The Rise & Fall of the Kodak Empire:
Part 2: How the Colossus of Film was broken by a disruptive technology
By Jason Schneider
Kodak did not “snatch defeat from the jaws of victory” as many have claimed, but the company did miss many opportunities by not having a clear and consistent strategy. This would have helped, but it wouldn’t have prevented the eventual collapse of film, and its dire consequences.
Kodak’s Electronic Still Camera Prototype of 1975: A secret until 2001!
Back in 1974, Gareth Lloyd, a supervisor at the KAD Research Lab, creatively challenged Steve Sasson, a newly hired engineer from Rensselaer Polytechnic Institute (RPI), to investigate the imaging potential of Fairchild’s newly developed 100 x 100-pixel monochrome charge-coupled device (CCD) that could capture an image and store it electronically (something nobody knew how to do at the time). On his own Sasson took the extra step (with Lloyd's approval) of building a handheld digital camera. After working diligently for over a year with the assistance of Jim Schueckler, an outstanding technician, he succeeded. Sasson’s prototype was about the size of a large toaster, weighed nearly 8 pounds, and could record an image on an audiocassette in abut 20 seconds. Although regarded as a curiosity, Lloyd and Sasson filed for a patent presciently calling it an Electronic Still Camera, and the patent was issued in 1978. Sasson was not encouraged to speak about it except at a few early management demos, and when his prototype was about to be tossed out in a lab move, he brought it home and stashed it in his basement! Decades later around 2001 when Kodak patents were coming under scrutiny, he was officially asked to speak about it.
Not all electronic cameras are digital cameras because a CCD is not inherently a digital device—it spatially samples packets of photons and converts them into electrons that are output as an analog voltage. To store those same image data in a digital format they must be converted into digital steplike signals using an analog-to-digital (A-to-D) converter to create discrete (digital) signals from the smooth analog signals. An electronic camera employing an A-to-D converter and capable of storing the resultant digital is called a digital camera. Sasson was trying to make his camera portable, so he wanted to “freeze time” by quickly converting the analog output of the CCD to digital signals and storing the output (4 bits per pixel) in twelve 4096-bit dynamic memory chips that has just become available.
Steve Sasson holding his prototype of the world's first digital still camera. He rescued it from potential disassembly by stashing it in his office! Note: The camera is currently on loan to the George Eastman Museum in Rochester, NY and will be on display as part of its 75th Anniversary celebration which opens on October 5th 2024.
On November 17 2009, Steve Sasson received the National Medal of Technology and Innovation from President Obama for “the invention of the digital camera, which has revolutionized the way images are captured, stored, and shared, thereby creating new opportunities for commerce, education, and for improved worldwide communication.”
Bayer Color Filter Array
It's noteworthy that the high quality, full color digital images we enjoy today were made possible by another Kodak researcher, Bryce Bayer, who invented the Bayer Pattern Filter Array that allows CCDs (and CMOS sensors) to capture color picture data using an interpolation scheme to reconstruct the full-color image. This ingenious system is based on the response of the human visual system, that peaks in the green wavelengths, and is another great example of how Kodak electronics technology changed the world.
Bayer Color Filter Array invented by Kodak researcher Bryce Bayer allowed full color digital capture and used in most current digital cameras.
Kodak Develops the first Megapixel CCD Sensor….but
In 1986, Kodak scientists invented the first megapixel CCD sensor capable of recording 1.4MP, sufficient to produce a photo quality 5 x 7-inch print. But even though these prints were being made and the results were clearly visible the term “photo-quality” was not allowed to be used to describe any electronic photo products for several years thereafter because, you guessed it, the term might encourage electronics to advance, hastening the demise of film; in other words, “It might hurt film.” Nevertheless, in 1985, Kodak reshaped its Consumer Electronic Division (CED) into a new business unit called the Electronic Photography Division (EPD) that concentrated on electronic products and systems that did not directly use Kodak’s mainstay, silver-halide photographic processes. But the EPD unit did work on products that could exchange images between traditional and electronic modes—in short, hybrid products. Such were the cross currents within Kodak at the time, and they resulted in the Kodak Still Video System, and the prototype SV8300 of 1986, the first Kodak Electronic Still Camera Design, which wasn’t digital because it recorded images on a SFV disc using analog video recording.
