back to article Kodak's moment: Camera biz files for bankruptcy

Iconic and inept US camera and film company Kodak has finally pressed the shutter button: it has filed for Chapter 11 protection. Citigroup has stumped up $950m for a credit facility over eight months while the bankruptcy process is worked out. Beset by the digital camera revolution and screwed by a breathtakingly stupid entry …

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Mushroom

Yet Another long standing

Company blinded by the idiots with boardroom bonuses, with little care for the people trying to innovate and create new products to make the money that funds it

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A classic tale

Many similar stories have occurred.

Company has major share of a market when a competing technology comes along often, ironically, pioneered within said company. Company either: does not wish to cannibalise current product sales with "big new thing" or, in the case of Kodak, cannot see a market whereby current product is not still the top dog. Company tries to reinvent itself half-heartedly way too far down the path to extinction. Company enters bankruptcy, coughs and splutters along for a bit, then ultimately fails or shrinks to the point it's not worth bothering with.

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It stuck to its first successful product and failed to innovate outside of that market. It also became a patent troll asking everyone for payments.

Oh sorry we're on about Kodak not Microsoft, same difference.

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Straight up the wrong tree.

Straight up the wrong tree - multiple times.

Almost comical (if it weren't for all the job losses amongst those who did the work) what has happened to Kodak. Starting with digital denial, then producing a bucket load of awful digital cameras, forgetting the digital print business and then making the printers where even an addled grandparent can work out the poor economics of printing using them and not an Internet bureau given how costly they were to run (it was still cheaper to go to a high street digital print kiosk - which are now priced much more competitively).

They had a good brand name and an ideal opportunity to be at the leading edge of consumer digital photography, but lost the plot entirely. All they needed was a bit of thought (tough at board level at times) and some vertical integration. Consider how well they could have done if 5 years there was an easy way to connect your Kodak digital camera to the Internet, automatically upload photos and have them nicely printed and delivered to you the next day. It's always been possible, but the trick would have to make it so seamless and easy it would have been more trouble not to do it.

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Kodak didn't make awful digital cameras - their Easyshare cameras took better pictures than their Fuji Finepix and Canon equivalents in the mid-range, but they never managed to get their marketing right.

And 5 years ago was too late - these trends were apparent 7 and 8 years ago, when the Easyshare software than came with these cameras could do exactly what you suggest, but most people were still on dialup, and uploading 20 x 1MB wasn't exactly a selling point.

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Point taken

"Kodak didn't make awful digital cameras"

OK, so they made *mediocre* cameras; people still didn't buy them.

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Flame

"Kodak didn't make awful digital cameras"

The Kodak camera I had used to randomly fail to power on, requiring you to remove the batteries for ~30 seconds and reinsert them before it unfroze. Since 30 seconds later whatever precious moment you wanted a picture of was probably over, I'd say it was pretty much worthless as a camera.

Combined with a hammer, it made a stellar one time use "stress reliever", but as a camera it would have to undergo some massive improvement before I would even classify it as "awful".

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Anonymous Coward

My opinion was that the Kodak camera imaging firmware was superior to every competitor's firmware-- all the way up through the so called pro digital cameras. This refers to the firmware in the camera, not the horribly buggy cr*p they had that runs on a PC.

Kodak though, used the superlative firmware to compensate for mediocre (and cheaper) lenses.

The net result was good picture quality but not great picture quality-- better than the competition but not enough better to attract a critical mass of customers.

What I wanted in that era, was the Leica lensing from a Panasonic camera with Kodak imaging firmware.... the Panasonic imaging firmware, well, sucked. But the lens was superior in its range. The net result: the Panasonic with Leica lens had about the same image quality as a Kodak camera with a garbage lens. The two flailing losers should have gotten together in cameras... but didn't. Do people oooh and aahh about the Kodapan camera? No? Myopic fail on both their parts.

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"My opinion was that the Kodak camera imaging firmware was superior to every competitor's firmware-- all the way up through the so called pro digital cameras."

I disagree, but notwithstanding that I guess it's too bad the sensors they used in their DCS Pro SLR cameras were rubbish.

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Unhappy

@Figgus

"The Kodak camera I had used to randomly fail to power on, requiring you to remove the batteries for ~30 seconds "

The *perfect* fail. Not quite annoying enough to dump it straight away but frequent enough to (eventually) really p**s you off and permanently trash your opinion of their products.

I've heard US pickup trucks are similar models of good design.

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I don't get the hard on

The author has for the inkjet business. Their printers are pretty reasonable and are a natural extension of their business. They might not be revolutionary but assuming they are even mildly profitable they are a reasonable step.

