I’m watching with both sadness and bemusement (perhaps the definition of schadenfreude) as Kodak limps toward bankruptcy. The company that gave us song titles (Kodachrome), vernacular (Kodak moment), iconic Olympics television ads, and made it possible for the consumer to chronicle his or her life is now about to end its own corporate lifetime. Disclaimers: Kodak was a customer of mine when I was at Sun Microsystems and Kodak sued Sun over some patents. I didn’t, and don’t, benefit one way or the other from this, but I’ve been watching this situation evolve since 1990.
The common wisdom is that digital photography killed Kodak. Digital images were the secondary effect. Networking was the primary. Kodak’s consumer business is about narrative: they thrived because people wanted to tell stories through snapshots of their lifes. The places I remember, to quote the Beatles. Kodak’s tag line was “Take Pictures – Further” for quite some time, a snapshot of both imaging and sharing the thousand words to do justice to the picture.
Kodak had the first digital camera (I had a consumer version of it; it used a floppy disk and took almost ten seconds per VGA quality image). They own a truckload of patents in digital imaging science, color science, and image manipulation. But their business model was predicated on taking pictures, having them developed, printed, and mailed to relatives in Iowa. It wasn’t just film; it was chemicals, paper, and the photofinishing “mini labs” that popped up in every chain drug store, camera shop and mini mall. As soon as that entire vertically integrated business was challenged by kids with smart phones posting pictures to Flickr, Photobucket, and now Facebook, the consumer business entered its denouement. Doesn’t matter that Kodak invested in Ophoto for digital image sharing, or that they make a really nice waterproof digital video camera. The higher end camera companies were able to continue to push professional grade innovation down into the consumer space, and for hack photographers like me, better glass and effectively zero cost of “wasted frames” meant that I began taking many, many more pictures than before. Every picture I take goes into an email, through MMS, up on SmugMug, or onto Facebook. Kodak adds no value to those processes, so I became a Kodak non-consumer.
Kodak bet against networking. Their business model was not predicated on telling analog stories using digital images. Adobe (Lightroom and Photoshop, not to mention the rest of their suite) and Smugmug (for high volume sharing and archival) represent the endpoints that Kodak could very well have defined had they bet that broadband networks would be cheap, ubiquitous and intimately attached to the vast majority of imaging devices (read: camera phones). They would have created a vertically integrated value chain from image capture to context (borders, ribbons, tags, clean up, editing) to archival to personal narrative. It’s not just the consumer business — Kodak also had a large medical business (X-rays and medical films). If you’ve read stories about remote radiology or remote diagnostics, you’ve seen how networking and digital imaging conspired against Kodak there as well. Both aspects are necessary; simply having great digital imaging but no networking capability means you’re making analog prints and using FedEx as your network layer to get a second opinion.
Moral of the story: You can’t stop Moore’s Law and Metcalfe’s Law from disrupting businesses. If your business model changes as a result of netowrking, you need to figure out how to deal with it. Once the publishers realized that amazon.com is a re-intermediator, not a dis-intermediator, and that building marketing, pricing and distribution relationships with amazon.com would actually increase sales of their entire front and back catalogs, they survived. Everyone who had a Brownie camera, who waited patiently for the fat picture envelope to return from Rochester, New York, is a bit sadder that the Kodachrome is being taken away.