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Originally Posted by pmbailey
The sad part of the Kodak story is, that they got addicted to the margins they made with film and processing. As a side note they were early into digital photography, but still addicted to the processing margins, whereas they should have started downsizing when the digital revolution started coming.
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I'm not convinced this is the reason. I've read a number of stories about Kodak that tried to paint them as "didn't want to change, blah, blah, blah". I think they just couldn't hack it in the digital camera world which was tied closely to computer electronics, had heavy competition and small profits.
Here's a story from 2006:
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"When Eastman Kodak (EK ) vowed in 2000 to become a leader in digital cameras, the idea seemed ludicrous. The old-line Rochester (N.Y.) company had film and print all through its DNA. Yet by 2005, Kodak ranked No. 1 in the U.S. in digital camera sales. Its digital sales surged 40%, to $5.7 billion, even as its film-based businesses fell 18%.
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So why does Kodak Chief Executive Antonio M. Perez now dump on digital cameras, calling them a "crappy business"? Simple: While blazing growth of camera sales has helped blunt the effects of Kodak's fast-fading film revenues, it hasn't replaced the rich profits of the film business. Even the best mass-market cameras yield slim profit margins. So, although Kodak's digital camera business was a roaring sales success, it turned out to be a crushing profit disappointment.
Mistakes Made On The Road To Innovation
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It's also worth pointing out that the digital camera business is getting hammered by the existence of cameras in phones. This has lead people to skip buying the whole camera and just use their phone's camera. I remember the "flip camera" (those small one-button video cameras) being the coolest thing a few years ago, but their business also got hammered, too: "RIP Flip Camera: Cisco Restructures"
http://blogs.wsj.com/deals/2011/04/1...-restructures/