Kodak Failing, But Camera Phones Not To Blame 309
An anonymous reader writes with this snippet from The Conversation: "According to the Wall Street Journal, camera manufacturer Kodak is preparing to file for Chapter 11 bankruptcy, following a long struggle to maintain any sort of viable business. The announcement has prompted some commentators to claim that Kodak's near-demise has been brought on by: a failure to innovate, or a failure to anticipate the shift from analogue to digital cameras, or a failure to compete with the rise of cameras in mobile phones. Actually, none of these claims are true. Where Kodak did fail is in not understanding what people take photographs for, and what they do with photos once they have taken them."
Continues the reader: "Looking at camera data from Flickr, of images uploaded in 2011, camera phones only make up 3% of the total. Dedicated cameras from Canon, Nikon and yes, Kodak were used to take 97% of the images. What Kodak failed to understand is that people have switched from taking photos for remembering and commemorative reasons to using photos for identity and communication. The shift changes the emphasis away from print to social media platforms and dedicated apps."
Changing business (Score:5, Interesting)
Litigation over innovation (Score:5, Interesting)
Kodak has lost money each year but one since Mr. Perez, who previously headed the printer business at Hewlett-Packard Co., took over in 2005. The company's problems came to a head in 2011, as Mr. Perez's strategy of using patent lawsuits and licensing deals to raise cash ran dry.
Perez chose litigation over innovation; failure was inevitable and deserved.
Re:bad data source (Score:5, Interesting)
I remember just 6 years ago (Score:5, Interesting)
Someone I knew uploaded their photos to the Kodak site for printing, and had deleted them from her camera.
Rather than making it easy to get a copy of these photos, it was impossible. I think you basically had to order a PhotoCD or something, which I wasn't going to do.
They could have made a proper website to allow people to share their photos and print them. But they made it annoying.
No real conclusion (Score:4, Interesting)
The article doesn't make much sense. It talks about "frictionless photo sharing" and how Kodak has totally missed it in that area, and how camera phones can share photographs via Facebook seamlessly with little effort. But then it shows Flickr stats asserting that Kodak isn't actually competing against camera phones, but other dedicated camera makers like Canon, Nikon, etc. So in what way is Canon and Nikon integrating with FB, or otherwise "getting it", where Kodak isn't? I've owned a couple modern Canon cameras, and they just throw pics onto an SD card like Kodak does, so Canon's success has nothing to do with beating Kodak in the way the article claims Kodak has failed. That's the real question - why did Canon and Nikon trounce Kodak when it comes to digital cameras?
Simply put, the article is talking about two different things, and doesn't correlate the cause and affect between them at all.
Re:Changing business (Score:5, Interesting)
A decline from such heights doesn't happen overnight. It takes years of mismanagement, mistakes, failure to read the market, failure to adapt, and in this case, failure to realize that the entire market on which your business is based is going away.
I find it interesting that Fuji in Japan was a much more diverse company, and seems to be working on Thorium Molten Salt Reactor technology based on the PROVEN trials of the 1960s. That's a pretty radical leap from Fuji's "traditional" camera market.
A smart company invests their assets in developing new markets and new products, not tenaciously clinging to old and failing models until their last dying breath.
Not just photography (Score:3, Interesting)
They sold off their Healthcare division (think expensive imaging equipment) in 2007, their graphics division was closed and the programmers replaced with Chinese & Israeli ones in 2009. That outsourcing flopped, competitors brought out major upgrades, Kodak stagnated.
http://printplanet.com/forums/kodak-systems/19947-prinergy-dead-they-laying-off-dev-team
So you might think their problems are just the loss of the low end digital camera business, but the CEO there makes some bad bad decisions in all divisions. A decent CEO could turn that place around.
Re:wrong comps (Score:2, Interesting)
As far as I understand, film still has its use - in very low temperatures (say, -30C), CCDs do not work as well as film. I am sure that there are special cameras with heated CCDs, but they would cost a lot, where film can be used with a (relatively) cheap camera.
Re:No real conclusion (Score:5, Interesting)
I mean a boring hum-drum one then (Score:5, Interesting)
I think you mean a Steve Jobs, whereas I mean a more boring hum-drum one like Mark Hurd.
Basic competent leadership is enough to turn Kodak around, it doesn't need a superstar CEO, or a major new innovation. That graphics software they killed, it was doing well in the marketplace before the credit crunch hit them. Credit crunch hits, idiot CEO sacks all the programmers and outsources it to China to cut costs. Competitors Agfa/Heidleberg etc. hire all the programmers while they're cheap and come out with major upgrades in the next cycle, customers switch from Kodak and Kodak product dies. Why? Some idiot CEO read an outsourcing article and like a gullible idiot believed it???
