How Kodak Failed to Adapt to Digital Photography
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Kodak was a pioneer in photography technology from the late 19th century until the early 2000s. It introduced roll film and mass-market cameras like the Brownie, dominating the photographic industry. However, Kodak was slow to transition to digital photography despite inventing the first digital camera in 1975. When digital cameras replaced film in the early 2000s, Kodak's business model collapsed as film sales plummeted. Kodak filed for bankruptcy in 2012, unable to complete the transition from film to digital that disrupted its entire industry.
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How Kodak Failed to Adapt to Digital Photography
- 2. 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
- 4. Back in the 19th Century the Eastman Dry Plate Company produced the 1st camera that weren’t invented for the professionals.
- 5. 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
- 6. 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
- 7. • 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
- 8. • The Eastman Kodak Company was founded in 1892. • By targeting non photographers, Kodak created a huge market.
- 9. 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.
- 10. Kodak brought photography to the people, just like Ford brought cars to the people.
- 11. Marketing
- 12. “Simplicity is greatest Complication”
- 13. Kodak became a household name.
- 14. 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.
- 15. Kodak Vest Pocket Camera (1912-1926)
- 17. Cine Kodak for Home Film Making (1923-1935)
- 19. What Next??
- 21. Color film was the next big thing.
- 22. Disruption from non-color to color film
- 23. In 1957, the Kodak Brownie Starmatic was launched. Over the coming five years more than 10 million of them were sold!
- 24. But even greater revenues were made by selling film.
- 25. Continues…..
- 26. 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.
- 27. Film could be bought and finished everywhere.
- 28. 1960
- 30. 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.
- 31. 1971
- 32. With signs, Kodak also sought to encourage people to take a lot of photos…
- 33. 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.
- 35. 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)
- 36. 1976:The Bayer Pattern color filter array (CFA) was invented by Eastman Kodak researcher Bryce Bayer.
- 38. 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.
- 39. 1976: Kodak introduced the first Kodamatic, instant picture cameras, using a similar film and technology to that of the Polaroid company.
- 40. • 1976: The company sold 90% of the photographic film in the US along with 85% of the cameras. • New Kodak Moment: A $19M profit
- 41. Kodak kept neglecting Digital technology
- 43. … However, in the late 1970s, the rise of the Japanese camera industry threatened Kodak…
- 45. When Fuji sponsored the 1984 Olympics in Los Angeles it became clear that the threat was real.
- 46. Sony electronic camera “Mavica” 1981
- 47. In Japan it was referred to as “the Mavica shock”
- 48. Continues…..
- 49. Kodak quickly identified the threat
- 50. 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.
- 51. 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
- 52. 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.
- 53. IF YOU CANT BEAT THEM THEN JOINT THEM
- 54. 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.
- 55. 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
- 56. Kodak collaboration with apple (1994). Quicktake 100 Quicktake 150
- 57. Digital Back • 6 MP • Heavy • Moderate Performance
- 58. PRESS AND STUDIO PHOTOGRAPHERS LOVED IT, NASA IMPRESSED BY KODAK SENSORS
- 59. Kodak Digital Avantrix Preview (1996) • Kodak spent $500M to develop and launch. • Features • Shot preview • No. of print • But it still use Films
- 60. Why buy a digital camera and still pay for film and prints? Advantrix preview was huge failure
- 61. 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)
- 62. Fall of Kodak
- 63. • 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.
- 65. Once the shift occurred, it was faster than anyone could have imagined…
- 66. 2004: Kodak announced that it would stop selling traditional film cameras in Europe and North America, and cut up to 15,000 jobs
- 68. 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
- 70. Continues…..
- 75. 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.”
- 76. Christian Sandström holds a PhD from Chalmers University of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
- 77. Kodak did embraced Digital Technology Then, Why If Kodak wasn’t late, why did the company encounter such great trouble…?
- 78. 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
- 79. 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.
- 81. Thus, the shift to digital imaging implied that Kodak’s capital in terms of skills, processes, market position etc was destroyed…
- 82. • 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
- 83. Kodak Dilemma So much investment has been made in Chemical, Paper, Film industries, it is almost difficult to suddenly shift into risky digital era
- 84. It choose slow pace to Digital Photography
- 85. The result is inevitable
- 86. In 2012 Kodak filed Bankruptcy & Also declared it will quit photography business.
- 87. 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.
- 88. Lessons we can learn: • External environment can be deceiving • Change happens • Greatest strength can be weakness • Innovation is not the perfect solution
- 90. Reference • https://en.wikipedia.org/wiki/Dry_plate • https://en.wikipedia.org/wiki/George_Eastman • https://en.wikipedia.org/wiki/History_of_the_camera • http://www.kodak.com/ek/US/en/Our_Company/Histor y_of_Kodak/Building_the_Foundation.htm • https://hkjeldal.wordpress.com/2015/02/18/gd1-week- 7-history-of-photography-an-introduction/ • https://en.wikipedia.org/wiki/Cine-Kodak • https://en.wikipedia.org/wiki/Steven_Sasson • http://www.forbes.com/sites/chunkamui/2012/01/18/h ow-kodak-failed/
- 91. Reference • http://www.economist.com/node/21542796 • http://blogs.wsj.com/source/2012/02/26/the- demise-of-kodak-five-reasons/ • https://en.wikipedia.org/wiki/Apple_QuickTak e • Special thanks to Christian Sandström & Chunka Mui
Editor's Notes
- Gelatin emulsions, as proposed by Maddox, were very sensitive to touch and mechanical friction and were not much more sensitive to light than collodionemulsions. Charles Bennett discovered a method of hardening the emulsion, making it more resistant to friction in 1873. In 1878, Bennett discovered that by prolonged heating, the sensitivity of the emulsion could be greatly increased. George Eastman developed a machine to coat plates in 1879 and opened the Eastman Film and Dry Plate Company,[1] reducing the cost of photography.
