in digital cameras is being made even more insignificant by today's smartphones which are the preferred way for most people to take casual photos. Prices of entry level point and shoot cameras are at their lowest price ever, some even going as low as $75 because few people are buying them.

FINAL Tick Tock ..Tick Tock..!!

 #  Three board members resigned, and last week, the company announced that it realigned and simplified its business structure in an effort to cut costs, create shareholder value and accelerate its long-drawn-out digital transformation.

#  Mass layoffs came every few years, unraveling a cozy relationship of company and community that was perhaps unequaled in the annals of American business. Kodak has sliced its global payroll to 18,800 from a peak of 145,300 in 1988.

#  Kodak Chief Financial Officer Antoinette McCorvey said smartphone and tablet makers Apple Inc., Research In Motion Ltd. and HTC Corp. took advantage of Kodak's weakened financial condition to drag out litigation over alleged intellectual-property violations. That accelerated Kodak's slide into bankruptcy court, she said, by cutting off a source of funds the company has relied upon heavily as its film business shrank.

#  The company's $950 million bankruptcy-financing package, led by Citigroup Inc., required Kodak to submit procedures for auctioning the patents by the end of June.

Source: Wall street journal, Kodak.com,Yahoo finance, Bloomberg, PR Newswires, Google Images.