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Monday, 03 February 2014

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If Kodak had stuck on to producing its legendary fine films, good papers and chemicals, and downsize a bit, it would have stood a chance of being a great brand name.

Today, Kodak Tri-X 35mm films are alive and well, and HC-110 is still available.
I still see some TMax films.
I still see Agfa films.
I still see lots of Fuji films.

As for papers and darkroom chemicals, Ilford seem to dominate the market.
I liked Agfa papers more but they are gone forever.

Kodak went the way of making funny formats other than 35mm and they did not last.

There is still a big market for a big player who can produce good films, good papers and good traditional darkroom chemicals.

Film is to oil painting as digital is to watercolor. They are different media and it's a big mistake to compare them side by side!

All said, I am referring mainly to B&W imaging.

Interesting article. What really struck me, though, is that except for Samsung and Fujifilm the consortium buying the patents didn't include any camera producers.

I wonder if this was a golden goose devaluation that will have an effect on the value of patents in the hands of other companies, such as consortium partners Apple and Samsung. (Microsoft and Google have not traditionally put as much emphasis on patents.) The story puts the emphasis on a portion of the Kodak patent portfolio, for which the price tag dropped to an estimated <$100M, but the real story seems to be that under Chapter 11 pressure, all the interested parties stripped Kodak of their entire patent portfolio for $500M. Further, Intellectual Ventures demonstrated that the value in all these patents could be most effectively extracted by a middleman, not by the originators. I think the whole story will have lasting consequences.

scott

I saw Kodak's scenario play out before. I once worked for a division of Exide battery. At one time, Exide had over 80% market share in storage batteries. They owned the business, they pioneered its technologies. By the time they woke up to the fact that others could do better than them in the industry they developed, they were too far behind. All they had left was accounting tricks, and a patent sell-off.

You want to cry when you see that happen.

@John You're taking an overly narrow view of "camera producers". I think four of the top five cameras on Flickr are made by Apple.

The linked article raises an interesting question. While the outcome was bad for Kodak—was it good for the public?

I guess what happened to Kodak is the same as what Kodak did to many of its competitors in the earlier days of photography.
A big, well financed company beating up and abusing its smaller competitor until there was an act of submission.
While some might claim that this is the essence of capitalism, it is also the display of overly aggressive position to the point of monopolizing the marketplace.
In my life, you can look at GAF and Dupont both exiting the photo market in the US, easier to exit than to go head to head with an equally large company which played much harder and perhaps less fairly.
Kodak did make the better product, they did a better job at public education, they did a better job in al respects and could have won fair and square but they did seem to go the extra mile just to make sure that the competition was driven from the marketplace.
What the photographic world will miss will be the efforts at education, the numerous amounts of technical data available to the public, often for free or minimal amounts of money.
Kodak also did a lot of research, which if they had any idea of its worth, or could have properly marketed it, would have saved their collective skins, but alas, they were too firmly hooked on the drug of high returns for a few products.
Kodak blinked, looked at the too short of a term and made the fatal mistakes.
They dismissed their own inventions, they fumbles the markets that they created and in the end died on the digital cross that they created.
Sorry George Eastman, the bean counters and paper shufflers that replaced you were never up to the task.

From what I've read, greed and complacency did Kodak in. And yet for years, opening those beautiful yellow boxes filled me with excitement and hope. Funny how things go.

On that Kodak IP thriller/drama/romantic comedy, can somebody tell me is it good or bad for the… well, for us photographers.

I think Roger is exactly correct. While we should revere and appreciate all the utterly wonderful stuff that Kodak research and technology gave the world,(including Inventing digital photography and until recently making some of the best sensors available for MF Backs) the ultimate lesson is NOT that they were picked apart by vultures, but that epic mismanagement and protectionism is a sure path to failure.

Regarding the digital technology they invented, they did Everything grudgingly, and too late.
They put themselves in a position to be picked apart, and that, in my opinion, is the ultimate sadness of the situation.
It didn't have to be.
Schumpeterian creative destruction.
Michael

This reminded me of John Walker's article about computer games and the public domain, worth a read, even if you don't like computer games: http://www.rockpapershotgun.com/2014/02/03/editorial-why-games-should-enter-the-public-domain/

Roger states: "Sorry George Eastman, the bean counters and paper shufflers that replaced you were never up to the task."