In addition we have bought 3 of their wireless photoframes and they are almost unique in the market and work brilliantly enabling the grandparents to see new photos with just an email. They are almost apple like in their ease of use.

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Inkjet

They entered the inkjet market waaaaay too late when it had been established and pretty much dominated already.

Funnily enough, I saw a Kodak inkjet advert tonight, bragging about the ridiculously cheap price of their ink. Couldn't tell if they were trying to do a loss-leading strategy to get the numbers up, which only really works if you force the competition out of the market which was never going to happen against the likes of HP.

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Kodak inkjets are pretty damned good on ink.

I know a couple of people who have Kodak inkjets for precisely that reason. I guess their only worry now should be how long will they be able to get hold of refills for?

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Holmes

This is what happens when you stop innovating, try to live off past successes, and spend too much time trying to sue as many of your competitors as you can so you can earn more income from your patent portfolio.

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Kodak weren't late to digital

If you look at the first even digital SLR Canon camera, it was a Canon camera with a huge lump on the bottom and a Kodak image sensor. This was long, long before Canon went digital. Kodak still make sensors, and make some of the very, very best, but between there and now just didn't start making the sensors that companies really wanted.

If you look at Canon, I don't think that they ever made their own film; they made cameras. I'm sure they only started making their own sensors because they couldn't get what they wanted from Kodak (or elsewhere). Between then and now, Canon has built up a very good sensor design and manufacturing capability that could've been Kodaks new business instead of film.

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Unhappy

Kodak no longer makes sensors

They already sold off all the viable businesses.

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Unhappy

Oh :( I didn't realise that they had done a Lord Winestock (Marconi) and ditched all R&D and sold anything not nailed down and just left a rotting husk behind :(

Only today we were talking about the different quality level of CCD sensors from Kodak, and how good (and expensive) the good ones are (although still cheaper than e2v).

It still mentions them on the Kodak US site, but I guess it's just about branding like Volvo cars aren't really made by Volvo anymore; Volvo sold the car bit, keeping lorries and rockets, but the Volvo cars still say Volvo.

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Unhappy

Kodak ISS is now Truesense Imaging

Kodak sold ISS to Platinum Equity (a mergers & acquisition firm) last November.

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OT but...

...Lord Weinstock did *not* dismantle GEC-Marconi. He retired in 1996. The slippery slope started with the selling of the defence arm (Marconi Electronic Systems) to BAe (as it was then) in 1998. Weinstock left GEC-Marconi in a very healthy state.

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FAIL

Demise of Marconi

Blame falls squarely on the shoulders of George Simpson.

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MJI
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GEC

I remember the death of it, so sad, a company who could survive well basically killed.

They were big in the railway industry*, now nothing is left but a few parts of the engine plants.

* English Electric mainly, but one of their constituents was a company created by the Rocket builders.

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Anonymous Coward

Typical Comestible FAIL

Every successful company is susceptible to the same effect-- if you don't eat your highly profitable one trick pony, someone else will do it for you.

Kodak tried to ride too long, and Custered out. Perhaps FUJI or Canon or Nikon should have vultured the Kodak name at a firesale price-- the name was probably worth more than the market cap just prior to the board pulling the pin.

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Trollface

Clearly the problem here...

...is they didn't lobby congress hard enough.

There should have been tough laws enacted to prevent these photogra^pirates from using digital cameras to upload their own photo content to the web without using film. People using digital cameras to sidestep the use of film have stolen jobs from hardworking Americans!

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They are dead

Too late

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Anonymous Coward

maybe Gary Fisher did it

Gary MC Fisher rode the success wave at Motorola (right place at the right time), then moved to Kodak where it looks like he was the one who decided that they should move into pictures and away from their chemistry biz. I'd posit that the move he made sent them into photography, an area they weren't really capable of mastering.

Kodak's main business and competency was chemicals, and a few times in their history they created the vertical market (cameras) to spur on consumption of those chemicals. They didn't always do stellar with that - remember the "disc" camera????

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Thumb Up

Businesses come, businesses go. It's all part of what Joseph Schumpeter describes as 'Creative Destruction'.

Live with it.

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The writing was on the wall when, on the cusp of the digital revolution, Kodak introduced APS — a more expensive film that cost more to process and was incompatible with existing cameras.

Though in the distant past they built some quite serious cameras, Kodak today are crippled by an association with trashy Instamatics. Though their digital models are pleasant to use they have styling best described as homely.

Not exactly an image to compete with Nikon.

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MJI
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APS

Was stupid.

I remember the hoo haa.

First question was why should a user swap from 35mm to APS if it was going to be worse.

Answer was a better film.

