As a boy growing up, my first camera was a Kodak Brownie—easy to use and, for that era, it took excellent pictures. It was somewhat expensive for a 10 year old because of the costs of film purchase and photograph development. Overall, however, I was a happy customer who would eagerly look forward to picking up my photos at the drug store.
Of course, there are no simple answers for why one of the most prestigious companies in the world has found itself having to file for bankruptcy. We do know that one of the first order effects was their inability to shift the center of gravity of their business. New technologies were adopted by their customers that in fact eliminated the cost of film while significantly reducing the cost of development. All the while, the company continued to be in denial about how big the impact would be on their business.
We can only imagine the internal discussions that must have occurred relative to any endorsement by Kodak that digital photography was the future and that they themselves would develop and sell the worlds best digital cameras and printers. The Kodak film people would obviously and immediately do everything possible to prevent that from happening. Just imagine Kodak’s large investment in film manufacturing plants, equipment, and distribution! As a result, they continued with their former core strength of promoting film while developing mediocre digital cameras. Furthermore, their strategy missed the shift of photography and photo software into smart phones, with an eventual even bigger impact on their core market.
Today, there is a technology shift that I believe will be even more profound than the changes brought by digital photography. That is the advent of Cloud Computing. We are all watching advancements occur at a breakneck pace. Initially it was all about virtualization, but we are now seeing very powerful software development tools as well as applications being hosted in the cloud. The result is a new generation of functionality at costs that in some cases are a factor of 10 to 100 times lower than those hosted on traditional servers. In addition, there is unparalled user access—laptops, tablets, smartphones everywhere! Consequently, all these new cloud-based applications come with an entirely new user experience.
The next generation of Kodaks are today convincing themselves that the Cloud will have limited applicability and therefore they can take a “wait and see” attitude, moving to endorse and adopt when they are sure it is real. What I can say with certainty is that by the time they come to that realization and have to analyze the business impact of dismantling infrastructure and a large IT organization, it will be too late. Their competitors who have moved quickly to adopt the Cloud will roll over them with not only significantly better IT cost structures and associated efficiencies, but with a better ability to focus on their businesses and a stronger and growing connection to their customers.