On September 4, 1888 George Eastman and Henry A. Strong founded Eastman Kodak. The company held a dominant position in the photographic film industry throughout most of the 20th century and their ubiquity was such that their “Kodak moment” tagline became a popular figure of speech to describe a personal event that demanded to be recorded for posterity.
Despite employing 140,000 workers at its height, and in 1996 being ranked the fourth most valuable brand in the United States behind Disney, Coca-Cola and McDonald’s, Kodak had begun to struggle financially by the late 1990s. This was a result of a decline in sales of photographic film and the company’s sloth-like demeanour in transitioning to new digital photography technologies.
The great irony is that Kodak or rather, a company engineer called Steve Sasson actually invented the first digital camera. It was a toaster-sized contraption that could save images using electronic circuits. The images were then transferred onto a cassette tape and were rendered viewable by attaching the camera to a TV screen, a process that took about 23 seconds.
This happened back in 1975, long before the digital age of photography had really started. Upon unveiling their device to Kodak’s bosses, Mr Sasson and his colleagues were met with blank faces as management didn’t see the full potential of digital photography.
“It is funny now to look back on this project and realise that we were not really thinking of this as the world’s first digital camera,” Mr Sasson later wrote. “We were looking at it as a distant possibility. Maybe a line from the technical report written at the time sums it up best: ‘The camera described in this report represents a first attempt demonstrating a photographic system which may, with improvements in technology, substantially impact the way pictures will be taken in the future.’ But in reality, we had no idea.”
As far as the suits at Kodak were concerned, going digital meant killing film, something the company was not prepared to consider as it had achieved such a dominant position and more importantly, huge profits from the older medium.
Mr Sasson realises in hindsight that he didn’t exactly win over the Kodak top brass when he unveiled his new toy: “In what has got to be one of the most insensitive choices of demonstration titles ever, we called it ‘Film-less Photography’. Talk about warming up your audience!”
In 1976, Kodak had a 90% market share of photographic film sold in the US and it also sold 85% of the cameras. The company’s gradual unravelling can therefore be traced back to the failure of its leaders to recognise the huge potential of Mr Sasson’s invention.
Don Strickland, the former Kodak vice-president who left the company in 1993 because he wasn’t able to persuade the board to manufacture and market a digital camera, put it like this: “We developed the world’s first consumer digital camera but we could not get approval to launch or sell it because of fear of the effects on the film market.”
With the support of Kodak’s CEO back in 1981, the then Head of Market Intelligence Vince Barabba conducted extensive research that examined the disruptive potential of digital photography.
The results of the study showed that digital photography had the potential to replace Kodak’s established film based business, but it also showed that it would take some time for that eventuality to occur and that Kodak had roughly a decade to prepare for the transition.
The problem was that during the 10-year window of opportunity, Kodak did very little to prepare for the oncoming changes. The company ultimately made the very mistake that founder George Eastman had managed to avoid on two occasions previously when he gave up the profitable dry-plate business model to move into film and also when he invested in colour film even though it was inferior to black and white film at the time.
As digital cameras became increasingly more affordable, Kodak experienced a dramatic fall in sales of film, which forced the company to beef up its digital offerings at the turn of the millennium.
Unlike technically elaborate film cameras which can only really be manufactured by companies with large amounts of capital and also require years of R&D to perfect, digital cameras were easy and cheap to produce. As a result, the company slid from number 1 to number 4 in the US for digital camera sales between 2005 and 2007, the year the iphone was released.
By 2010, the company ranked seventh place as traditional cameras began losing market share to smart phones.
Kodak was now struggling to turn a profit and in 2012, the company filed for bankruptcy after laying off thousands of employees.
Kodak ultimately created a digital camera, invested in the technology, and even understood that photos would ultimately be shared online. Where the company failed was in realizing that online photo sharing was the new business and not just an add-on to the existing print based model.
All we would like to say is that no one can be too hard on the Kodak bosses for being sceptical about the first digital camera they invented. The bloody thing looks like it should be toasting the bread required for your breakfast, not taking pictures of it to post on Instagram!