The Emmy Award Winning Kodak SV9600 Still Video Transceiver, 1987
In response to strong customer demand for a device that could electronically transmit high quality color images between two sites, Kodak created its first all-digital product, the SV9600 Still Video Transceiver. It used a digital image compression technology developed by Majid Rabbani of Kodak Research Labs that later became universally known as JPEG, an acronym for Joint Photographic Experts Group, the international standards body that officially established the standard in 1992. Both JPEG and DSC coefficients were weighted in accordance with a model of the human visual system (HVS), a patented Kodak invention that Kodak gave away under free license to JPEG so all parties to the JPEG standard could agree and the standard could be born. The SV9600 was able to send a color picture over standard phone lenes in under 60 sec, with a 9600-bps modem, a big deal in the days before public internet. The SV9600 was used to send some vital news pictures of the 1989 Tiannamen Square incident when China had blocked all video satellite pictures, and the media exposure resulted in the Kodak SV9600 Still Video Transceiver being given an Emmy Award (albeit a “nerd’ Emmy Award that was not presented in prime time).
Kodak SV9600 Still Video Transceiver of 1987 surmounted by its Emmy Award presented to Kodak for its "outstanding technical achievement."
The Sterling Drug Acquisition: A bad (and costly) mistake
In 1988 Kodak acquired Sterling Drug, Inc. for $5.1 billion, a move designed to provide the infrastructure and marketing ability Kodak needed to participate in the highly profitable ethical and over-the-counter drug market. The idea was that Kodak would leverage its expertise in the chemistry to achieve higher profit margins, a new product line that could potentially make as much money as film. Unfortunately, Kodak didn’t know much about the pharmaceutical industry or how fiercely competitive it was, and the venture was ultimately unsuccessful. In 1994 Kodak sold Sterling and its non-imaging, health-related businesses, and it’s estimated that the 1988-1994 adventure cost Kodak about $10 billion, causing Kodak to go into debt.
Polaroid Damage Settlement: Wrongly decided? Maybe, but costly.
In 1976 Polaroid filed a lawsuit against Kodak for patent infringement on its system of instant picture photography that was allegedly used in Kodak Instant Cameras starting in 1976. Polaroid asked for $5.7 billion in damages, the suit was settled in Polaroid's favor in 1985, and a cash settlement of around $925 million was negotiated in 1990--still a lot of money for Kodak to pay out, and at a bad time. Some experts claim the suit was wrongly because the decision was largely based on “the obvious use of an un-patentable roller that was employed to spread the developer,” but the decision stood, and Kodak had to pay up.
Kodak EK4 Instant Camera of 1976, Kodak's first instant picture camera. Reviewers said it yielded prints with more vivid colors than Polaroid's.
At the beginning of the 1980s Kodak had no debt on its balance sheet, following the longstanding practice of its founder, George Eastman. At the end of 1989, Kodak’s long-term liabilities totaled $9 billion.
Kodak DCS 100, 1991. The first digital SLR offered for sale to the public, the DCS 100 is at once a landmark camera, and one that shows just how far digital imaging had progressed in a relatively short time. Essentially a Nikon F3 incorporating a 1.4-megapixel Kodak CCD image sensor measuring 20.5 x 16.4mm, the DCS 100 required a heavy, bulky tethered monitor/control unit, had 200MB of internal flash memory and yielded SCSI image files. Its small CCD meant that a 28mm lens provided an angle of view equivalent to an 80mm lens on 35mm. The whole rig was carried around in a large backpack, and it cost over $20,000. Other features: Manual focus, aperture-priority automation, electronically controlled shutter speeds 8-1/2000 sec, and a 4-inch monitor. The following year (1992), Kodak brought out the improved, 1.54-megapixel DCS 200, which was available in five variants (color and black & white, with and without integrated hard disk, and the “Wheelcam,” (which provided color by capturing separate green, red, and blue exposures.) Despite their limitations, the DCS 100 and 200 sparked sufficient technical interest and user-involvement to pave the way for today’s vastly improved digital SLRs. Today the Kodak DCS 100 is considered a historically significant (and pricey) collectible.