- In 1880, he began the commercial manufacture of dry plates. Success of this venture so impressed businessman Henry A. Strong, that he invested some money in the infant concern. On January 1, 1881, Eastman and Strong formed a partnership called the Eastman Dry Plate Company. Late that year, Eastman resigned from his position at the Rochester Savings Bank to devote all his time to the new company and its business. While actively managing all phases of the firm's activities, he continued research in an effort to simplify photography.
- In 1884, Eastman patented the first film in roll form to prove practicable; he had been tinkering at home to develop it. In 1888, he perfected the Kodak camera, the first camera designed specifically to use roll film. In 1892, he established the Eastman Kodak Company, in Rochester, New York. It was one of the first firms to mass-produce standardized photography equipment. The company also manufactured the flexible transparent film, devised by Eastman in 1889, which proved vital to the subsequent development of the motion picture industry. The use of photographic film was pioneered by George Eastman, who started manufacturing paper film in 1885 before switching to celluloid in 1889. His first camera, which he called the "Kodak," was first offered for sale in 1888. It was a very simple box camera with a fixed-focus lens and single shutter speed, which along with its relatively low price appealed to the average consumer. The Kodak came pre-loaded with enough film for 100 exposures and needed to be sent back to the factory for processing and reloading when the roll was finished
- Kodak became a household name. Kodak moments, Kodak days, ’to Kodak’, the company defined consumer photography and the brand became very strong. Kodak change into verb just like google today.
- In 1912 kodak released Vest Pocket Camera , which weight 10.5 ounce, one inch in width when compressed and sold by millions by time when production stopped in 1926.
- The Cine-Kodak was the first 16mm camera, introduced in 1923. It was a rectangular cast aluminum box approximately 8 inches square, and was cranked by hand at two turns per second to achieve the necessary 16 frames per second. Hand turning meant that a tripod was essential while allowing varying speeds and single frames to be taken. Accessories such as lenses and a motor attachment became available later. Production ceased in the mid 1930s.
- To my friend my work is done. Why wait?
- Black and white logo of kodak
- In 1935 kodak change its logo, colorfull
- Kodak logo changed in colorful logo.
- In 1960 kodak changes its logo like paper bird, kodak collaborating with nasa.
- New logo, focused on market penetration.
- Steven was kodak electrical engineer. The digital camera record photo in film tape and was only 0.01 megapixel and also black & black It was unfit for manufacturing.
- Barak obama awarding national medal of technology and innovation to steven sasson in 2009.
- A Bayer filter mosaic is a color filter array (CFA) for arranging RGB color filters on a square grid of photosensors. Its particular arrangement of color filters is used in most single-chip digital image sensorsused in digital cameras, camcorders, and scanners to create a color image. The filter pattern is 50% green, 25% red and 25% blue, hence is also called RGBG,[1][2] GRGB,[3] or RGGB.[4]
- Bayern pattern is widely used in photography, printing of colour in newspaper, magazine etc even now (2015). As well as now it is for digital color photography.
- 1981: Kodak was sued by Polaroid for infringement of its Instant Picture patents. The suit ran for five years, the court finally finding in favour of Polaroid in 1986
- Fuji is major competitor for the kodak,
- In 1981, the industry was shaken when SONY launched their Mavica, a camera that used floppy discs instead of film.
- All film producing company were totally shocked. They saw mavica as a threat to the film roll industry.
- CEO, Barabba conducted a very extensive research.
- The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had the potential capability to replace Kodak’s established film based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition. All pointed to the conclusion that adoption of digital photography would be minimal and non-threatening for a time. History proved the study’s conclusions to be remarkably accurate, both in the short and long term.
- 1986: Kodak scientists created the world'sfirst megapixel sensor, capable of recording 1.4 million pixels and producing a photo-quality 12.5 x 17.5 cm (5×7 inch) print.
- It looked like a pair of binoculars, could store 32 photos and was the first camera that could be connected to a PC.
- The choice to use digital as a prop for the film business culminated in the 1996 introduction of the Advantix Preview film and camera system, which Kodak spent more than $500M to develop and launch. One of the key features of the Advantix system was that it allowed users to preview their shots and indicate how many prints they wanted. The Advantix Preview could do that because it was a digital camera. Yet it still used film and emphasized print because Kodak was in the photo film, chemical and paper business. Advantix flopped. Why buy a digital camera and still pay for film and prints? Kodak wrote off almost the entire cost of development.
- Fisher oversaw the flop of Advantix and was gone by 1999. fisher meant kodak was not adopting the digital technology full since top management committee wanted to produced film based camera even sony made maven(image stored in floppy drive) in back 1981.
- Kodak stock is higest in 20th century (2000). Kodak and fuji kept competing in film based technology.
- Purple:Digital camera…….Blue:no. of film based camera . From 2000 kodak share price and market share kept continuous decline. Film based technology was loosing battle against the filmless digital cameras.
- Digital technology was improving very rapidly..kodak demolish its several building because demand for films were declining rapidly.
- Furthur cut in jobs.
- Carp admitted digital filmless photogtraphy has taken over the kodak film based technology.
- In 2006, kodak change it logo
- If kodak adopted quickly that means only looses since there are many competitors and also its chemical business will be completely destroyed. so it choose slow pace.By moores law digital technology is exponentially developing. Kodak was doomed to fail.