The death of ‘camera king’ Kodak

Tram Ho

Although the legend in the world of film cameras has fallen, one cannot forget the great role Kodak played in the birth of popular photography. For three-quarters of the 20th century, Kodak’s remarkable success was not only in developing new technology (film cameras) but also in creating an entirely new market.

Kodak’s First Mistake

More than 100 years ago, when photography was the only “playground” of the professional world, Mr. George Eastman – the founder of Kodak – invented the roll film, replacing the photographic plate. He released the first Kodak camera in 1888, bringing photography to more people without the need for high-tech machines. He raised the slogan: “You just press the button, we take care of the rest”.

The company adopts a “razor and blade” business strategy, which is to sell razors first at a low profit. After purchasing the razor, the customer will have to buy more blades continuously and the company will sell the blade at a high profit. Kodak’s plan is to sell low-priced film cameras and then sell accessories such as photographic film, printing paper, etc. at a high price.

Cái chết của ‘ông hoàng máy ảnh’ Kodak - Ảnh 1.

Thanks to this model, Kodak generated huge revenue and became a true money printing machine. In 1950, Kodak controlled about 70% of the lucrative US film market with a gross profit margin of nearly 70%. Kodak’s success is further bolstered by its extensive distribution network and one of the strongest brands in the world. At that time, the company completely dominated the industry in which they were operating.

However, with the advancement of technology, people started to gradually reduce the use of film and printing paper, especially when the digital camera was invented in 1975. Kodak rejected the power of digital cameras and refuse to change. The twist is that the inventor of the digital camera – Steve Sasson – is an electrical engineer at Kodak. When Steve reported to his boss about the new technology, their reply was, “It’s cute, but don’t tell anyone.” That was the moment Kodak shot himself in the foot.

The reason Kodak omitted digital cameras is because the film and print business is extremely attractive and profitable. If photography doesn’t need them anymore, Kodak will suffer huge losses and have to close its production plants. Meanwhile, the idea of ​​a digital camera was applied at a Japanese company called Fujifilm. Soon, other firms followed suit and produced and sold digital cameras, leaving Kodak behind. This is Kodak’s first mistake. Denying new technology, refusing to adapt to changes in the environment is the beginning of their downfall.

The biggest reason why Kodak failed

After digital cameras became popular, Kodak spent 10 years arguing with rival Fujifilm over a “pointless” issue. Kodak believes that viewing photos on a digital camera does not bring the same feeling of love as when they see washed photos. Meanwhile, Fujifilm and other firms are busy gaining a foothold in the photography and videography market instead of “war of words” with Kodak. Once again, Kodak wasted no time promoting film cameras instead of following the competition. They completely ignore the feedback from the media and the market. Kodak tries to convince people that film cameras are better than digital cameras. 10 years have passed in such vain with Kodak.

Kodak also lost its outside investment during this time. People realize that digital photography is ahead of traditional film photography. It’s also cheaper and the picture quality is better.

At that time, a magazine pointed out the fact that Kodak was left behind because it “closed its eyes” to new technology. The marketing department tried to convince management to change the core principles of success, but management continued to stick with the idea of ​​relying on outdated film cameras and even turned to criticize reporters for not having any. what knowledge.

Kodak failed to realize the once effective strategy was taking away their opportunity. Rapidly changing markets and technologies require changing strategies. Kodak invested in acquiring smaller companies, draining money that could have been used to promote sales of digital cameras.

When Kodak “wake up” and started producing digital cameras, it was all too late. Many established companies and Kodak couldn’t keep up with them. In 2004, Kodak announced it would stop selling traditional film cameras. The decision put about 15,000 employees out of work. Before 2011, Kodak slipped out of the S&P 500 – 500 largest US companies based on stock performance. In September 2011, the company’s stock price hit the bottom, only 0.54 USD/share.

By January 2012, Kodak had used up all its cash and reserves. On January 19, 2012, the company filed for bankruptcy protection, leading to restructuring. Kodak was granted a $950 million line of credit to continue operations. To get more revenue, some parts of the company are sold. In addition, Kodak decided to stop manufacturing and selling digital cameras, switching to selling camera accessories and photo printing services.

Kodak also sold many patents, including a digital imaging patent, bringing in more than $500 million. In September 2013, Kodak escaped bankruptcy. Most recently, in August 2020, the US government provided a $765 million loan for Kodak to set up a new division called Kodak Pharmaceuticals, which produces 25% of the active ingredients for conventional drugs in the US. The agreement helps realize a key US priority of reducing dependence on foreign countries for the production of drugs and other essential products.

This is a major turning point in Kodak’s 140-year history. While pharmaceutical manufacturing seems like a big leap for Kodak’s roots, CEO Jim Continenza insists the chemical business is “our heart.” Kodak shares rose 530% in 5 days after the announcement of the agreement between the government and Kodak was made. The mayor of New York described it as an effort to “restore Kodak’s role as an American innovator and force to be reckoned with in the chemical industry.”

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Source : Genk