Why Kodak Willingly Ignored the Future of Photography

January 8, 2019

In 1977, Steve Sasson, a Kodak employee, was granted a patent for the world’s first digital camera ー 20 years before the technology really landed among consumers. So why did Kodak go bankrupt in 2012 if the company had the future of photography in its grasp?

FULL TRANSCRIPT

CARL MUELLER: In 1977, Steve Sasson,

CARL MUELLER: an employee for Kodak,

CARL MUELLER: was granted a patent for

CARL MUELLER: the world's first digital camera

CARL MUELLER: 20 years before they became common among consumers.

CARL MUELLER: But according to Sasson in

CARL MUELLER: an interview with The New York Times,

CARL MUELLER: management said, that's cute,

CARL MUELLER: but don't tell anyone about it.

CARL MUELLER: This is the story about how Kodak went from

CARL MUELLER: top of the world to bankruptcy.

CARL MUELLER: [MUSIC] A Kodak moment used to mean something.

CARL MUELLER: The moment that was so

CARL MUELLER: special that you wish you

CARL MUELLER: had a camera to capture it forever.

CARL MUELLER: But it wasn't a camera moment,

CARL MUELLER: it was a Kodak moment.

CARL MUELLER: That's how big Kodak was.

Speaker 2: Oh, boy. We missed you.

Speaker 3: It's a Kodak moment.

CARL MUELLER: [MUSIC] It's size and growth over its existence can

CARL MUELLER: largely be attributed to

CARL MUELLER: the company's willingness to innovate.

CARL MUELLER: In 1888, 34 year old George Eastman of Rochester,

CARL MUELLER: New York, released his Kodak black camera.

CARL MUELLER: The first camera designed to use roll film.

CARL MUELLER: By 1896, Kodak was

CARL MUELLER: the leading supplier of film stock worldwide,

CARL MUELLER: but Eastman and Kodak kept creating.

CARL MUELLER: 1897, the first folding pocket camera

CARL MUELLER: allowed for easy transport.

CARL MUELLER: 1900, the Brownie camera,

CARL MUELLER: one of the earliest cameras designed for mass market.

CARL MUELLER: 1902, the developing machine

CARL MUELLER: let amateurs develop at home without a darkroom.

CARL MUELLER: 1920, the autograph feature.

CARL MUELLER: Tragically, in 1932 at age 77,

CARL MUELLER: Eastman took his own life.

CARL MUELLER: His suicide note read,

CARL MUELLER: my work is done. Why wait?

CARL MUELLER: For the next 45 years,

CARL MUELLER: Kodak continued to invent Kodachrome 1935,

CARL MUELLER: Starmatic 1959, Instamatic 1963,

CARL MUELLER: the carousel projector, 1965.

CARL MUELLER: Innovations is what got Kodak to

CARL MUELLER: the top of the photography world,

CARL MUELLER: but there was one change,

CARL MUELLER: one invention that Kodak couldn't embrace.

CARL MUELLER: Steve Sasson's digital camera.

CARL MUELLER: In 1975, Steve Sasson,

CARL MUELLER: a recent graduate of RPI,

CARL MUELLER: was working at Eastman Kodak in Rochester, New York.

CARL MUELLER: His supervisor, Gareth A. Lloyd,

CARL MUELLER: gave him his first assignment.

CARL MUELLER: Build an electronic camera using a charge-coupled device.

CARL MUELLER: A charge-coupled device captures

CARL MUELLER: light and converts it to digital data.

CARL MUELLER: He did it, but you probably wouldn't recognize it.

CARL MUELLER: It weighed eight pounds,

CARL MUELLER: ran on 16 NiCad batteries and held 30 images.

CARL MUELLER: Nonetheless, it was the world's first digital camera,

CARL MUELLER: and the invention was so impressive,

CARL MUELLER: so game changing, that Kodak wanted it gone.

CARL MUELLER: As late as 1976,

CARL MUELLER: Kodak commanded 90 percent of film sales in the US.

CARL MUELLER: [MUSIC] If this camera hit the market,

CARL MUELLER: executives felt it would cannibalize its film business.

CARL MUELLER: [MUSIC] Kodak which had always embraced holistic,

CARL MUELLER: diverse innovation, chose film over photography.

CARL MUELLER: The near-sighted view allowed

CARL MUELLER: competitors to fill the void.

Speaker 4: Sony has done it again.

Speaker 4: This is the latest in camera technology.

Speaker 4: It is called a Mavica,

Speaker 4: that stands for magnetic video camera.

Speaker 4: It records images on a magnetic disk,

Speaker 4: and then those are transmitted on television.

CARL MUELLER: It stored pictures on two inch floppy disks,

CARL MUELLER: called Mavipacks, that could hold up to 50 color photos.

CARL MUELLER: Other companies followed with their versions.

