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Kodak case: learning from decline
Jan 31, 2022 7:01:40 PM5 min read

Kodak case: learning from decline

Surely you love taking pictures with your smartphone, and who doesn't. Current technology allows high-quality captures to be achieved from mobile phones that were not originally designed to fulfill the function of a camera, since decades ago there were analog cameras and later digital ones exclusively for taking photographs, whether professional or of life itself.

<<< Recognize and prevent the different signs of business decline >>>

But before the cell phone camera and the popular “selfie” became popular, which you most likely upload to Instagram and Facebook, people had cameras. But since there was no USB connection to digitize the photos, they were developed in a room designed for that purpose, only a professional photographer could do this activity, although it was common for the wealthiest families to have cameras in their homes.

Over time, access to photography ceased to be exclusively for the elite, as more accessible cameras began to be marketed to the general public. Hence, it was very common for there to be a Kodak in the home.

 

Kodak case

This case is about one of the most important and traditional photography companies worldwide, Kodak which was founded in 1892 in the United States, and which for more than a hundred years became known for its analog cameras and photographic films.

Currently, it has reoriented itself towards digital photography and digital printing, but since 2020, thanks to a millionaire loan from former President Donald Trump, the ailing photographic company has begun to market pharmaceutical products for the treatment of COVID-19 infection.

The proposal for this article is, through a brief analysis of the Kodak case, to account for its history, peak, decline, and resurgence under a different business model that put a stop to its resounding and imminent fall, after the obsolescence of digital cameras from the emergence of smartphones with high-resolution cameras.

 

Analog photography

Kodak's great commercial success was thanks to the introduction of the paper reel on the market in 1888, which led to the replacement of the glass plates used until then, as well as the launch of the Kodak 100 Vista camera, which used reels of 100 circular photos. Then the celluloid reel was launched, whose protection allowed it to be removed and placed in sunlight.

In addition to cameras, Kodak was one of the leading providers of photographic film for the amateur and professional sectors.

One of the company's first setbacks was the loss of the instant photography patent against Polaroid, for which it ended up abandoning the instant camera market in 1986.

 

The rivalry with Fujifilm

Originally, Kodak and Fujifilm's business model was the sale of photographic film. With a strategy typical of printer manufacturers who sold printers for profit on ink cartridges, Kodak profited when people printed their photos, spending comparatively much more on film than on the camera itself.

With the digital transition in 2000, 72% of Kodak's revenue was from film sales, while Fujifilm had only made 60%. Until then, it seemed that nothing could take the podium from Kodak, as the leader of the photographic brand. And more considering that this company had launched the first digital camera in 1975. However, nothing was what it seemed.

The success was short-lived after the new millennium with the arrival of the digital age, the closure of video stores, and the incorporation of cameras into cell phones. Consequently, users began to consume digital cameras and fewer and fewer analog cameras, that is, roll and film. In short, everything was digitized.

The only consolation for Kodak was that its eternal rival Fujifilm suffered almost the same fate and its market share also fell considerably with the drop in film sales since people could create their own from the button of a digital camera.

But not for long, since it was able to recover, and even prosper thanks to the fact that it managed to diversify, something that Kodak did not do at the time. Proof of this is that in 2010 the film market fell by less than 10% compared to 2000, but Fujifilm managed to increase its revenues by 57%, while Kodak's had remained at 48%.

<<< Boom! Competition is everywhere >>>

 

The unforgivable mistake

The biggest mistake that Kodak made was to focus only on one product, unlike its main competitor Fujifilm, and allocate all its resources to the production of unprofitable cameras. Does it sound familiar to you from other cases studied previously? Nokia, Blackberry, etc.

This resistance to change on the part of the company was probably due to the assumption that they would lose loyal customers if they ventured into other more innovative markets, which moved away significantly from the original value proposition of the brand.

How did the Kodak company resist change? Simple, selling digital cameras and not cell phones with cameras. At a time when consumers were beginning to discover the benefits of smartphones, digital cameras no longer had a place in the market. In addition, you could not take selfies with digital cameras and that disadvantage already placed it very close to obsolescence.

As a result of this, since 2006 it suffered an inevitable decline that finally led to bankruptcy in 2012.

 

Entering the pharmaceutical market

In mid-2020, then-US President Donald Trump decided to grant a loan of 765 million dollars for Kodak to start the manufacture of pharmaceutical ingredients, invoking the production law for defense. Thanks to this financing, Kodak has re-emerged in the world market, although dedicating itself to an industry very different from that of its origins.

 

Take advantage of opportunities

If there's one thing Kodak must have learned, it's not to miss out on opportunities when they finally come along, especially when they promise big profits. It's what it finally did by changing its business model, having made cameras for more than 100 years.

But until reaching this turning point, it had to sacrifice what made it recognized in the world. Inevitably, it is the price it had to pay for poor decisions, or rather, lack of decisions when the competition was surpassing it and Apple's new business model with the camera in its iPhone surprised everybody.

<<< Business disruption: innovation, phases and more >>>

To conclude, the Kodak case is also a clear example, like Nokia and BlackBerry, of how making bad decisions can lead to business failure or bankruptcy, with significant losses that require years of recovery to be able to enter the market again. 

Some companies manage to recover by marketing a new product within the same industry, while others are forced to change the industry directly, as Kodak ended up doing, now that it is in the business of making pharmaceutical drugs. In the end, it's about seizing opportunities. 

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