eastman kodak files for bankruptcy protection

'Snooze' - That was pretty much the case. I live five minutes away from the Eastman plant and used to work there in 2003. During that time they were still mass producing 35mm film when the whole photography world was staring at 4MP digital cameras wondering if it would ever take off. The digital camera was evolving at such a fast pace and Kodak just sat still doing very little. I became disillusioned with the place and decided to move on after two years. Digital camera's were appearing everywhere, yet Kodak just did not want to move on.

In 2005 I began noticing huge building chunks of the factory literally vanishing overnight as I travelled past it to my new workplace. Now very little remains of the colossal Eastman plant, which was so large that the roads within had streetnames. It was once the largest employer of people in Harrow. There are rumours that the space will be used for housing 'europeans', either that or a giant market. Even the iconic 'Goodwill' pub that right outside Kodak has also been knocked down.

It's sad to see such a huge company vanish like this.

This is the plant on Google Maps - iirc googlemaps mapping data was from 2008. You can already see bits missing from the area.

http://maps.google.co.uk/maps?q=ha3...A3+5LR,+United+Kingdom&gl=uk&t=h&z=17&vpsrc=6
 
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Bing has the earlier maps from the looks of it. If you select 'Birds Eye' view from bing maps and zoom out a bit, you can see the refreshed photos of the top end of the complex being deconstructed.
 
Thom Hogan with some good insights as always:
http://bythom.com/

Feb 9 (commentary)--Kodak's disclosure today that they were getting out of the camera and digital frame business seems like a shock, but it isn't. Most of us had predicted that for some time now. I believe I first wrote that the end was inevitable for Kodak cameras when they bought Chinon a number of years ago. I'm a little surprised it took this long to close the door.

I believe Kodak's management is more clueless today than it was at the end of the film era when it needed to transition to digital. Paper printing and print kiosks are where they're putting the last stake in the ground. I'm not even sure they'll get that stake fully secured before the steam roller hits it.

The future of displaying images isn't on paper. The print kiosk business is slowly dying, so being a big player there is just another dinosaur business and delays the inevitable. Two technologies are pushing forward for display of images: LCDs (dynamic) and E-Ink (static). Kodak has almost no skin in either game. The skin they did have--digital frames (LCDs in frames)--wasn't very much to start with, but now it's gone.

The future for images is clearly cloud-stored, wireless displayed on whatever device screen you desire. It is not "print it on paper."

Note that I'm not saying that paper will go away any time soon. Just as the US Postal Service hasn't gone away because of email, paper will stick around for quite some time. The problem is the same one as the USPS has, though: the primary driver of volume and profit (letters for mail, prints for photos) is moving to a new medium (email for mail, displays for photos). These kinds of transitions tend to leave a smaller, less profitable, and non-growing market behind. But that's exactly where Kodak just placed its bets: on smaller, less profitable, and slow-or-no-growth markets. Meanwhile, they couldn't wean themselves off the high profit margins in film, even as that market dramatically shrinks, so they kept that bit of the company.

Kodak is now on Death Watch, AFAIC. To win in printers, they have to beat HP, Lexmark, Epson, Brother, and Canon, who will all definitely fight hard to protect their territory. Worldwide, those companies were about 85% of the printer market in 2010, and year-to-year growth is modest (maybe 15%). This is no different than the challenge in cameras: there you have to beat Nikon, Canon, Panasonic, Sony, Samsung, Olympus, and others that hold more than 80% of the market, and the year-to-year growth is non-existent. I don't see a lot of difference in the market Kodak chose to exit versus the one it choose to stay in.

Kodak's strategy seems to be "we were too late with the right things for the game in market 1, let's see if that's true in market 2" (it is) and "Keep the things that still have higher profit margins and hold on as long as we can" (which probably won't be long).

Kodak's best business still in the fold is the higher-end commercial printing business, but it's not a big enough business for anything like the old Kodak to survive. Indeed, last year Kodak was projecting something near US$6b in business in 2011 (they're not going to make it). Their projection for the core businesses they now plan to keep was US$2b in 2013 (not clear they'll make that). In the 9-month year-to-year results for 2010 and 2011, we find that they've slipped 18% in sales but increased 2% in cost of sales. That's before we get to all the corporate stuff like admin, R&D, restructuring, etc.

