Eastman Kodak Company of Rochester, New York, one of the greatest success stories of American business in the 20th century, filed for Chapter 11 bankruptcy protection early this morning.
Kodak was once nicknamed "the Great Yellow Father" by photographers, after the trademark yellow packaging it used for so many of its products. It once thoroughly dominated many aspects of the photographic supplies market.
A great many important products were invented at Kodak, from the near-magical D-76 developer, to the Kodachrome film that dominated amateur color photography for decades, to digital photography itself.
Kodak made many management and business missteps in the 1980s and later. (Remember Kodak batteries? Copiers? the idea that there would be a Photo CD player attached to every television set in every living room?) It seemed to attempt again and again to recapture the glory days of inventor/designer Dean M. Peterson's Instamatic, when it possessed the power to both create lucrative markets and dominate them. (Peterson was later the inventor of autofocus and the father of the point-and-shoot.) But the Disc Camera of the early '80s was a pale shadow of the Instamatic of the early '60s. The most difficult blow may have been APS, the "Advanced Photo System," which was an attempt to rationalize—and maximize profit from—a system that was already in place and working just fine for consumers. Kodak invested huge amounts of money and human capital into APS at just exactly the wrong time: just before the dawn of the digital transition. With catastrophically small returns from APS, and with its resources depleted, the company found itself in a weakened state just when it most needed all of its strength.
For many years, Kodak was indeed paternalistic, in that it used its formidable profit centers (color negative film and the long rolls of paper used in automated print processors) to fund a wide range of what amounted to services for photographers—a world-class research laboratory, a near-endless series of publications, arcane darkroom supplies, a poison hotline, and one of the world's leading photography museums. On and on.
In the 1980s, Fuji and Konica of Japan moved in to compete with Kodak in its most profitable product areas, without providing many of the other services and product categories Kodak used its profits to subsidize. Although challenged, Kodak met that difficulty with spirit, introducing a flurry of greatly improved films in response.
Much has been made of Kodak's failure to respond to the digital transition, and I'm sure that will be dissected by business analysts and writers in years to come. But what's more likely is simply that the world changed and moved away from the old behemoth too quickly. With the 21st century came not so much a failure of flexibility and will, but simply a looming disaster that could not be avoided.
As most of you know, Chapter 11 is not synonymous with "the end"; businesses in reoganization don't necessarily disappear altogether. It's our hope that a smaller, leaner Kodak will be part of our lives—and, for some of us, our photographic work—for decades to come.
But the glory days for Kodak are over.
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Original contents copyright 2011 by Michael C. Johnston and/or the bylined author. All Rights Reserved.
Featured Comment by Jim Kofron: "I started out working for Kodak in high school (a co-op at Kodak's Apparatus Division) in the late '70s. What a great opportunity that was! The company was huge, and was doing a ton of innovative research and science. My dad was a photographic chemist in R&D; one of the inventors of a novel form of silver halide emulsion chemistry named the T(abular)-grain. Kodak was such a great place to tour in those days: they'd bring in kids through a variety of programs and show them all sorts of different areas (roll coating, substrate production, paper mill, assembly lines, etc). Their brand recognition was always in the top three in the world. How far have they fallen now?
"I'm not convinced that Kodak suffered anything other than poor management (much in the way that U.S. automakers did) in that they were unwilling to expand and commit to different markets. They basically invented digital photography (the creation of a lucrative market), and owned the segment for many years (with very expensive equipment). They clearly were positioned to dominate it far better than Canon, Nikon, or Sony could. But they were behind the curve when it came to commercializing the products for consumers, because it cut into their cash cows (film, paper, and processing). They had a restructuring in the '90s where they shed 'non-core' businesses; one of the areas they cut was their pharmaceutical business (I was a causality of that)—good thing too—there's no money in pharma. The upper management has been (in my opinion) myopic for decades, and I've felt like they couldn't have done worse managing the company if they had been trying to sabotage it.
"I would hope that a smaller, leaner Kodak will survive (and eventually thrive), but it will take them some time to get their gestalt back."
Mike replies: There's no doubt, in my mind at least, that a lot of Kodak's ventures during the time I've observed it have seemed directive rather than reactive—that is, they'd develop products that made sense inside the corporate culture of Kodak and that they thought consumers ought to like, but that had little relation to putting things out on the market, seeing how the market responded, and taking their cues from that.
I remember making an argument to a venture capitalist in the '90s who was interested in the photographic marketplace and was trying to pick my brains—he had a deep tan and wore an open shirt with gold chains, if you can believe that—that Kodak's management had their heads up their butts and that, if they were behind an idea, it was a pretty reliable indicator that the idea was a bad one. He gave me a withering look of complete contempt and said "Kodak can afford the best people. I'm sure they know exactly what they're doing." Dismissed; end of interview.
Kodak was big and rich, therefore it couldn't make errors. I ran into that idea again and again—despite misstep after misstep on Kodak's part. The evidence was right there for all to see, but nobody could believe it. Least of all, it would now (sadly) appear, those inside the company itself.
Featured Comment by Geoff Wittig: "It's difficult to exaggerate how wrenching the fall of Kodak has been for the Rochester N.Y. area. When I attended college there in the late 1970s, landing a job at Kodak was the Holy Grail; apparent lifetime security and great benefits while working for a genuinely benevolent employer. Per last week's New York Times article, in 1980 an astonishing 60% of Rochester's workforce were employed by Kodak, Bausch & Lomb, or Xerox—all companies deeply involved in photography, optics and printing. Today that figure is 6%, and falling like a stone. In the process, Rochester's per-capita income has plummeted from well above the national average to rather below. And Rochester's remarkable network of satellite art/imaging institutions, from the Memorial Art Gallery to George Eastman House to the Visual Studies Workshop, are gradually sliding into shabby gentility—sort of like the aging descendents of a failing dynasty, wandering the dusty halls of the crumbling family mansion.