Cameras still sell, and sell well, and Kodak are still a respected camera maker, but they make slightly overpriced, ugly looking cameras. Just basic CEO cost cutting, and trying out new designers, and adjusting teams, boring CEO 101 stuff would be enough to bring Kodak back.
Kodaks problems are just bad CEO problems.
Re:Changing business (Score:5, Interesting)
Rather than saying a company can be sunk by a single bad decision, I'd say it's one specific TYPE of bad decision: hiring the wrong executive.
Look at NorTel in it's heyday. It was one of the top technology companies in the world; the patents sold in the bankruptcy are still very valuable.
But they brought in a hot-shot "save the company" American executive to run the place. He laid off THOUSANDS, and many thousands more who were good resources left of their own accord in addition before the axe could fall on them. The company never did recover from the devastation of those late-80s layoffs, and continued it's decline for years afterward.
But it wasn't a single bad decision in the sense of backing the wrong technology or the wrong business model. It was hiring a rapist to run the company.
Re:Doubtful (Score:4, Interesting)
Kodak is/was definitely a player in the high-end market. Their sensors are used in the current top-end Leica (M9 and S-series) and are the best available.
There's an aspect to this story that no one is considering - contracts with (or loss of) governmental customers for exceptionally high-quality film. There's a reason you can't get Tech Pan any more and it's not because they forgot how to make it.
Re:I remember just 6 years ago... Kodak ate Ofoto (Score:5, Interesting)
Someone I knew uploaded their photos to the Kodak site for printing, and had deleted them from her camera.
Rather than making it easy to get a copy of these photos, it was impossible. I think you basically had to order a PhotoCD or something, which I wasn't going to do.
They could have made a proper website to allow people to share their photos and print them. But they made it annoying.
Ofoto.com was the premiere photography web upstart at the millennium. At that time, Ofoto was the largest buyer of KODAK paper. In fact, since they were clearly in a position of market dominance, Ofoto's brand looked very appealing to Kodak. Kodak greedily gobbled up that magnificent Berkeley dot com upstart, and made it Dow Jones blue chips. From that moment forward, it was all down hill for Ofoto. It went from being the technological and artistic leader to falling into stagnation and total alienation of Ofoto's loyal customer base. They tragically proceeded to delete the customer archives, to save on cost. For most people, this cloud was the ONLY back up of their precious data. Kodak refused to allow customers to download their data:or transfer it to other servers. ONLY the purchase of measly 700mb/ $20 CDs was offered as a means of accessing gigabytes of sacred customer data. I recall doing the math and finding that it was more expensive than all of my camera equipment. Kodak MURDERED Ofoto like they self destructed themselves when they realized that Corporate America is no place for a retired labor force. So just die, rob the shareholders, and let go of all those ballooning pension and health care commitments.
Reasons for failure (Score:2, Interesting)
I think there are three main reasons for Kodak's failure. They are:
1. Still analog and chemical company. It is possible kick people out and just buy electronics and software from somewhere else. Does Kodak want to do it? Also how many internal processes still originate from the rigid chemical process lines? Is it possible to change the people for different industry (i.e. chef to physicist).
2. Pride. Having developed its reputation on analog (pocket) cameras. It's hard for a reputable stove oven company to start selling cheap microwave ovens. It is possible but only with company downsizing and clear selection of its clients. And being proud that you only produce stove ovens.
3. No good products and no clear idea about future progress. No good SLR products, no pro-sumer range. Well this should be clear by now. It's digital. And having read about the product line from multiple sources tells that they trusted in film. Products were secondary. When film eventually died out in practice (especially in medical industry), somebody (investors?) told Kodak they are now standing in deep swamp. I don't know if they ever realized it themselves.
Re:bad data source (Score:4, Interesting)
It is probably because patents mostly work as intended: basically to promote the disclosure of trade secrets by giving a temporary monopoly in return (yes yes I know patent trolls are there as well and so, it's not perfect). As a result the companies benefit from both the issuing of patents, and the expiry of other companies' patents.
While issuing copyrights benefit the creators, but expiry of copyrights mainly benefits consumers. Media creators have generally very little benefit, if at all, from the expiry of other creator's copyrights, as there are plenty of ways that a creator can benefit from other people's works while under copyright: by getting inspiration, by parodying, etc.
Re:bad data source (Score:5, Interesting)
Re:Poor analysis - its film not the camera itself (Score:4, Interesting)
What you have, is an old but highly profitable business model (selling cameras, and *then* both selling and developing film) becoming obsolete, and replaced with a new business model thats better for consumers - namely just selling digital cameras.