Kodak DCS 100 of 1991, the first DSLR sold to the public, was essentially a Nikon F3 incorporating a 1.4-megapixel Kodak CCD image sensor.
Kodak’s first Point-and-Shoot digital camera
In March 1995 Kodak unveiled the Kodak DC40 Point-and-Shoot digital camera that allowed you to capture images, and quickly transfer them to your computer to save them, share them, or manipulate them using image-editing software. Flat form and compact the DC40 featured flash, timer, and exposure settings, a built-in lens cover, battery status display, energy saving sleep mode, a choice of battery power or AC adapter, and the ability to add lens attachments. It had a 504 x 756-pixel CCD and sold for $960. It resembles the Apple Quicktake (which was largely designed by Kodak engineers) uses virtually the same internal electronics, and sold quite well.
Kodak DC40 Point-and-Shoot digital camera of 1995 had a 504 x 756-pixel CCD and sold for $960. It had a front thread for lens attachments.
A ‘kick-ass” Kodak DSLR
The Kodak Professional DCS 520 of 1998 was a handsome, relatively compact Canon-based dual-branded DSLR with a 1152 x 1728-pixel sensor (almost 2MP) and a Bayer RGB color filter array that debuted at the PMA show at $14,995. It sold well and was popular with photojournalists and early adopter enthusiasts.
The Kodak Professional DCS 520 of 1998, a handsome, Canon-based DSLR with a nearly 2MP sensor debuted at $14,995 and sold well.
The last great Kodak DSLR
A great new Kodak professional DSLR was announced at Photokina 2002, and it’s a testament of the stunning advances of digital photography (including those by Kodak) in an amazingly short time. The robust full-featured Kodak DCS Pro 14n offered 14-megapixel resolution at a price of $4,995. Regrettably it was the last if the breed since Kodak decided to exit the professional camera business due to (what else?) lack of profit. Still it seemed like a bad time to quit the pro camera business when it was delivering so much in terns od customer value.
Kodak DCS Pro 14n of 2002 offered 14-megapixel resolution at a then reasonable price of $4,995, but then Kodak quit the pro DSLR market.
More consumer digital cameras
In 2005 Kodak released the EasyShare One, the world’s first wireless consumer digital camera with the ability to e-mail images directly from the camera (yup, before the iPhone; yet another example of them being too early to the party!). In addition to Wi-Fi capability, it had an articulated three-inch LCD display screen and 3x optical zoom, and it allowed online browsing of photo albums at the Kodak EasyShare Gallery. Initially offered with four megapixels of resolution at $599, it was soon joined by a six-megapixel version.
Kodak EasyShare One of 2005. First wireless consumer digital camera that let you select and send e-mail images directly from the camera
In 2006, Kodak brought forth the world’s first dual-lens digital camera, the sleek Kodak EasyShare V570 Zoom. Kodak followed up by releasing two more breakthrough designs, the Kodak EasyShare V610 Dual Lens, the world’s smallest camera to feature a 10x optical zoom lens, and the Kodak EasyShare V705 Dual Lens digital camera, the world’s smallest ultra-wide-angle optical zoom digital camera. In 2007, they released the Kodak EasyShare C513 featuring the company’s innovative low cost 5MP CMOS sensor and priced at under $100! Kodak may have been struggling but that didn’t prevent them from innovating.
Kodak V570 of 2006, world's first dual-lens digital camera, was a sleek compact design. It also had two 5MP sensors, one for each lens.
The inexorable march of digital camera sales
Sometime around 2003, the lines in the graphs representing the ascendence of digital camera sales and the decline in film camera sales crossed, and by 2010 the sharp upward slope of digital camera sales landed at about 25 million units (down from about 28 million in 2007) while sales of film cameras had sharply decreased to virtually nil. Kodak’s cash cow had been milked dry, the 100-plus-year era of silver-halide supremacy was over, and neither Kodak nor the world of imaging would ever be the same.