The best case I see is a Kodak that's less than one-third its size at the start of last year, that's not overly profitable, has only modest growth, and will have to use patent sale revenue to pay back the debtor-in-bankruptcy and restructuring charges.

Short story: Kodak never solved its management decisionmaking problems. It's still making them.
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Such a shame to see bad management destroy such a company. You have wonder if the current management are purposely trying to drive kodak into the ground with such decisions.
 
D.P. said:
Such a shame to see bad management destroy such a company. You have wonder if the current management are purposely trying to drive kodak into the ground with such decisions.
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It's quite obvious that pulling out of the digital market was a good decision. I mean, the products they make are some of the best out there. But if the market's not there and they don't have the money to spend on 'experiments' then what can you do?

Their best bet is still film. Which they are brilliant at, already have a massive share of the market and is still growing. Sure, it doesn't exactly have the 'only option in photography' thing going for it any more, but it is a relatively massive 'niche' to cater for.

Eventually the problem there becomes the cameras themselves. Yes, we have a massive backlog of well made bodies and lenses that will last well into this century. But as well made as they are, they can't last for ever. So few new ones are being produced, and those that are are massively expensive.
 
Pulling out of the digital market is fine, they royally screwed up on that line and found it a very competitive arena, low profit margins, and stagnant market (there is now growth in digital cameras any more).

The thing is they are not concentrating solely on film, and if they were then it would be a guarantee to imminent bankruptcy. Film is profitable form them and there is a market, but it is a declining market that hold little long term future, and there are plenty of other players in that area.

They seems to think they will make head way with printing. Which as Thom Hogan points out, is incredibly competitive, not very profitable and not growing, in -fact is declining.

Kodak made an epic failure by not getting onto the digital camera market, despite being the technological leader that brought about many of the sensor technologies and image processing chips and firmware.

They have now made another major mistake in trying to go down routes that inevitably will lead to failure.





It is a fragile time for a lot of camera manufactures and I wouldn't be surprised to see some more fall by the way side. Both Olympus and Panasonic are failing to make profits, and Panasonic as a whole has major issues even if the camera department can be made profitable. Sony as a whole has serious issues also, and their camera lines are failing to get anywhere near the market share they expected or need to be viable. The Nikon 1 is eating away at their Nex line, their NEx line is not taking sales from M43s cameras, their low end DSLR sales are dropping probably due to Nex sales (these statements are not contradictory), and their pro line is left for dead. Where is the next A900? Where are the next Sony Pro and semi-pro DSLRs. Some good SLTs but not it looks, like Sony has backed out of the top end, which is somewhat inevitable seeing that Canon and Nikon have the top end wound up.

Fuji are trying a new direction of high profit margin large sensor-ed all in one cameras. Their market share is shrinking. Sigma, small and declining, who is buying Sigma DSLRs? Pentax, great cameras and lenses, market share fails to expand and some bizarre new mirror-less ideas that will not take any significant market share.

Canon and Nikon look safe. Nikon is doing surprisingly ell, and is actually gaining market share at the cost of the others, including Canon. Even their terrible coolpix cameras are gaining share. But nikon is very delicate because they are the 1 last true camera manufacturer. A vast majority of nikon's profits comes from only cameras and lenses. Canon/Sony/Panasonic etc can all prop up their camera business with outside funding, Nikon is dedicated to cameras. Canon is very strong but it is loosing market share to Nikon, nothing radical but they need to sop that.
 
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D.P. said:
The thing is they are not concentrating solely on film, and if they were then it would be a guarantee to imminent bankruptcy. Film is profitable form them and there is a market, but it is a declining market that hold little long term future
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This isn't true. The film market is growing. Quite probably largely due to the popularity of 'lomography' in Japan.

D.P. said:
and there are plenty of other players in that area.
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Mmm... not really. Definitely not ones that directly compete with Kodak. There's Fuji. That's pretty much it.
 
Kodak film sales have been on a steady decline for over 10 years:
http://static.photo.net/attachments/bboard/00X/00XQGG-287365584.jpg

There are less film manufactures now because some of the big players of the past went bankrupt due to declining sales, e.g. Agfa in 2004, Konica Minolta in 2007.

The volume of film sales have dropped like a stone since consumers have all but forgotten about film cameras. Film is now more of a niche product.


If Kodak rely on film for profits then they are destined to go extinct within years really.
 
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