The problem is that these companies became bloated from the huge profits they made selling and developing film, so the profits obtained from selling just the cameras are no longer enough to sustain the business. We're just lucky that they didn't start lobbying to have digital cameras banned, and force people to continue using film in order to protect their profits.
Re:Poor analysis - its film not the camera itself (Score:5, Interesting)
Also, for what it's worth, there are color spaces which completely blow Photo CD's color space out of the water in terms of total gamut, if not overall dynamic range, because unlike Photo CD these formats are hard limited at 100% brightness. Example: ProPhoto RGB which, incidentally, was also developed by Kodak and can record many colors which the human eye cannot see!
It gets even worse: XYZ, a colorspace used for e.g. digital cinema and based on the response of the receptors in the eyes contains "imaginary colors" that can't exist in the real world. E.g.: It is impossible to find any mix of wavelengths that will only stimulate the Y/green receptor but not also stimulate the X and Z receptors at least slightly. But XYZ can express "colors" like that, that are supposed to stimulate only one receptor without also slightly stimulating the others, even through response curves of the receptors overlap. Maybe some day direct brain stimulation will make us able to see these colors that can't exist in the real world.
Unfortunately it's mostly academic for now because few displays are capable of accurately rendering a great deal of the tonality those color spaces represent, because 1) DVI is limited to 8 bits per component, and 2) at a certain point you basically need more physical color components, like yellow and violet 'subpixels'.
Well, HDMI and DisplayPort can both do up to 16 bits per component and xvYCC. Also 3 color components are fine for transmission, just for displaying some of these more extreme colors you will need more than three components.
Re:Changing business (Score:5, Interesting)
If business was slowing down a lot, why weren't they sacking workers and reducing expenditure? I think this is more of a failure on management to restructure the company in a way that identifies that they can't really compete in the digital age how they once used to. I think that sometimes the management just have to realise that the company can't exist like it once did, and in order for the company to remain and still employ some people, they'll have to downsize a lot more than management might be comfortable about.
When you have a small company, it's pretty easy to do that. The CEO or someone very close to him visits the affected departments like the Angel of Death and when he leaves, staff levels have been cut by 40%.
When you have a huge multi-national, it's really hard. You've got a vast number of departments spread out in all sorts of locations, employment law varies between locations (meaning you may not be able to go in and sack everyone even if you wanted to) - and even the most efficient set of management accounts is lacking in some detail. So rather than visiting like some dark angel, you carry out a full review of operations to get an idea of what departments are contributing and what departments aren't.
Well and good, but the people directly below you didn't get that far by being stupid. They're pretty good at office politics themselves, they know which way the wind is blowing, they know what a full review of operations means, they've spent years building up their little empire. No way they're letting it go without a fight. So when the instruction comes down from on high, you can be more-or-less certain that the report that goes back will show their department to be the one thing that's keeping the company afloat. (This, BTW, is why it's quite common to hire in outside consultants or make big staffing changes at a senior level before doing these things...)
Not to mention that such a review works great if the problem can be neatly divided in departmental lines. If it can't - if instead all your teams are contributing but none are contributing anywhere near what they need to be to keep the company afloat - things now become a lot harder.
That's why when we hear of huge companies turning things around and improving their situation dramatically where before they looked doomed, it's really big news. IBM and Apple have done it, but as a rule it's pretty rare. It's rather more common for the numbers on the balance sheet to drop steadily over a period of time until they can no longer sustain the business - and when that happens, creditors get jumpy. Frequently they get so jumpy that there simply isn't time to go in and turn the business around, they've already asked a court to declare you bankrupt.
Re:bad data source (Score:5, Interesting)
> The vast majority of their older work is original.
What ?!?!?!?!
The vast majority of their older work is - if anything- MORE public domain based than their newer work. Stories like The Lion King and Lilo and Stitch at least in theory were original (some serious doubts about the former exist) but their older movies - hell ANYTHING with "classic" in the title are all based on public domain works.
In fact no company in history has profited from the public domain as much as Disney - or spent as much to prevent ever having to contribute back to the pool from which they drew so much.
If your argument is that "earlier work" only refers to the short cartoons before Snow White then I suppose you're right - most of that was indeed original, but then there is a LOT less of that than most people think.
By the time of the Golden Age of Cartoons the Disney Corporation was barely even involved in the market anymore - several other companies owned the market, the biggest being MGM and Warner Brothers.
Re:Poor analysis - its film not the camera itself (Score:5, Interesting)
But XYZ can express "colors" like that, that are supposed to stimulate only one receptor without also slightly stimulating the others, even through response curves of the receptors overlap. Maybe some day direct brain stimulation will make us able to see these colors that can't exist in the real world.