Understanding Kodak’s Decline i
How did Kodak, one of the most powerful companies in the world, devolve into bankruptcy in 2012 before re-emerging in 2013 as a viable but much smaller enterprise with a market capitalization of less than $1 billion? Certainly, Kodak executives made mistakes, many of which have been noted here, and missed opportunities. Nevertheless, it was Steve Sasson, a Kodak electronics engineer, who created the first working prototype of a digital camera, Bryce Bayer another Kodak engineer, who made full color digital photography possible by creating the Bayer Pattern Color Filter Array used in almost every digital camera and cell phone, and it was brilliant Kodak scientists who created the first 1 Megapixel CCD, and the first 5MP CMOS sensor.
Ultimately Kodak invested billions to develop marketable digital cameras, but understandably they also went to great lengths to preserve the viability of film, a product that had the highest profit margin of any product sold by a Fortune 500 company. Indeed, it was the profit from film sales, fueled by creating a mass market for taking and printing out pictures, that enabled Kodak to expand, diversify, and grow into the world-dominating monopoly it was for at least half a century, from the early 1920s through the 1960s.
Many pundits have conjectured that if the Kodak execs who witnessed the demonstration of Steve Sasson’s ingenious but clunky, low-res black & white digital camera prototype in the ‘70s had had the vision to see it as an emerging technology that would eventually supplant film, they would have acted differently. They wouldn’t have told Sasson, “That’s cute— but don’t tell anyone about it,” as he revealed to the New York Times. And they wouldn’t have responded to every advance in digital technology made by Kodak’s own scientists and engineers with the curt question, “Will it hurt film?” as documented by Brad Paxton (general manager and vice president of both the Electronic Photography and Printer Product Divisions) in his seminal book, Pictures, Pop Bottles, and Pills, Kodak Electronics Technology That Made a Better World But Didn’t Save the Day, Fossil Press. Instead, they would have made digital imaging a top priority from the outset, invested heavily in its development, and made digital a robust parallel track alongside film.
Brad Paxton's seminal book gives an insider's perspective on Kodak's fraught relationship with electronics technology over the years. It's the source of much of the material used in this article (Parts 1 & 2) and I extend my heartfelt gratitude to the author for his facts and insights.
However, no capitalist enterprise in the history of the world ever did that, and it’s doubtful that even such a radical strategy would have altered the long-term outcome. There is simply no product or service with the profit margin of film, one if the most complex consumer products on the planet. The overall profit margins on digital photography (including cameras and cell phones which must be refreshed with new models on a 2-3-year cycle) are 12-15% at best, not 70-80% or more as they are with film. Indeed, it was the desperate pursuit of higher profit margins that led Kodak to purchase Sterling Drug, which was outside their wheelhouse and became a financial disaster. In short, once digital became the primary mode of image capture Kodak was destined to become a smaller company and even the wisest decisions and most brilliant strategies would have only extended the downsizing time frame.
Kodak made other mistakes of course, mostly out of fear and aversion to risk. Management assumed they were still in the printout business when the paradigm had already shifted to online sharing. Like many capitalist enterprises they were too focused on the short-term bottom line, the present rather than the future, and this led to missed opportunities which led to other companies such as Fuji filling in the gap. And according to Brad Paxton, Kodak did not have a clear understanding of what business they were in (the picture business) and as a result did not exhibit the “constancy of purpose” necessary for success over the long haul
As Scott D. Anthony concluded in his excellent article Kodak’s Downfall Wasn’t About Technology in the July 2016 edition of Harvard Business Review, “…failure is usually an inability to truly embrace the new business models that disruptive change opens up. Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online. Where they failed was in realizing that online photo sharing was the new business, not just a way to expand the printing business. If your company is beginning to talk about a digital transformation, make sure you ask three questions: What business are we in today? What new opportunities does the disruption afford? and What capabilities do we need to realize these opportunities?”
“Kodak remains a sad story of potential lost. The American icon had the talent the money, and even the foresight to make the transition. Instead, it ended up the victim of the aftershocks of a disruptive change.”