"Our shared obsession/hobby/artform was once sufficient not just to enrich our own lives, but to create and support an enormous industry driving the prosperity of a great industrial city. It's sad to witness its twilight."
Featured Comment by Steve Jones: "If Tri-X disappears, or fails to reemerge intact under some Eastern European based label, then I might have to walk away from it all…or, begrudgingly, hello Ilford."
Mike replies: I feel the same way, Steve. I've always been too attached to Tri-X. And Plus-X before it.
Featured Comment by Sandy Rothberg: "As a photography student at RIT in the late '60s, we were taken to visit the research labs at Kodak Park. This was a really big deal. After visiting one fabulous lab after another, we were ushered into an auditorium where we were told with great ceremony 'you are the last generation of silver photographers.' We left that day amazed by what we had seen and sure that Kodak had not only planned for the future but was quite prepared to deliver it to us in a bright yellow box. This is a sad day, a great company and a huge employer of the sighted and the blind in upstate New York, brought down."
Featured Comment by Dave Jenkins: "Kodak's difficulties are not altogether undeserved. Although I am an unabashed supporter of the capitalist, free-market system, I have to say that Kodak has been one of the most rapacious companies in existence, the kind of company that gives capitalism a bad name. They grew not only by developing excellent products, which they indeed did, but also by underselling, freezing out, and buying up smaller companies by the dozen, especially in the first half of the 20th century."
Featured Comment by Cyril: "Sadly, when we heard the news on the radio this morning, my 12-year-old son asked: 'What's Kodak?'"
Featured Comment by David Saxe: "Many years ago, I ran a photography department in a major Montreal hospital. Twice a year we would get a visit from the local Kodak rep. He would arrogantly march in to my studio and sit himself down and for the next hour or so, extol the wonderful benefits of their latest color print film. I would always have to interrupt him and remind him that departments such as ours never used color print film. Although I had mentioned this to him on many occasions, he never remembered and in spite of my reminder, he would continue with his pitch. Every now and then, he would come in and talk about a new slide or black and white film (which interested us) but his explanations of why they was superior to the previous films was always far too technical and utterly useless. Finally I would ask him to send us a few samples to try out. His response was always the same. 'Kodak does not supply free samples.' That was that.
"We used Ilford black and white products. The rep would visit about every second month. He always has a box of 100 sheets of enlarging paper with him and he would talk about his products briefly, and then go into the darkroom with us to jointly test them out and compare the with the the older version. If there was ever a problem with any of their products, we would call him up and a replacement would be delivered the following day.
"That was 30 years ago. I never remembered the name of the Kodak rep but I will never forget the name of the Ilford rep. Business is all about creating and maintaining relationships. Kodak didn't understand that."
Mike replies: The version of that I had to contend with was that Kodak always had separate internal divisions for "professional" and "consumer." So one month I would have to waste precious time constructing and supporting evidence that our magazine audience was an appropriate audience for a PROFESSIONAL product. The next month I'd be spending time trying to justify our audience as being composed of amateurs, or CONSUMERS—for an entirely different group of people at Kodak, who never talked to the other group. The fact of the matter was that our whole audience bought, or might have bought, certain Kodak products, and the professional / consumer bright line simply didn't make a damn bit of difference in the real world. As far as I know, not one other company we dealt with even bothered with the distinction.
And to top it all off, Kodak virtually never bought an ad. I think in my whole six years at the magazine, Kodak bought one advertisement. It might have been two. The income was far offset by the man hours wasted trying to get ads we never got.
Featured Comment by Petru: "This relatively young reader also has wonderful memories of pictures taken using Kodak film and paper, in the not too distant past. I can still remember my surprise and delight at seeing my wedding pictures, nine years ago. In particular, I was blown away by a particular picture taken using Portra color negative. I've never seen more beautiful portrait colors—natural and vibrant at the same time, simply astonishing. I'll be forever grateful to the Kodak people who made this possible: scientists, managers and workers. They did a really phenomenal job for years and years."
Featured Comment by Steve Jacob: "There is one factor in Kodak's demise that no-one has mentioned and it's one that makes the contrast with Fuji's healthy survival all the more interesting: environment.
"Japanese dominance in consumer optics and electronics creates a critical mass of skills, sympathetic banks, a culture of mutual cooperation and cross licensing and ready access to all the supplementary industries needed to build digital cameras (suppliers of sensors, LCDs, processors, optical glass, precision engineering etc). No other country is as well placed to assemble those components into a single product or exploit opportunities for convergence. Add their proximity to ready and willing Asian manufacturing bases and they have a massive head start over everyone else.
"Anyone could have invented the digital camera, but only Japan was in a position to really exploit it (and even there there were casualties).
"From the U.S. perspective, the direct converse is the Pacific West Coast and Silicon Valley in particular, where the same network of technology and skills has created an incredibly fertile, innovative, risk-loving environment and a ready supply of private venture capital. It is almost impossible for foreign companies to start up in direct competition with Apple, Microsoft, Oracle, Google or Amazon, and the U.S. completely dominates the world in software (even if all its hardware is made overseas). Some companies crashed and burned but the ideas and people just moved on. Nothing was 'lost.'
"Today, in a global economy, countries not just companies are becoming specialised. A hundred years ago, every developed country made just about everything by themselves and for themselves. Not any more.
"Kodak was just in the wrong place at the wrong time for the business it was in."
Featured Comment by David Dyer-Bennet: "History of Kodak in pictures."