Peckin’ on Kodak’s Nostalgia

Kodak is going through one of the more upsetting demises that the corporate world has ever witnessed. Founded in 1880, the company Eastman Kodak has played a pivotal role in popularizing photography throughout the entire world.
After tackling extreme economic hardship for over a decade, Kodak filed for bankruptcy protection. The company announced that it will stop producing both digital cameras and pocket video cameras, reserving its remaining capital for producing printers, inkjet devices and online services. It is also looking to license its brand name and line of products in order to survive through bankruptcy.

How could Kodak be dying? Do we still not take photography classes where we learn to develop film? Are we not still buying film cameras to look artsy? Are we not using the phrase “Kodak moments” any more? Kodak’s issues are business-centric, not affecting the culture and technology that it has provided. The reason for the company’s direction toward bankruptcy is not because of failure to maintain its popularity, but rather due to bad business choices.

The monetary illnesses for Kodak started in the late 1990s. The company failed to recognize that brand loyalty was not an everlasting feeling for its consumers. The company has been called out as the “twentieth century corporate dinosaur” by a number of commentators. It has been great at innovation but laggard at translating such ideas into enduring business ventures.

When competitor Fujifilm first entered the U.S. market, Kodak ignored the sway that their low-priced films had on the American consumer. Kodak was confident that the American consumers would stay loyal to the brand that introduced photography to them decades earlier; the feeling of confidence blinded the urge to see Fujifilm as a fair match. In 1985, Fuji became the sole sponsor of the Los Angeles Olympics, an opportunity that Kodak flopped on. As a newcomer to the American market, the sponsorship was a brilliant business maneuver on Fuji’s part—it provided Fuji with immediate recognition. The market share of the Japanese company grew over 17% in the early 1990s, while Kodak was not able to make an acclaimed progress in Japan. Kodak’s inability to deal with Fuji was the first signs of bovine business choices that the company made, knowing that Japan, at the time, was the second largest market for photo-related products after the United States.

Meanwhile, Kodak’s contributions to the digital recording technology have always been anything but negligent. In an attempt to become more than the producer of film cameras and films, Kodak invented the first digital camera in 1975 (who knew!). As a result, it was the founding father of the “filmless photography” culture in addition to its fame as the founding father of film photography. In 1996, Kodak collaborated with Nikon to produce the first point-and-shoot professional digital camera. However, Fuji, Olympus and Canon proved to be thorough competition. They were devoting more of their energy to the digital camera business, whereas Kodak was having a hard time paying less attention to the production of its first products—analog cameras and films. Kodak also fell behind in the market for printers due to their obsession with the past, channeling a little too much of its capital into the production of analog cameras.

When Daniel Carp, the CEO of the company between 2000 and 2005, announced the company’s goal of becoming the leading digital camera and printing company, a large chunk of Kodak’s endowment went into further developing digital projects. In 2005, Kodak became the best-selling digital camera brand in the U.S. Starting in 2007, most of Kodak’s revenue went into producing printers in order to continue onto becoming a digital giant.
Kodak, this time, had a unique business strategy that would hopefully leverage them as business innovators in the field: they decided to sell printers for more money and the ink for less. Rival companies like Hewlett-Packard and Xerox were making profit by selling expensive ink and cheaper printers.

Accordingly, 2007 was the last time Kodak made profit. The company was not able to compete against the standard business strategy in which the printers were sold. Kodak was losing money on the research and development of its digital projects, but was not getting satisfying returns.

As a last resort to engage in profits again, the company gave more attention to patent litigation and licensing lawsuits. They would sue companies that had actually or supposedly stole their ideas, including Apple Inc., who was sued for violating Kodak’s image preview patent, which allows photos to be previewed at a low-resolution yet saved as a higher resolution.

For a few years, acting as a patenting troll helped the company keep acceptable levels of production, but paying for a legal team can get expensive. Making “okay” profits is not good enough for companies to survive in the corporate world.
Now, Kodak has just recently filed for bankruptcy protection. It appealed to the U.S. Bankruptcy Court on January 12, 2012 and the court agreed on giving $950 million as debtor-possession financing. The company asked to remove its name from the Kodak Theatre in central Hollywood in order to get money to restructure while under bankruptcy protection. No one knows if the owners of the theatre will keep Kodak’s name during the next Oscars as a tribute to their pivotal role in making Hollywood a snapshot-land.

What makes the story of Kodak’s downfall sadder than other bankruptcy cases is that Kodak has been the architect of innumerable inventions for the “life-recording” market and is subsequently facing bankruptcy because of being too caught up in old memories of film photography. Everything about the company, from its name (given because of Eastman’s obsession with the letter “K”), to the way it promoted recording happy memories with the “Prove it with a Kodak” slogan, as well as its approach to business ventures, Kodak has long been under the pervasive influence of nostalgia. Kodak had a hard time letting go of the elderly analog camera business, while the digital photography business, which they invented, was clearly impairing the market for film cameras. When Fuji, Olympus and Canon were excelling in SLR cameras and fancy zoom mechanisms, Kodak was sparing some portion of its resources to producing disposable cameras for us to take photos that make us look blonde with a touch of gray on pictures.

The company is now doing everything it can to keep what it has left. The most important thing that Kodak has been able to do during times of hardship has been to remind people that Kodak had always created special moments and will remain attached to that idea as long as we use cameras. It has done this by emphasizing its investment on brand name rights. The company may be dying, but the notion of reminiscence that it created—capturing memories in snapshots of precious moments—will keep its name attached to the subject of photography forever. Next time you use an analog camera or go through your childhood pictures, remember that Kodak played a huge role in enabling us to pick-and-choose moments that we would like to remember. •