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?


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.


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]