Part 2: How the Colossus of Film was broken by a disruptive technology
By Jason Schneider
Kodak did not “snatch defeat from the jaws of victory” as many have claimed, but the company did miss many opportunities by not having a clear and consistent strategy. This would have helped, but it wouldn’t have prevented the eventual collapse of film, and its dire consequences.
Kodak’s Electronic Still Camera Prototype of 1975: A secret until 2001!
Back in 1974, Gareth Lloyd, a supervisor at the KAD Research Lab, creatively challenged Steve Sasson, a newly hired engineer from Rensselaer Polytechnic Institute (RPI), to investigate the imaging potential of Fairchild’s newly developed 100 x 100-pixel monochrome charge-coupled device (CCD) that could capture an image and store it electronically (something nobody knew how to do at the time). On his own Sasson took the extra step (with Lloyd's approval) of building a handheld digital camera. After working diligently for over a year with the assistance of Jim Schueckler, an outstanding technician, he succeeded. Sasson’s prototype was about the size of a large toaster, weighed nearly 8 pounds, and could record an image on an audiocassette in abut 20 seconds. Although regarded as a curiosity, Lloyd and Sasson filed for a patent presciently calling it an Electronic Still Camera, and the patent was issued in 1978. Sasson was not encouraged to speak about it except at a few early management demos, and when his prototype was about to be tossed out in a lab move, he brought it home and stashed it in his basement! Decades later around 2001 when Kodak patents were coming under scrutiny, he was officially asked to speak about it.
Not all electronic cameras are digital cameras because a CCD is not inherently a digital device—it spatially samples packets of photons and converts them into electrons that are output as an analog voltage. To store those same image data in a digital format they must be converted into digital steplike signals using an analog-to-digital (A-to-D) converter to create discrete (digital) signals from the smooth analog signals. An electronic camera employing an A-to-D converter and capable of storing the resultant digital is called a digital camera. Sasson was trying to make his camera portable, so he wanted to “freeze time” by quickly converting the analog output of the CCD to digital signals and storing the output (4 bits per pixel) in twelve 4096-bit dynamic memory chips that has just become available.
Steve Sasson holding his prototype of the world's first digital still camera. He rescued it from potential disassembly by stashing it in his office! Note: The camera is currently on loan to the George Eastman Museum in Rochester, NY and will be on display as part of its 75th Anniversary celebration which opens on October 5th 2024.
On November 17 2009, Steve Sasson received the National Medal of Technology and Innovation from President Obama for “the invention of the digital camera, which has revolutionized the way images are captured, stored, and shared, thereby creating new opportunities for commerce, education, and for improved worldwide communication.”
Bayer Color Filter Array
It's noteworthy that the high quality, full color digital images we enjoy today were made possible by another Kodak researcher, Bryce Bayer, who invented the Bayer Pattern Filter Array that allows CCDs (and CMOS sensors) to capture color picture data using an interpolation scheme to reconstruct the full-color image. This ingenious system is based on the response of the human visual system, that peaks in the green wavelengths, and is another great example of how Kodak electronics technology changed the world.
Bayer Color Filter Array invented by Kodak researcher Bryce Bayer allowed full color digital capture and used in most current digital cameras.
Kodak Develops the first Megapixel CCD Sensor….but
In 1986, Kodak scientists invented the first megapixel CCD sensor capable of recording 1.4MP, sufficient to produce a photo quality 5 x 7-inch print. But even though these prints were being made and the results were clearly visible the term “photo-quality” was not allowed to be used to describe any electronic photo products for several years thereafter because, you guessed it, the term might encourage electronics to advance, hastening the demise of film; in other words, “It might hurt film.” Nevertheless, in 1985, Kodak reshaped its Consumer Electronic Division (CED) into a new business unit called the Electronic Photography Division (EPD) that concentrated on electronic products and systems that did not directly use Kodak’s mainstay, silver-halide photographic processes. But the EPD unit did work on products that could exchange images between traditional and electronic modes—in short, hybrid products. Such were the cross currents within Kodak at the time, and they resulted in the Kodak Still Video System, and the prototype SV8300 of 1986, the first Kodak Electronic Still Camera Design, which wasn’t digital because it recorded images on a SFV disc using analog video recording.
