Kodak: why the moment has passed
Just as the music industry was rocked by
the world of downloads after the launch of the CD, Kodak fell foul of new
technology
Simon
Waldman guardian.co.uk, The news that Kodak has filed for Chapter 11 is rather like hearing
about the death of a much-loved elderly relative. You've known for ages it
was going to happen, but it's still a shock when it finally does. Kodak
has teetered on the brink of collapse for the best part of a decade.
Despite the continuous optimism of the CEO, Antonio Perez, the numbers
simply never stacked up. Its
new digital businesses kept growing, but didn't make any money. The old
film business remained profitable, but shrank: shifting from consumers to
professionals to diehards. Every so often, they would get a surge in
revenue from some patents and everything would look a bit better, but this
was only ever a temporary reprieve. At its heart, this was a business that
had lost its previously formidable ability to generate cash, and that has
ultimately led to this latest news.
Kodak's success was based on a business model of genius. They sold film, they sold the chemicals you used to develop the film and then they sold the paper that the photographs from the film were printed out on. People often talk about the genius of the Gillette model where you sell cheap razors and charge a premium for the blades. But Kodak's model was better than that. Everything was premium. And thanks to great marketing, they managed that rare mix of being both profitable and much loved. The problem is that it was just too good, and as a result the phrase "victim of its own success" could have been created to describe Kodak. They got big and bureaucratic. When they needed to be moving faster, they got slower. When they needed to be radical, they were conservative. As a result, when digital technology challenged their perfect model, it was too easily dismissed by executives who had spent their entire career in the world of film, chemicals and paper. So, they were found wanting when Fuji launched a price war against them in the film market in the late 90s. When digital cameras made it to the mass market at the turn of the century, Kodak started a process of catch-up that has continued until the present day. ...
http://www.guardian.co.uk/business/2012/jan/19/kodak-why-moment-has-passed