CARL MUELLER: [NOISE]

Speaker 1: [MUSIC] The digital camera most like

Speaker 1: the ones we have today hit the shelves in 1990.

Speaker 1: The die cam model one. [MUSIC]

Speaker 2: In the future however,

Speaker 2: you may use the camera like this one.

Speaker 2: There is no film and when you want to see your pictures,

Speaker 2: [MUSIC] you simply take them to your computer.

Speaker 1: Finally in 1991, 14 years after

Speaker 1: Kodak was granted the patent for

Speaker 1: the world's first digital camera,

Speaker 1: it released the Kodak digital camera system.

Speaker 1: By that time

Speaker 1: the digital camera market was getting crowded.

Speaker 1: Instead of establishing themselves

Speaker 1: early with the world's first digital camera,

Speaker 1: Kodak was in the middle of the pack and

Speaker 1: still hanging onto a dying industry.

Speaker 1: Ironically, Kodak reached the top of

Speaker 1: the market right before its historic collapse.

Speaker 1: In 1996, Kodak's revenue reached

Speaker 1: nearly 16 billion and

Speaker 1: the company was worth over 31 billion.

Speaker 1: Kodak was the fifth most valuable brand in the world.

Speaker 1: But the repercussions of its inaction over

Speaker 1: the last 20 years were on the horizon.

Speaker 1: Kodak was still a giant.

Speaker 1: So, it began efforts to

Speaker 1: maintain its hold on the industry.

Speaker 1: This is where Kodak made their second big blunder,

Speaker 1: from 1996 to 2012,

Speaker 1: Kodak's business strategy relied on

Speaker 1: a false pretense that people

Speaker 1: wanted hard copies of their photos.

Speaker 1: In 2001, Kodak attribute

Speaker 1: its easy share line of point and shoot cameras.

Speaker 3: Transfer at the touch of a button and

Speaker 3: your pictures are ready to email or print.

Speaker 3: It's digital photography made simple.

Speaker 1: While consumers loved them,

Speaker 1: the easy sure cameras soon became

Speaker 1: commoditized and Kodak struggled to make a profit.

Speaker 1: Next Kodak bought the photo galleries site

Speaker 1: of photo and renamed it Kodak Gallery.

Speaker 1: To complete the final step of the process,

Speaker 1: Kodak set off on its new endeavor, printers.

Speaker 4: Just press a button to get

Speaker 4: real Kodak photos at home without a PC.

Speaker 1: Yet these two failed to reach profitability.

Speaker 1: Kodak found out the hard way that

Speaker 1: people didn't need print photos anymore.

Speaker 1: They now shared them online.

Speaker 1: Photo albums were replaced with

Speaker 1: MySpace, Facebook, and Instagram.

Speaker 5: You don't just go to a party anymore,

Speaker 5: you go to a party with a digital camera and then

Speaker 5: your friends relive the party online.

Speaker 1: While the failure to market the digital camera was

Speaker 1: the mistake that sent Kodak

Speaker 1: on the path toward bankruptcy,

Speaker 1: the mistake that kept them on course was

Speaker 1: the belief that people wanted

Speaker 1: hard copies of their photos.

Speaker 1: In 2008 Kodak got desperate.

Speaker 1: The company began mining its patent portfolio.

Speaker 1: This generated nearly two billion dollars

Speaker 1: in fees over three years.

Speaker 1: By 2010, Kodak dropped to seventh place in

Speaker 1: camera sales behind Canon, Sony, and Nikon.

Speaker 6: Generations of American families captured

Speaker 6: the great milestones of their lives using Kodak cameras.

Speaker 6: But today, you can buy a share of

Speaker 6: Eastman Kodak stock for less than we

Speaker 6: once paid for a roll of Kodachrome film.

Speaker 1: [MUSIC] In 2012, Kodak filed for Chapter 11 bankruptcy.

Speaker 1: One of the great companies of the last century collapsed.

Speaker 1: Kodak is still alive

Speaker 1: today but most of the work is for other companies.

Speaker 1: They provide packaging, functional printing,

Speaker 1: and graphic work for businesses around the world.

Speaker 7: [NOISE] Lots of companies are

Speaker 7: jumping in on the crypto craze trend.

Speaker 7: The most recent is camera company Kodak.

Speaker 1: In a strange turn Kodak announced

Speaker 1: their entry into Bitcoin in January 2018.

Speaker 1: A photographer oriented block chain crypto currency

Speaker 1: used for payments for license and photographs.

Speaker 1: In July 2018, it canceled code coin.

Speaker 1: Kodak's failure to embrace

Speaker 1: the digital camera is

Speaker 1: a lesson on the power of the market.

Speaker 1: No industry or business can resist change and

Speaker 1: you have to adapt even if

Speaker 1: that means competing with yourself. [MUSIC]