Bookmark and Share

No more a “Kodak Moment” for Kodak

0 Comment


It is needless to say by now that Kodak was known for its photography and film business. A market leader until digital photography made a revolutionary entry into the market sphere. In the past few years when digitization took pace, there have been plenty of not-so-happy Kodak moments for the company. The company faced severe losses and declining profits which led to the state of bankruptcy. The company filed for Chapter 11 bankruptcy protection.

Kodak was known for its camera which was launched decades ago but the company generated maximum of its revenue from the film business which was very profitable. The recent digitization led to an era where the films became almost obsolete as the photography has seen a new dimension. The requirement of films to capture moments is no longer the need of the people. This led to a sever downfall for the company. The company faced severe loss due to declining film business for which the digital camera or the inroad printer selling business could not make up.

The Company though had some valuable technology patents in its kitty, which finally came handy as it decided to sell its patents for over 525 million USD to save itself from bankruptcy. Despite facing cutthroat competition from Japanese rivals, the company established itself as the world’s most valuable and visible brands capturing more than half of the market.

Kodak – What went wrong

The reason for Kodak’s failure recently was due to their inability to leverage its own innovation in the digital camera. It was felt that venturing into the film-less digital camera would kill the company’s cash-cow film business which had a major share in the revenue and profit. The Company failed to recognize that if they wouldn’t cannibalize their own business with better digital cameras, some of their competitors would do so and Kodak would be left with nothing in the end. This is what actually happened with the company in the end. Kodak’s Japanese rival Fuji set out to dominate the most lucrative part of the market with high-end digital cameras.

Kodak diversified into different segments like medical imaging, films to improve the viewing angle on flat-panel screens, cosmetics, printers, etc. but the improper market research, innovation, and half-hearted attempt never helped Kodak succeed in any of these. This way gradually Kodak continued to lose the profits it used to make by the film business.

Kodak’s too-slow transformation is responsible for such a fate of the company which was known for its films once upon a time. The company did not care about its rivals who worked on developing technology which made Kodak obsolete.

Kodak Financing

Currently as a part of its bailout plan, Eastman Kodak Co agreed to sell its digital imaging patents for about $525 million which will bring the company out of bankruptcy in the year 2013. The deal for the 1,100 patents allows Kodak to fulfill a condition for securing $830 million in financing.

Some of the world’s biggest technology companies, which will license or acquire the patents include Adobe Systems Inc, Inc, Apple Inc, Facebook Inc, Fujifilm, Google Inc, Huawei Technologies Co Ltd, HTC Corp, Microsoft Corp, Research In Motion Ltd, Samsung Electronics Co Ltd, etc. The patent deal put the company on the path of emerging from Chapter 11 in the first half of 2013. Kodak is likely to be a different company when it exits bankruptcy as the company will be out of the consumer business and will focus instead on providing products and services to the commercial imaging market.

Thus going forward we can say that Kodak needs to restructure its business lines completely, so as to ensure its continued operation in future. Also the company needs to adapt to different disruptive technology measures on a timely basis, so that it can compete with some of finest companies currently operating in the sector.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

No Responses so far | Have Your Say!