imaging markets. - sves-srpt.ac.insves-srpt.ac.in/codingclub/files/20150913130951the rise and fall...

CODING CLUB, SVES, SURYAPET 2

THE RISE AND FALL OF EASTMAN KODAKEASTMAN KODAK


KODAK HISTORYKODAK HISTORY

● KODAKKODAK – A LEADER IN CONSUMER AND BUSINESS IMAGING MARKETS.

● “YOU PRESS THE BUTTON, WE DO THE RESTYOU PRESS THE BUTTON, WE DO THE REST”● Eastman Kodak Co.Eastman Kodak Co. was incorporated in New Jersey in

1991, as successor to the Eastman Dry Plate CoEastman Dry Plate Co..(1880)● Dry Photographic Plate – More Portable and Easier to

Use.● Eastman mass produced plates commercially using a

patented plate coating machine.



● In 1884 Eastman developed Silver HalideSilver Halide paper based photographic roll film.

● In 1888 Eastman invented First Portable Camera.● This Camera used his own patented film, which was

developed using his own proprietary method.● Thus he gained control of all stages of photographic

process.● The popularity of recorded imagesrecorded images business was

immediate, and sales boomed.



4 Primary Objectives of KODAKKODAK

1.Mass Production to Lower Production Costs.

2.Maintaining the lead in technological development.

3.Extensive product advertising.

4.The development of multinational business to exploit world market.



● KODAKKODAK is also supplier of the plastics and Chemicals needed to produce the film, and it made most of the component parts for its cameras.

● To maintain it's competitive advantage, KODAKKODAK continued to heavily invest in R&D in Silver Halide photography.

● In 1990 approximately 40% KODAKKODAK's revenues came from sales outside the USA.



● In 1980's KODAKKODAK ran into major problems, it reflected as drop in returns on equity.

● Its preeminence was being threatened as the photographic industry competition is changed.

● New methods of recording images and memories beyond silver halide technology, most noticeably digital imagingdigital imaging was emerged.


INCREASING COMPETITIONINCREASING COMPETITION

● In 1970's KODAKKODAK began to to face an uncertain environment in all its product markets.

● First the color film and paper market from which KODAK made 75% of its profits experiencing growing competition from Japanese companies, led by FujiFilmFujiFilm.

● FujiFilmFujiFilm's Competition reduced KODAKKODAK's Profit margin. Besides growing competition KODAKKODAK did little internally to improve profit margin..


COST OF PATENT VIOLATIONCOST OF PATENT VIOLATION

● KODAKKODAK then rushed to produce a instant camera, at that time Polaroid is market leader.

● However a federal judge ordered KODAKKODAK out of the instant photography business for violation of 7 of Polaroid's patents.

● In 1985 KODAKKODAK reported that it had exited instant photography business at a cost of $484 million.

● In 1991 KODAKKODAK agreed to pay Polaroid $925 million to settle court suit laid by Polaroid over patent infringement.


INCRESING COMPETITIONINCRESING COMPETITION

● Stiff competition from foreign manufacturers of photographic paper, film processingphotographic paper, film processing.

● Japanese developed cheaper source of paper and eroding KODAKKODAK's market share..

● The photographic industry surrounding KODAKKODAK had dramatically changed. Competition increased in all product areas. Still KODAKKODAK is the largest producer.


EMERGENCE OF EMERGENCE OF DIGITAL IMAGINGDIGITAL IMAGING

● VCR● LASER Disks● Compact Disks.● DVD's

The vast amount of data that can be recorded on these disks gave them a great advantage in reproducing image through electronic means.



● Nature of image recording process was changing from chemical methods to electronicchemical methods to electronic.

● Between 1972 to 1982 KODAKKODAK profitmargin from sales declined from 16% to 10%.

● KODAK KODAK managers were still fixated on improving core declining film business.



● In 1988 SONYSONY introduced a digital electronic camera that could take still pictures and transmit them back to screen.

● Even though the digital image quality not matched with conventional silver halide films, the managers failed to predict technological advancement in digital imaging.

● CD was also new of alternative to digital storage media and Silver Halide media is already out of date by that time.


KODAK'S KODAK'S FAILING BUSINESS MODELFAILING BUSINESS MODEL

● Instead of acquiring Companies like SONYSONY and APPLEAPPLE, KODAKKODAK invested in acquiring companies which are related to it's conventional business.

● KODAKKODAK entered into new businesses where it had little expertise, and where it already had strong competition.

● Soon KODAKKODAK was forced to retreat from these markets. It reduced earnings from a profit of $311 million in 1988 to a loss of $360 million in1989.


KODAK'S KODAK'S FAILING BUSINESS MODELFAILING BUSINESS MODEL

● KODAKKODAK emphasized traditional, conservative values rather than entrepreneurial values.

● All decision making had been centralized at the top of organization among a clique of senior managers.

● KODAKKODAK's revenues and profits continued to decline throughout the 1990's and into 2000's as it steadily lost market share in it's core film business to Fuji.

● Mean while the quality of image take in Digital Camera's was imroving.


ATTEMPTS TO RESCUEATTEMPTS TO RESCUE

● Emergence of more powerful, easy to use digital imaging devices began to increasingly punish KODAKKODAK in the 2000's.

● For example KODAKKODAK launched a new camera “Easy Share” and sold around 10 million cameras in 2 years. Profitability on these sales is very low because of high expenditure in R&D.

● Because of its switch to Digital Imaging, its high profitable core Silver Halide business showed decrease in sales.

● Its share value decreased from $80 to $60 to around $30 in 2001.


KODAK IN 2000'SKODAK IN 2000'S

● KODAKKODAK film and paper business revenues sunk.● KODAKKODAK become unprofitable.● KODAKKODAK “Easy Share” become one of the best

selling camera's and #2 in global seller with 18% of the market.

● Profit margins on Digital products were razor thin because of intense competition from Canon, Olympus and Nikon.


DECLINE IN DECLINE IN CORE FILM BUSINESSCORE FILM BUSINESS

● In 2004 KODAKKODAK stopped investing in its core film business and poured all it's resources in developing Digital Products.

● KODAKKODAK bought remaining 44% of Chinon, its Japanese Division which made Digital Camera.

● In 2011 KODAKKODAK announced major decrease s in profits and sales across many of its product groups.


WILL KODAK SURVIVE?WILL KODAK SURVIVE?

● In 2008 to find new source of revenue to offset losses KODAKKODAK launched a series of lawsuits against SAMSUNG and LG. KODAKKODAK received over $900 million from these settlements.

● Now KODAKKODAK investing in inkjet printing, packaging, softwares and services.

● In 2011 its market value was only $300 million.● It may rise again with its secret weapons again,

who knows?


RISE OF INSTAGRAM!!!!RISE OF INSTAGRAM!!!!

● InstagramInstagram is an online photo sharing app that enables its users to share them on variety of social networking platforms, such as Facebook, Twitter, Tumblr and Flickr.

● This service was acquired by facebookfacebook in 2012 for approximately US $ 1 Billion.

● In 2013 InstagramInstagram grew by 23%, while its parent company facebookfacebook, only grew by 3%.

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imaging markets. - sves-srpt.ac.insves-srpt.ac.in/codingclub/files/20150913130951the rise and fall...

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