Ice harvesting, digital imaging and why history matters

Those who study history and understand theory can make better predictions. The quote below comes from James M. Utterback, an MIT professor who has done pioneering work regarding the interplay between technological change and industrial dynamics. In 1994, Utterback compared photographic film with the old Ice harvesting industry in the Boston area, a vibrant business back in the 19th century. Using special plows, ice was harvested and isolated using saw dust, then transported for weeks throughout the entire world. Needless to say, this entire industry collapsed with the introduction of mechanical refrigeration.

”As of 1993, the future of Sony’s new image-producing technology is not clear. It may be a technology with only a few special applications; but then, it may become the way people take pictures in the future – which raises the question of how the massive industry based on photosensitive film will respond. The multibillion dollar industry of Kodak, Fuji Film, docens of camera makers, and tens of thousands of independent film processors around the world may be in the same situation as the nineteenth-century harvested ice industry.”

Source: Utterback, J. (1994) Mastering the dynamics of innovation – How companies can seize opportunities in the face of technological change , Harvard Business School Press, Boston, Massachusetts, p. 181.

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Polaroid enters the video surveillance industry?!

Polaroid went bankrupt in late 2001 as digital imaging destroyed its profitable revenues from instant film photography. In 1997, the stock was traded around 60 dollars, four years later it was frozen at 28 cents.

Ever since, the brand has lived on in various shapes and in various settings, art being one of them. The company recently announced that
it will enter the commercial security market, something that at first appears to be an odd move.

Looking at the current structure of the video surveillance industry this event makes more sense. Video surveillance is undergoing a technological discontinuity where analog CCTV is increasingly replaced by digital, internet-based cameras. Such transitions usually create a temporary spike in firm entry as new companies with different competencies see abundant opportunities. Moreover, most of the components required for manufacturing a surveillance camera are readily available on the market, implying that entry barriers are rather low. And besides, in what other imaging application would Polaroid re-emerge? The regular camera business is fiercely competitive and demands huge economies of scale.

Whether the company will be successful or not remains to be seen. At present, its entry into video surveillance can be regarded as an indication of the hype and Klondike behavior that currently characterizes the security industry. Sooner or later, this must come to an end and the industry will become more consolidated.

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No more Kodak moments in the Olympics

Looking back at the rise and fall of Kodak over the past century, one can make several observations about its role in society. Kodak’s hegemony was manifested through its strong presence in the Olympic Games. During these games, not only athletes compete – firms also compete for our attention. Tracking Kodak’s role in the Olympic Games is therefore a way to track its performance, and vice versa.

In fact, Kodak was present as a sponsor during the first Olympic Games in Athens 1896. Being only 16 years old by that time, Kodak had pioneered amateur photography and created a consumer market that it would thrive upon for more than a century.

At the Olympics, the most famous contemporary consumer brands are exposed. Globally recognized top brands such as Coca Cola and McDonald’s are the only ones that can afford and benefit from such major sponsorships. For many decades, Kodak’s presence in the Olympics was more or less taken for granted.
As the company grew in the 20th century and continued to dominate the photographic industry it became increasingly used to extensive market power. Kodak had built a global monopoly position and with such hegemony usually comes a certain arrogance and resistance to change.

By the early 1980s, a challenger named Fujifilm was gaining momentum. The first signs of Kodak’s decline could in fact be spotted at the Olympic Games in Los Angeles 1984. As Kodak controlled about 90 percent of their domestic market and the organizing committee preferred American sponsors, Kodak took its presence for granted. In doing so, they dictated the conditions and were generally very difficult to do business with.

In contrast, the Japanese challenger adopted a ‘name-your-price’-strategy and eventually became the official sponsor of the Olympics in L.A. Kodak now tried desperately to offset this loss through massive TV advertising but the harm couldn’t be undone – Fuji’s green box was now familiar to American consumers.

After 1984, Kodak made sure to have a strong presence at the Olympics and it seems like the company had learnt from its mistakes. This didn’t stop them from losing market share to Fujifilm, both in the United States and elsewhere.

The next blow to Kodak came with the shift to digital imaging. From the year 2000 and on, the company slid further into decay, the layoffs continued and the 2008 Olympics in Beijing was the last time Kodak entered this stage for global consumer brands. The official motivation for not sponsoring the Olympics in London last year was that Kodak wanted to focus its marketing efforts and get closer to its customers. Put differently: Kodak was no longer a global consumer brand.

As the torches were lit in London last year, the lights had gone out at Kodak.

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