Reply was that film will go to 35mm as well and kill APS.

APS was dead at birth, and if Kodak had kept the best films for APS Fuji would have taken the 35mm market.

I was a long time user of Tri-X and Fujichrome, unfortunately my camera has a light leak.

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Meh

A modest proposal.

It is *claimed* that the "quality" of the CEO and Board have a disproportionate effect on company profitability (mostly by Board members, CEOs and business school professors funded by them) so that's why you *have* to pay them large salaries and big bonuses.

So how about a simple law. If a publicly quoted company starts making losses all CEO & Board level bonus schemes are *suspended*. The funds stay in the company or go to the stockholders, which is at least a *slightly* fairer distribution (although if the company is not making a profit handing out *anything* to stockholders is a poor use of company funds).

It's simple, and attempts to work around it would probably be fraud. Not that will stop the fat cats trying to get their paws on the cream. But it *might* make them a *little* more protective of maintaining profitability rather than some insanely risky move aimed at mega growth.

Caveat. I was warned about the dangers that people who propose "simple" solutions to complex problems don't understand the situation so what's the glaringly obvious point I've missed?

Greedy CEO's and Board members (and a fair number of each at one company is the other at another) won't like it and it wouldn't be *necessary* if the bulk investors (mostly the corporate pension funds) *actively* managed their holdings and grew a pair and started exercising their stockholder muscle, but that doesn't seem to happen much on this planet.

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This post has been deleted by its author

Meh

The glaringly obvious point you've missed is that it shouldn't be /law/.

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@melt

"The glaringly obvious point you've missed is that it shouldn't be /law/."

Perhaps you could explain how you would encourage CEO's and Board members to do this *voluntarily*?

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Coat

Point of Order: Chapter 11 <> Bankruptcy

Chapter 11 is part of the US Bankruptcy Code, but does not mean that the filing entity is actually bankrupt. Far from it. It usually means that the entity has recognised that if things continue as they are then bankruptcy is likely to arise, but with the right steps, taken with some additional protection not normally afforded to a running business, can be avoided.

Companies can - and do emerge - from Chapter 11 in a better state than when filing. General Motors being a notable example of that, requiring just 39 days of Chapter 11 protection.

Chapter 7 is the biggy... under Chapter 7 of the Bankruptcy Code the filing entity has to cease business operations, sell off the assets and distribute proceedings to creditors with the owners only getting what (if anything) is left.

The one with the "Journalism 101 - Research and Factual Accuracy" in the pocket...

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Not convinced

"Companies can - and do emerge - from Chapter 11 in a better state than when filing."

US airlines for one seem to yo-yo in and out of this one and GM is hardly a shining virtue of a well run company. I'd say it gives most companies the chance to rearrange the deckchairs on the Titanic.

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Anonymous Coward

@Jolyon Smith; Further Point of Order: "Bankruptcy" <> Liquidation

"Chapter 11 is part of the US Bankruptcy Code, but does not mean that the filing entity is actually bankrupt [..] Chapter 7 is the biggy "

Chapter 7 appears to be the US version of liquidation. (*)

You say "*actually* bankrupt" as if most people would assume (corporate) "bankruptcy" means that the company was finished and being split up, i.e. liquidated.

However, I was under the impression that even in everyday use the term "bankruptcy" was not considered synonymous with liquidation anyway; rather just a legal recognition that the company couldn't pay its debts (and the various potential outcomes of that situation), as is the case with Kodak.

(*) According to Wikipedia "Chapter 7 [..] governs the process of liquidation under the bankruptcy laws of the United States":- http://en.wikipedia.org/wiki/Chapter_7,_Title_11,_United_States_Code

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Anonymous Coward

No, most people think "bankrupt" means "have closed down and you might pick up a bargain in their final stock-clearance sale".

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WTF?

Mixed feelings about Kodak's demise but reason prevails: so it's good riddance to bad rubbish.

I've a few mixed feelings about Kodak's demise but reason must prevail: so it's good riddance to bad rubbish, the company deserves to die.

For decades I used Kodak products and mostly there was not much better available. Then in the 1980s, when Fuji became effective competition, Kodak did stuff-all to compete, it acted as if it was invincible and that no competition could ever touch it.

Here's one example, I've dozens more: essentially, Kodak did nothing to keep its flagship colour slide product, Kodachrome, in the vanguard in the 1970s and '80s, thus Kodachrome lost its market dominance. (Kodachrome--with its 75-year product life--was, for many reasons, probably the best colour film ever made--not for its colorimetry but rather for stability and longevity (it has an estimate fade life of 200 years+ which still makes it second to none)). However, its emulsion speed and dynamic range/D-max were left to languish for over 20 years whilst Fuji creamed it with beautiful E6-type colour slide emulsions (albeit never with the same high stability of Kodachrome but the here-and-now user was never too worried about such long term stability).

