Kodak created memories and we all know the phenomenal company it was in the 90s and the early 2000s. Kodak was founded by George Eastman in the year 1988 and was earlier known as ‘The Eastman Kodak Company. Around the 20th century, it was the dominant name in the photography and videography industry.
It was the time when the entire domain of photography and videography was defined by the reputation of Kodak. At this time, only large corporations can afford a camera for recording videos. But Kodak made it accessible for common citizens to afford an affordable and portable camera for clicking pictures.
For the whole of the 20th century, Kodak was the leader in its segment. But due to some faulty business decisions and management shortcomings, Kodak failed to excel more and went bankrupt. It was the year 2012 when Kodak declared itself to be bankrupt. Hold onto this piece of information, if you want to know the reason for Kodak to fail and why did Kodak go bankrupt?
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What was the reason behind the failure of Kodak?
For decades, Kodak has been the market leader in the industry of photography and videography. By the year 1968, Kodak was holding almost 80% of the market share related to the industry of photography. The business structure adopted by Kodak was the ‘Razor and Blade’ strategy. In this process, the business required selling the razor first with the expectation of minimal profits.
After getting to know the impeccable service, customers will be moving to buy the blades in a repeated manner. The concept is to make profits at a higher margin while selling the blades. Kodak, the company wanted to sell cameras at an affordable price while keeping a small amount of profits.
Following this method, Kodak wanted to sell consumable items like printing sheets, films, and others at a higher profit margin. With the help of this business model, generated an insurmountable amount of revenue and became a financially strong company. With the passage of time, evolution is evident and films and printing sheets began to be a thing of the past.
In 1975, digital cameras were built and Kodak disregarded this invention and kept onto the analog mechanism. Steven Sasson, who was an engineer at Kodak developed this masterpiece. But when he shared his creation with the higher management at Kodak, he was told to not discuss this with anyone otherwise this would be harmful for his career.
Kodak wanted to remain on the film and system of paper as it was highly profitable at that period of time. But the next step is always to evolve and embrace new possibilities. Kodak felt that if paper and the film system cease to exist, the company will generate huge losses and they will eventually shut down. But the final conclusion sculpted the similar climax as the company failed to accept new technology.
A company named ‘Fuji Films’ adopted digital technology to which all other companies started to follow. But Kodak stayed at the same place until it was too late to accept their mistakes. The downfall of Kodak was the result of not accepting digital technology at the right time.
The primary cause of the failure of Kodak-
After the invention of digital cameras, Kodak went on arguing with Fuji Films, that a paper-printed image feels better than the output of a digital camera. Kodak was also under the impression that the United States of America would accept Kodak over Fuji Films, which was a company from a different country.
Fuji Films and other companies decided to invest time and energy into innovation rather than going into continuous irrational arguments with Kodak, over which technology is superior. Kodak on the other hand, kept on investing over analog systems and completely rejected the digital camera possibilities.
Kodak could not understand the market and customer demand and the media was directing the next answer of the photography and videography industry to be digital. In the middle of all these, Kodak wasted about a decade in pointless validations over an aging technology. The company also lost any sort of external funding that supported Kodak for a long time.
Time told the market that digital cameras were much more affordable, flexible, and portable than a traditional setup of clicking pictures. The magazine and media express that Kodak had no intention of appreciating this new technology. The marketing team put in efforts to make the management understand the severity of the shift to digital.
But Kodak said that magazines and the media have less knowledge about this and the analog system is the way to go. For any company in any industry, it is very crucial to listen to market trends and demands and adjust the products according to it.
Kodak kept on acquiring small brands and did not use that capital towards selling newer products of digital cameras. When Kodek finally got to understand their blunder, it was too late. Other companies have already created an impressive market share and have developed stellar products.
Kodak just couldn’t compete in spite of being such a brand at a certain period of time. It was until 2004, that Kodak officially announced that the company would cease the selling of traditional analog cameras. This was the time when almost 15,000 staff have been redundant and parted ways with the brand.
Before the beginning of 2011, Kodak lost all its stock value in the S&P 500 list, which basically indicates a list of 500 companies portraying the company’s stock performance. In the month of September in 2011, the stock price of Kodak was at $ 0.54/share and the company lost almost 50% of the value of the stock in that same year.
The Bankruptcy Protection of Kodak-
In the month of January in 2012, Kodak used every penny of its resources and cash from the reserves. Kodak filed for bankruptcy protection at Chapter 11, where the company was provided $ 950 million by the CITI group for the re-establishment of the company.
This capital flow allowed Kodak to continue operations but at the expense of selling a lot of divisions to other companies. Finally, Kodak decided to stop producing digital cameras and left the industry of digital photography. Kodak continued to sell camera accessories and printing photos.
The first digital camera of the world
The company sold a large number of patents that also included digital image patents for about $ 500 million and referred to bankruptcy protection. Kodak announced on September 13th that the company has recovered from the Chapter 11 type bankruptcy protection.
The comeback of Kodak-
Reports indicated that Kodak will collaborate with Chinese mobile phone manufacturer, OPPO, to create its flagship offering. In the device the camera is rumored to be housed with a 50 megapixel specification figure and the design of the camera will be sharing that of the traditional Kodak cameras.
This has been reported to be a tribute by OPPO to Kodak’s traditional camera legacy. The OPPO smartphone will be fitted with a Sony IMX 766 sensor with a 50-megapixel camera. Further surveys also indicated that the mobile phone will have a large sensor with the ultrawide camera offering coupled with a 13 megapixel telephoto lens and a 3-megapixel micro lens.
The partnership between Android smartphone makers and OEMs was not new information. The world has seen Nokia collaborate with the German optics brand, Carl Zeiss in 2007. Nokia wanted to reinvent the N95 phone with a modern outlook. Such partnerships have always brought in new technology.
The Chinese phone manufacturer OnePlus has teamed up with Hasselblad, Huawei joined hands with Leica and Samsung also welcomed Olympus into their product range with the latest offerings. Kodak also entered the TV industry with a product and the company built a plant in Hapur in Uttar Pradesh in the year 2020.
Kodak is also looking forward to investing about Rs 500 crore in creating a fully automated android television from the Hapur plant. Kodak is strengthening the ‘Make in India’ plan and wants to reinvent its legacy and put forward Shri Narendra Modi Ji Atma Nirbhar Bharat’ strategy.
From the latest reports, the TV industry imports a lot of raw materials and generates a value of about 10% to 12%. With Kodak’s strategy and capital flow, the value is estimated to increase to about 50%. The Hapur plant is set to release products into the market with the ‘Make in India’ initiative.
A company located in Noida named as Super Plastronics Private Limited has obtained a license from Kodak to sell its TV to the market. This Noida group has teamed up with a company from New York and is selling several products like Kodak’s 42 inches, 43 inches, and many other smart LED TVs.
Kodak also offered impressive discounts on these LED TVs with Flipkart and Amazon on their festival days. The company is gradually buckling up to enter the technology market and recreate the legacy they have lost. The ultimate goal for any brand is to keep on innovating and accepting its shortcomings. Even giants like Kodak can fail but it is the thing to see how to come up from the lowest point and keep on trying till reaching success again.
Frequently Asked Questions-
- When did Kodak go bankrupt?
Ans– Kodak announced its bankruptcy in 2012.
- When was Kodak formed?
Ans– Kodak was established in 1988 by George Eastman.
- What is Kodak doing now?
Ans– in 2020, Kodak secured about $ 765 million from the United States Government and started making drugs and pharmaceuticals.