Kodak Inc - a Giant Stumbles

Kodak Inc : A giant stumbles...

The new CEO of Kodak looked out of his office window and wondered when things would turn around for Kodak. After crossing US$ 16 billion in 1995, the company's sales had steadily declined each year since then to dip below US$ 12 billion by 2004. Profits had also halved during this period. Kodak was once more planning to slash several thousand jobs, and transfer more of its manufacturing activities to China – but would that really help the company ?

A century of undisputed leadership

Kodak was founded in 1884 in Rochester, New York and had remained the undisputed leader in the photographic film business, for the next 100 years. Since its early years, Kodak took a view that money in the photography business came from consumables, and not from hardware; thus cameras were sold relatively cheaply and film fuelled Kodak's growth and profitability. For a century, other firms were unable to match up to Kodak's leadership in film technology, which enabled consumers to get much higher which enabled customers to get much higher quality pictures with the Kodak film. Kodak created a strong brand name based on its quality and was able to charge a premium for its products. Kodak's technology leadership and brand name helped it build strong relationships with retailers, and surging sales meant that the company also enjoyed huge economies in film manufacturing. By the 1970s, Kodak enjoyed almost 90% market share in the film business in the US.

The introduction of the Mavica....

In 1981, Sony announced the launch of the world's first film-less digital camera, the Mavica and Kodak wondered what that would mean for photography in future. In 1983, the company began exploring new technologies in digital imaging and started many internal initiatives to develop new digital products in its labs. While Kodak exhibited need to anticipate and pursue new technological developments, the senior management of Kodak still believed in a silver-halide based future wherein these new technologies could be blended with its current products. For the next few years, Kodak spent over US$ billion on digital R&D, which represented over 50% of Kodak's total R&D budget during this period. By 1989, it had developed more than 50 products that involved digital image capture or conversion including electronics image scanner, a digital camera, a scanner, a digital printer, an HDTV projection system, digital CD etc,, Kodak declared that it would be the world's best in chemical and electronics imaging ...

A rival in the core imaging business ....

Between 1983 and 1992, Kodak also diversified into other businesses such as copier services, clinical diagnostics, pharmaceuticals etc., During the same time it also encountered a new rival in its core imaging business.