Kodak files for bankruptcy

Bob Moon Jan 19, 2012

Kai Ryssdal: There’ve been plenty of not-so-happy Kodak moments for the company of the same name the past few years, capped by last night’s filing for Chapter 11 bankruptcy protection. The company that invented the digital camera nearly 40 years ago never did come close to making up for the profits it lost from the film business.

It’s tried to make inroads selling printers. It still owns some valuable technology patents. But the recession finally pushed Kodak over the edge. Analysts, though, wonder why Kodak failed where its main Japanese rival Fuji has thrived.

Here’s our senior business correspondent Bob Moon.

Bob Moon: Even in the face of cutthroat competition from Japanese rivals, as recently as the 1990s, Kodak was consistently rated among the world’s most-valuable — and visible — brands.

Austin Smith: They really did occupy what seemed like half of the aisle.

Austin Smith is a consumer analyst with the investing website The Motley Fool. The other half of that film aisle he speaks of was dominated by Kodak’s chief competitor, Fujifilm. And the way those rivals handled the coming of the digital age is where their roads diverge. Smith says Kodak failed to leverage its own innovation in the digital camera, because executives feared it would kill their cash-cow film business.

Smith: What they failed to recognize is that, if they didn’t cannibalize their own business with better digital cameras, someone would, and then they’d be left with nothing.

Fuji set out to dominate the most lucrative part of the market with high-end digital cameras. But even then, it realized that income could never replace film. So it diversified into medical imaging. It also makes film that’s used to improve the viewing angle on flat-panel screens, and it even used its chemical expertise in a successful line of cosmetics. Smith says Kodak made only half-hearted attempts at diversifying, but never really succeeded in replacing its lost profits.

At the research firm IDC, analyst Chris Chute suggests executives were too impatient to grow a new business.

Chris Chute: Kodak in general always had a benchmark of its film business, which it literally created from the ground up, to work against when comparing other types of businesses against it.

Howard Anderson, who teaches at MIT, sees a lesson in Kodak’s too-slow transformation.

Howard Anderson: There is a ying and yang to business, and if you’re on top today, start to worry because someone else somewhere is working on a technology that’s going to make yours obsolete.

That, of course, is how Kodak itself got started more than 130 years ago.

I’m Bob Moon for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.