The Emmy Award Winning Kodak SV9600 Still Video Transceiver, 1987
In response to strong customer demand for a device that could electronically transmit high quality color images between two sites, Kodak created its first all-digital product, the SV9600 Still Video Transceiver. It used a digital image compression technology developed by Majid Rabbani of Kodak Research Labs that later became universally known as JPEG, an acronym for Joint Photographic Experts Group, the international standards body that officially established the standard in 1992. Both JPEG and DSC coefficients were weighted in accordance with a model of the human visual system (HVS), a patented Kodak invention that Kodak gave away under free license to JPEG so all parties to the JPEG standard could agree and the standard could be born. The SV9600 was able to send a color picture over standard phone lenes in under 60 sec, with a 9600-bps modem, a big deal in the days before public internet. The SV9600 was used to send some vital news pictures of the 1989 Tiannamen Square incident when China had blocked all video satellite pictures, and the media exposure resulted in the Kodak SV9600 Still Video Transceiver being given an Emmy Award (albeit a “nerd’ Emmy Award that was not presented in prime time).
Kodak SV9600 Still Video Transceiver of 1987 surmounted by its Emmy Award presented to Kodak for its "outstanding technical achievement."
The Sterling Drug Acquisition: A bad (and costly) mistake
In 1988 Kodak acquired Sterling Drug, Inc. for $5.1 billion, a move designed to provide the infrastructure and marketing ability Kodak needed to participate in the highly profitable ethical and over-the-counter drug market. The idea was that Kodak would leverage its expertise in the chemistry to achieve higher profit margins, a new product line that could potentially make as much money as film. Unfortunately, Kodak didn’t know much about the pharmaceutical industry or how fiercely competitive it was, and the venture was ultimately unsuccessful. In 1994 Kodak sold Sterling and its non-imaging, health-related businesses, and it’s estimated that the 1988-1994 adventure cost Kodak about $10 billion, causing Kodak to go into debt.
Polaroid Damage Settlement: Wrongly decided? Maybe, but costly.
In 1976 Polaroid filed a lawsuit against Kodak for patent infringement on its system of instant picture photography that was allegedly used in Kodak Instant Cameras starting in 1976. Polaroid asked for $5.7 billion in damages, the suit was settled in Polaroid's favor in 1985, and a cash settlement of around $925 million was negotiated in 1990--still a lot of money for Kodak to pay out, and at a bad time. Some experts claim the suit was wrongly because the decision was largely based on “the obvious use of an un-patentable roller that was employed to spread the developer,” but the decision stood, and Kodak had to pay up.
Kodak EK4 Instant Camera of 1976, Kodak's first instant picture camera. Reviewers said it yielded prints with more vivid colors than Polaroid's.
At the beginning of the 1980s Kodak had no debt on its balance sheet, following the longstanding practice of its founder, George Eastman. At the end of 1989, Kodak’s long-term liabilities totaled $9 billion.
Kodak DCS 100, 1991. The first digital SLR offered for sale to the public, the DCS 100 is at once a landmark camera, and one that shows just how far digital imaging had progressed in a relatively short time. Essentially a Nikon F3 incorporating a 1.4-megapixel Kodak CCD image sensor measuring 20.5 x 16.4mm, the DCS 100 required a heavy, bulky tethered monitor/control unit, had 200MB of internal flash memory and yielded SCSI image files. Its small CCD meant that a 28mm lens provided an angle of view equivalent to an 80mm lens on 35mm. The whole rig was carried around in a large backpack, and it cost over $20,000. Other features: Manual focus, aperture-priority automation, electronically controlled shutter speeds 8-1/2000 sec, and a 4-inch monitor. The following year (1992), Kodak brought out the improved, 1.54-megapixel DCS 200, which was available in five variants (color and black & white, with and without integrated hard disk, and the “Wheelcam,” (which provided color by capturing separate green, red, and blue exposures.) Despite their limitations, the DCS 100 and 200 sparked sufficient technical interest and user-involvement to pave the way for today’s vastly improved digital SLRs. Today the Kodak DCS 100 is considered a historically significant (and pricey) collectible.
