How Kodak lost focus
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Kodak is due to enter the world of cryptocurrencies. Yes, you read right — the company of little yellow box fame. After a four-month delay, the Kodakcoin initial coin offering (ICO) is set to begin next week, with funding of between US$10M and $50m being sought.
Kodakcoin will be used to pay photographers, help them licence their work and track the unlicensed use of it. This will be the latest crack at reinvention for 130-year-old Kodak — and I got to wondering about corporate makeovers and whether a company can ever really live up to the legacy of its storied past.
While it’s still hard to see the wood for the trees when it comes to cryptocurrencies, one can understand why Kodak has moved (and swiftly, I might add) to play in this area. Remember that this is the company that invented the first prototype of a digital camera in 1975. This is also the company that didn’t back its invention because it was deemed too esoteric. Because Kodak’s film business was printing money (it had captured 90% of the US film market and 85% of all US camera sales) that’s what it chose to focus on. The digital age, a bankruptcy and thousands of job cuts later, Kodak’s fall from grace has been nothing if not spectacular.
In the early 1970s the company was in the so-called “Nifty Fifty”, an unofficial stock index of 50 US com- Kodak was worth $20bn in 1995.
Today it’s worth less than $290m and it has been relegated to life as a penny stock. In its nearsightedness, the company thought that backing its rather obscure new invention would cannibalise its film business — Kodak was so fixated with what it represented at the time that it didn’t think too much about its role in the future. While it was being complacent Nikon, Sony and Canon charged ahead with their digital cameras, and by the time Kodak decided to get in the game it was too late.
It didn’t help when digital cameras became embedded in mobile phones and tablets. Over the years, Kodak’s attempts at a comeback have included investments in inkjet printers, touchscreen sensors, pre-press printing plates and even an Android smartphone with a souped-up camera. Compared to Japanese rival Fujifilm, Kodak, since its heyday, has never really managed to have its “moment”. These days it is a tech company. It sells printing equipment to businesses and specialises in digital flexographic printing on packaging for things ranging from chip packets to perfume bottles. As for film, it has photo kiosks around the world and sells photographic paper.
Fujifilm was quicker in decreasing its reliance on photography revenues by exploring new industries such as health care and cosmetics and then investing heavily in research and development. It also has a successful joint venture with Xerox — another “Nifty Fifty” company that has had to change its spots.