Frankly, if you had tried in the 80's to hire the most evil, diabolical management team to take over Kodak and sabotage the company---you'd probably have the company still doing pretty well. The ineptitude of that generation of management (manglement?) is astounding. As an ex-Kodaker, it makes me want to cry. Or strangle someone...

I've always heard that complaints of the predatory nature of the company regards sales and competition. I never saw that end of the business---I just knew a bunch of very talented and dedicated scientists doing some very creative work. At least they cut me free in the early 90's when they divested their pharmaceutical business. Yeah---you wouldn't want to be in that non-core business... it's almost as bad as digital photography.

Dear Dan,

Your scenario would not work. The B&W business was less than 1% of Kodak's revenues. That has been true for a very, very long time -- at least two and maybe three decades. Kodak had no more chance of being a viable company based on their "legendary" products than your household would surviving on 1/100th its current income.

Sure, some totally different company (or household) maybe, but not the same one. No amount of restructuring makes that possible.

pax / Ctein

Dear Omer and Jim,

Omer, anyone who wrote that Kodak was "complacent" has made a deeply ignorant assessment and has no idea of what Kodak was actually doing for the last three decades. They were anything but.

Oh, they failed impressively and mightily, initiative after initiative, but that ain't at all the same thing.

Read this:

http://theonlinephotographer.typepad.com/the_online_photographer/2010/01/so-what-about-kodak.html

And, Jim, regarding the amazing bunch of eff-ups who were running Kodak in the 80's, see my post toward the end of the comments to that column. Oh yeah, they were impressively screwing themselves.

pax / Ctein

The linked article ends with this:

---------
There is at least one benefit arising from the Kodak deal. The “patent peace” imposed by the superconsortium should discourage expensive, high-profile courtroom battles in the years ahead—at least in the area of digital imaging.
------------

This omits one important thing. The only court battles will be between the incumbents who now own the patents (that can probably be used for all sorts of things) to stop others entering the market. Maybe not battles. Maybe just lawyers letters.

But the end result will be less innovation, not more. The incumbents, thus protected, don't have much incentive. And the new guy, well he will just get taken out by the lawyers.

I wonder if we might be better off without patents nowadays. I know that is extreme, but consider an analogy - here in New Zealand, people don't have the right to sue for personal injuries. If someone were to suggest this for the US, all hell would break loose I'm sure. Especially from lawyers. But although there are *some* downsides, in general it manages to keep a lot of money out of lawyer's pockets and in ours.

OK maybe not a great analogy, but I can't see what's happening right now with patents as being very beneficial to society as a whole.

A very excellent article. The true value of patents is very hard to estimate and the whole system has been widely abused over recent years.

You may have a design which your own lawyer (and most trained patent lawyers) would agree was not in breach of patent, but when tried in a US court with a lay jury, the result could be quite different (Apple vs. Samsung).

There are also widely differing views on what constitutes prior art. A rounded off rectangle would not be considered a patentable innovation in Europe for instance. It would certainly fall under copyright or trademark law, but the closeness of the design would have to be extraordinary (Nikon vs Sakar/Polaroid).

The value of the Kodak patent portfolio is unlikely to be due to anything fundamentally ground breaking (compared to Nortel). If it were, buyers would be engaged in a frenzied auction, and would certainly NOT have been willing to share the proceeds.

Rather its value was probably the reduced uncertainty over litigation and reduced cost of working around a large number of patents that were not in themselves ground-breaking. The very fact that Kodak had exploited so few of them commercially shows how they saw the value of their own portfolio.

In other words the valuers were the ones that got it wrong. The longer a patent sits on the shelf and is not exploited, the more companies will find ways around the patent. Usually 2-3 years is enough, at which time the value falls exponentially. I suspect most of these patents were somewhat older.

In terms of us consumers this is good news. It means that new products will flow faster and development costs will be lower.

Changes in US patent law will also be very helpful for small start-up companies that have been frozen out of the market by larger companies who simply sue them for some (possibly non-existent) breach they can't afford to fight, or buy them out and shelve the patent in case another upstart stumbles upon it.

In the end, the patent sell off was simply the final scene of a Greek epic tragedy. As for the consortium, I see it more as a reaction to the widespread abuse of patents as anti-competitive money spinning devices, rather than a way of stimulating innovation.

It was all quite predictable really.

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