Kodak DCS 100 of 1991, the first DSLR sold to the public, was essentially a Nikon F3 incorporating a 1.4-megapixel Kodak CCD image sensor.
Kodak’s first Point-and-Shoot digital camera
In March 1995 Kodak unveiled the Kodak DC40 Point-and-Shoot digital camera that allowed you to capture images, and quickly transfer them to your computer to save them, share them, or manipulate them using image-editing software. Flat form and compact the DC40 featured flash, timer, and exposure settings, a built-in lens cover, battery status display, energy saving sleep mode, a choice of battery power or AC adapter, and the ability to add lens attachments. It had a 504 x 756-pixel CCD and sold for $960. It resembles the Apple Quicktake (which was largely designed by Kodak engineers) uses virtually the same internal electronics, and sold quite well.
Kodak DC40 Point-and-Shoot digital camera of 1995 had a 504 x 756-pixel CCD and sold for $960. It had a front thread for lens attachments.
A ‘kick-ass” Kodak DSLR
The Kodak Professional DCS 520 of 1998 was a handsome, relatively compact Canon-based dual-branded DSLR with a 1152 x 1728-pixel sensor (almost 2MP) and a Bayer RGB color filter array that debuted at the PMA show at $14,995. It sold well and was popular with photojournalists and early adopter enthusiasts.
The Kodak Professional DCS 520 of 1998, a handsome, Canon-based DSLR with a nearly 2MP sensor debuted at $14,995 and sold well.
The last great Kodak DSLR
A great new Kodak professional DSLR was announced at Photokina 2002, and it’s a testament of the stunning advances of digital photography (including those by Kodak) in an amazingly short time. The robust full-featured Kodak DCS Pro 14n offered 14-megapixel resolution at a price of $4,995. Regrettably it was the last if the breed since Kodak decided to exit the professional camera business due to (what else?) lack of profit. Still it seemed like a bad time to quit the pro camera business when it was delivering so much in terns od customer value.
Kodak DCS Pro 14n of 2002 offered 14-megapixel resolution at a then reasonable price of $4,995, but then Kodak quit the pro DSLR market.
More consumer digital cameras
In 2005 Kodak released the EasyShare One, the world’s first wireless consumer digital camera with the ability to e-mail images directly from the camera (yup, before the iPhone; yet another example of them being too early to the party!). In addition to Wi-Fi capability, it had an articulated three-inch LCD display screen and 3x optical zoom, and it allowed online browsing of photo albums at the Kodak EasyShare Gallery. Initially offered with four megapixels of resolution at $599, it was soon joined by a six-megapixel version.
Kodak EasyShare One of 2005. First wireless consumer digital camera that let you select and send e-mail images directly from the camera
In 2006, Kodak brought forth the world’s first dual-lens digital camera, the sleek Kodak EasyShare V570 Zoom. Kodak followed up by releasing two more breakthrough designs, the Kodak EasyShare V610 Dual Lens, the world’s smallest camera to feature a 10x optical zoom lens, and the Kodak EasyShare V705 Dual Lens digital camera, the world’s smallest ultra-wide-angle optical zoom digital camera. In 2007, they released the Kodak EasyShare C513 featuring the company’s innovative low cost 5MP CMOS sensor and priced at under $100! Kodak may have been struggling but that didn’t prevent them from innovating.
Kodak V570 of 2006, world's first dual-lens digital camera, was a sleek compact design. It also had two 5MP sensors, one for each lens.
The inexorable march of digital camera sales
Sometime around 2003, the lines in the graphs representing the ascendence of digital camera sales and the decline in film camera sales crossed, and by 2010 the sharp upward slope of digital camera sales landed at about 25 million units (down from about 28 million in 2007) while sales of film cameras had sharply decreased to virtually nil. Kodak’s cash cow had been milked dry, the 100-plus-year era of silver-halide supremacy was over, and neither Kodak nor the world of imaging would ever be the same.