The saga of watching Kodak slowly die over some 20+ years became a pastime for some Kodak fanboys but by the early 1990s it was all to clear to me that its failure to properly adopt digital technology was going to be its doom. US based and in the US, it should have made much better use of state-of-the-art silicon and other photo technology--the US then being the centre of integrated circuit technology, but Kodak seemed content to be only a bit player. Heavens knows why.

In recent years, I've found out just how woefully Kodak treated its Ektacolor negative customers through the 1970s and 1980s, it's actions and decisions were then a disgrace and in hindsight they still are. Knowingly, for about a generation, Kodak produced colour negative material that was extremely prone to fading and did nothing about it.

Today, most of the colour print photos taken back then are little more than faded blobs. So much for Kodak's duty of care over its customer's treasured photos--it could have warned customers and done somethings about the problem such as offer customers interim b&w tri-separations until more reliable neg stock had been produced--but Kodak never did! Ethically, the company sucks. Diehards can get the evidence here: http://www.wilhelm-research.com/pdf/HW_Book_08_of_20_HiRes_v1a.pdf.

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Windows

Roll of 127, please.

Errrr....(Cheap snapper I got given in the '60's)

Kodak made some superb film. I cannot remember the name (ekta-chrome?), but it was rated at 200 ASA, and my Canon EOS 600 loved it, as did I. The result was worth waiting for. More pricey than other stuff, but when you're using a Canon EOS, you don't mess about...Like putting 2-star in a Bentley

Sadly, both museum pieces nowadays. (Bentley's still going, natch...)

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The title is required... and all that blather...

All I can say is, "Please don't take my KodaChrome away." But they already have.

Paris, only because I'd like to shoot a few rolls of KodaChrome with her as the subject.

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Unhappy

Now sell the film business

To Leica, or someone who has an incentive to keep it going. Film production does scale down, otherwise Maco (who make some rather good films like the Rollei-branded ones) and Ilford wouldn't bother.

I think we'll see the end of colour film in a few years' time when commercial C41 processing gets too hard to find; home processing of C41 is thankless and digital generally does colour better anyway. Black-and-white film, on the other hand, isn't really in competition with digital and it's survived and even grown since most of the world went colour in the 1970s.

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MJI
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C41 at home

Best prints I ever had were from a home developed C41 film, but printed at a processor.

Finding a processor prepared to print a whole roll of uncut but processed print film was the issue.

I would love a darkroom now, I still like film, just need to fix my camera, digital stills from my video camera are no substitute (Sony HC9 HDV)

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Now imagine

for a minute if Kodak had a Kodak Industry Ass of America to look after them.

Instead of Kodak going into Chapter 11 there would have long since been a US act stating that anyone caught using a digital camera is a pirate, supporter of terrorism and a child abuser.

Sales of photo scanners unapproved by KIAA (and not phoning home for permission for each scan) would have been prohibited.

Every scanned photo would have been wrapped in a DRM layer prohibiting further copying without obtaining a licence from Kodak and removal of these restrictions would have been a felony.

The US ISP would be blocking every JPG on every website unless it was digitally watermarked and signed by Kodak.

Kodak would have taken over MS and Apple and the latest rumours would be that the next iPad will come with a pinhole camera box and a pack of B&W negative glass plates as standard.

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"the next iPad will come with a pinhole camera box and a pack of B&W negative glass plates"

Too high quality a camera for Apple.. :-)

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Unhappy

*not* "too big to fail"

So they did.

Whatever companies in *any* business think no company has some sort of deity given *right* to survive, or even survive in its existing form *forever*.

While (as others have pointed out) Ch 11 is not *certain* death it might be interesting to see how many companies in the US go into it and come out still in business in say 1, 3 and 5 yrs.

This question will return for a simple reason.

No one in the US banking community has been punished in *any* way for the behavior causing the 2008 banking crisis. High risk strategies (which *failed* and trashed the companies) still got big rewards to individuals, some of whom at least will still want to be in the game.

There is no incentive for them *not* to do it all over again and once again get the head of the Federal Reserve to organize another bail out.

Will the US govt have *any* money left to do it again?

The situation is a bit different for the bailouts for the big car companies,where the likely result would be hardware shipped abroad and mass redundancies.

But isn't this a demonstration that while their are people *globally* who think some US cars are *iconic* they just don't actually think they're iconic enough to actually *buy* them at the price offered in the numbers that make the business make a profit.

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