You can actually experience that kind of colors as optic illusions : if you fix a blue sheet, you will strain your blue cones. If you then fix a green or yellow sheet, you should get an "impossible" color. There are other ways to get such impossible colors [wikipedia.org], but in any case you can't perceive them in "normal" conditions.
Re:Doubtful (Score:5, Interesting)
Around 2003, I used to work in a small photo store, and we had a Noritsu optical photo printer hooked up to a WinNT4 workstation running Kodak DLS MiniLab software. From the ground up, it was designed for totally digital workflow, so processing orders from floppy disks and CDs was common, as was saving orders to NAS.
It was buggy as hell, the GUI frequently drew garbage and tears, it wouldn't run on Win2K so we couldn't use a lot of card readers or USB anything, it crashed several times a day, and the database would just stop working for no reason which required frequent restarts and losing orders. The system was supposed to be all digital, but any orders we loaded from customer media always printed yellow and washed out, and any color adjustments resulted in horrible banding and color shifts. It was a total black box system, and I couldn't even tell what colorspace the machine was using to process images. JPEG files with embedded color profiles either showed up totally black, or in some cases would cause the system to crash. I eventually developed a system of filtering all customer orders through Irfanview to weed out color profiles the DLS software couldn't handle, to make sure we could actually print on a 1-hour schedule without fear the system would collapse. Just about everything crashed that software, and the CD burner would frequently make coasters -- a big deal when Kodak was charging several dollars for their PhotoCDs (the system would write to blank CDs, thankfully).
Photos scanned on the Kodak PictureMaker kiosk (running a SparcStation III which took over 15 minutes just to boot up), would take about 10 minutes just to network the final images to the DLS software, even though it took half as long for the Noritsu printer to spit them out. Don't even get me started about the greeting card templates, where more than 150K of XML was required just to define a canvas and a transparency mask to make bordered cards.
Naturally, proprietary file formats were used for everything, so it was impossible to access customer orders directly through the NAS. You had to use special client software to connect to the DLS system, search for the order strictly by customer number (not order number), retrieve thumbnails of the orders one at a time until you haphazardly discovered the actual order you wanted, retrieve the high-resolution image for the whole order, and then you could actually save the images to a disk. This procedure could take 3-4 minutes if you were lucky, more than 15 if you weren't. The Image Extractor client was about the only thing in the whole setup that ran on Win2K, so that was what we used to write orders to USB thumb drives. The DLS system itself required a horrifically expensive multi card reader connected via SCSI.
If there was anything that shattered my impression of Kodak, it was their "high-end" software. Kodak did a horrible job adapting to the digital market.
Re:Poor analysis - its film not the camera itself (Score:5, Interesting)
Yeah. This article's analysis is WAY off. I still mostly take photos to remember important events, trips, etc. The images I post are mostly the sorts of things that this article describes (for identy and communication), but that's a tiny fraction of the photos I take.
I don't know what Kodak's problem is other than that they focused on the wrong consumers. Sure, a lot of people buy cheap consumer cameras, but the real profit margins are in the DSLR space, which Kodak never really touched. Instead, they built digital backs for film-based SLR cameras, under the assumption that people would want to update their current film cameras to be digital. The problems with this are twofold:
Because Kodak did not anticipate this transition (and thus did not start making any DSLR cameras of their own), their only remaining sources of income were consumer-grade cameras and sale of image sensors to camera companies. By their very nature, however, consumer-grade cameras are low margin, and worse, their market got heavily cannibalized by camera phones, which seriously cut into those devices as a source of revenue.
This left image sensors. Thus, the only way for Kodak to stay afloat at that point was to continue to be at the forefront of image sensor technology. Unfortunately, the two main camera makers, Canon and Nikon, both build a lot of their own chips, and Sony and Foveon make great chips as well, which nearly eliminates the potential for image sensor sales except in their own cameras.
By the time all was said and done, their only way to make money was to compete in the compact camera market. Unfortunately, this market is almost purely feature-driven, which means that it demands ever-higher megapixel counts. Thus, they either had to buy chips from their competitors or keep up with them in their own image sensor designs. Worse, this meant supporting an image sensor division on sales of compact cameras—sales that were drying up.
At least that's my interpretation of things based on what I've seen/read. Kodak needed to have made a serious foray into the DSLR market instead of (or in addition to) being a temporary enabler for their competition. Had they done this, they would be right up there with Canon and Nikon in the DSLR space by now, and they wouldn't be bankrupt.
Let this be a warning to companies that ignore the pro market: you do so at your peril. The consumer market is great, but fickle. It can go away at a moment's notice, and when it does, if you don't have the loyal pro market, you're out of business.