Understanding Kodak’s Decline i
How did Kodak, one of the most powerful companies in the world, devolve into bankruptcy in 2012 before re-emerging in 2013 as a viable but much smaller enterprise with a market capitalization of less than $1 billion? Certainly, Kodak executives made mistakes, many of which have been noted here, and missed opportunities. Nevertheless, it was Steve Sasson, a Kodak electronics engineer, who created the first working prototype of a digital camera, Bryce Bayer another Kodak engineer, who made full color digital photography possible by creating the Bayer Pattern Color Filter Array used in almost every digital camera and cell phone, and it was brilliant Kodak scientists who created the first 1 Megapixel CCD, and the first 5MP CMOS sensor.
Ultimately Kodak invested billions to develop marketable digital cameras, but understandably they also went to great lengths to preserve the viability of film, a product that had the highest profit margin of any product sold by a Fortune 500 company. Indeed, it was the profit from film sales, fueled by creating a mass market for taking and printing out pictures, that enabled Kodak to expand, diversify, and grow into the world-dominating monopoly it was for at least half a century, from the early 1920s through the 1960s.
Many pundits have conjectured that if the Kodak execs who witnessed the demonstration of Steve Sasson’s ingenious but clunky, low-res black & white digital camera prototype in the ‘70s had had the vision to see it as an emerging technology that would eventually supplant film, they would have acted differently. They wouldn’t have told Sasson, “That’s cute— but don’t tell anyone about it,” as he revealed to the New York Times. And they wouldn’t have responded to every advance in digital technology made by Kodak’s own scientists and engineers with the curt question, “Will it hurt film?” as documented by Brad Paxton (general manager and vice president of both the Electronic Photography and Printer Product Divisions) in his seminal book, Pictures, Pop Bottles, and Pills, Kodak Electronics Technology That Made a Better World But Didn’t Save the Day, Fossil Press. Instead, they would have made digital imaging a top priority from the outset, invested heavily in its development, and made digital a robust parallel track alongside film.
Brad Paxton's seminal book gives an insider's perspective on Kodak's fraught relationship with electronics technology over the years. It's the source of much of the material used in this article (Parts 1 & 2) and I extend my heartfelt gratitude to the author for his facts and insights.
However, no capitalist enterprise in the history of the world ever did that, and it’s doubtful that even such a radical strategy would have altered the long-term outcome. There is simply no product or service with the profit margin of film, one if the most complex consumer products on the planet. The overall profit margins on digital photography (including cameras and cell phones which must be refreshed with new models on a 2-3-year cycle) are 12-15% at best, not 70-80% or more as they are with film. Indeed, it was the desperate pursuit of higher profit margins that led Kodak to purchase Sterling Drug, which was outside their wheelhouse and became a financial disaster. In short, once digital became the primary mode of image capture Kodak was destined to become a smaller company and even the wisest decisions and most brilliant strategies would have only extended the downsizing time frame.
Kodak made other mistakes of course, mostly out of fear and aversion to risk. Management assumed they were still in the printout business when the paradigm had already shifted to online sharing. Like many capitalist enterprises they were too focused on the short-term bottom line, the present rather than the future, and this led to missed opportunities which led to other companies such as Fuji filling in the gap. And according to Brad Paxton, Kodak did not have a clear understanding of what business they were in (the picture business) and as a result did not exhibit the “constancy of purpose” necessary for success over the long haul
As Scott D. Anthony concluded in his excellent article Kodak’s Downfall Wasn’t About Technology in the July 2016 edition of Harvard Business Review, “…failure is usually an inability to truly embrace the new business models that disruptive change opens up. Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online. Where they failed was in realizing that online photo sharing was the new business, not just a way to expand the printing business. If your company is beginning to talk about a digital transformation, make sure you ask three questions: What business are we in today? What new opportunities does the disruption afford? and What capabilities do we need to realize these opportunities?”
“Kodak remains a sad story of potential lost. The American icon had the talent the money, and even the foresight to make the transition. Instead, it ended up the victim of the aftershocks of a disruptive change.”
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