Eastman Kodak

Eastman Kodak Company
Type Public
Traded as NYSEEK
Industry Digital imaging
Photography
Optics
Founded 1892[1]
Founder(s) George Eastman
Headquarters Rochester, New York, United States
Area served Worldwide
Key people Antonio M. Perez
(Chairman and CEO)
Philip J. Faraci
(President and COO)
Products Digital Cameras
Digital Video Cameras
Digital photo frames
Imaging Systems and Sensors
Printers
Photo Hosting Service
Photographic film
Photographic paper
Photographic chemistry
Scanners
Revenue US$ 7.187 billion (2010)[2]
Operating income US$ -561 million (2010)[2]
Net income US$ -687 million (2010)[2]
Total assets US$ 6.239 billion (2010)[2]
Total equity US$ -1.075 billion (2010)[2]
Employees 18,800 (2010)[2]
Website Kodak.com

Eastman Kodak Company (NYSEEK) (commonly known as Kodak) is a multinational imaging and photographic equipment, materials and services company headquartered in Rochester, New York, United States and incorporated in New Jersey.[3] It was founded by George Eastman in 1892.

Kodak has long been known for its wide range of photographic film products. During most of the 20th century Kodak held a dominant position in photographic film, and in 1976 had a 90% market share of photographic film sales in the United States. Indeed Kodak's ubiquity was such that the phrase "Kodak moment" entered common lexicon as a personal event that demanded to be recorded for posterity.

Since the late 1990s, Kodak has struggled financially as a result of the decline in sales of photographic film, and 2007 was the most recent year in which the company made a profit.[4] As part of its turnaround strategy, Kodak has focused on digital photography and digital printing. In the late 2000s, Kodak also turned to aggressive patent litigation in order to generate revenue.[5][6] As of late-2011, Kodak was reportedly exploring the sale or licensing of its vast portfolio of patents in order to stave off bankruptcy.[7]

Name

The letter "K" was a favorite of Eastman's; he is quoted as saying, "it seems a strong, incisive sort of letter." [8] He and his mother devised the name Kodak with an anagram set. Eastman said that there were three principal concepts he used in creating the name: it should be short; one cannot mispronounce it, and it could not resemble anything or be associated with anything but Kodak.[9]

It has also been suggested that "Kodak" originated from the suggestion of David Houston, a fellow photographic inventor who held the patents to several roll film camera concepts that he later sold to Eastman.[9] Houston, who started receiving patents in 1881, was said to have chosen "Nodak" as a nickname of his home state, North Dakota (NoDak).[10][11] This is contested by other historians, however, who cite that Kodak was trademarked prior to Eastman buying Houston's patents.[12]

History

From the company's founding by George Eastman in 1880, Kodak had followed the razor-blade strategy of selling inexpensive cameras and making large margins from consumables — film, chemicals and paper. As late as 1976, Kodak commanded 90% of film sales and 85% of camera sales in the U.S., according to a 2005 case study for Harvard Business School. However this seemingly unassailable competitive positions fostered Kodak's unimaginative executive culture.

Japanese competitor Fujifilm entered the U.S. market (via Fuji Photo Film U.S.A.) with lower-priced film and supplies, but Kodak refused to believe that American consumers would ever desert its sacred brand. Kodak passed on the opportunity to become the official film of the 1984 Los Angeles Olympics; Fuji won these sponsorship rights which gave them a permanent foothold in the marketplace. Fuji opened up a film plant in the U.S. and its aggressive marketing and price cutting began taking market share from Kodak. Fuji went from a 10% share in the early 1990s and from 1993-1997 that grew to 17%. Meanwhile, Kodak had made little headway in Japan, the second-largest market for photo film and paper after the United States. In May 1995, Kodak filed a petition with the World Trade Organization under section 301 arguing that its poor performance in the Japanese market was a direct result of unfair practices adopted by Fuji. However on January 30, 1998, the WTO announced a "sweeping rejection of Kodak's complaints" about the film market in Japan. Kodak's financial results for the year ending December 1997 showed that company's revenues had come down from $15.97 billion in 1996 to $14.36 billion in 1997, a fall of more than 10%; their net earnings went from $1.29 billion to just $5 million for the same period. However, the most worrying factor was that Kodak's market share had plunged from 80.1% to 74.7% in the United States, a one year drop of five percentage points that had observers suggesting that Kodak was slow to react to changes and had underestimated its rivals. [13][14][15][16]

In the 1990s, Kodak had planned a decade-long journey to move to digital technology. CEO George M. C. Fisher reached out to Microsoft and other new consumer merchandisers. Apple's pioneering QuickTake consumer digital cameras, introduced in 1994, had the Apple label but they were actually produced by Kodak. Overall, though, there was little implementation of the new digital strategy. Kodak's core business faced no pressure from competing technologies, and as Kodak executives could not fathom a world without traditional film there was little incentive to deviate from that course. However in 2001 film sales dropped, and even then insiders initially attributed the financial shocks to the September 11 attacks, hoping that Kodak might be able to slow the shift to digital through aggressive marketing.[17]

Under Fisher's successor as CEO, Daniel Carp, Kodak made its move in the digital camera market, with its EasyShare family of digital cameras. Kodak spent tremendous resources studying customer behavior, finding out that women in particular loved taking digital photos but were frustrated in moving them to their computers. This key unmet consumer need became a major opportunity. Once Kodak got its product development machine started, it released model after model offering consumers top-quality cameras at reasonable prices that made it easy to share photos with friends and family members via their PCs. One of their key innovations was a printer dock, where consumers could insert their cameras into this compact device, press a button, and watch their photos roll out. By 2005, Kodak ranked No. 1 in the U.S. in digital camera sales which surged 40% to to $5.7 billion.[19]

However despite high growth, Kodak failed to anticipate how fast these digital cameras would become commodities, with low profit margins, as more companies entered the market in the mid-2000s. Also, an ever-smaller percentage of digital pictures were being taken on digital cameras, being gradually displaced in the late 2000s by cellphones and tablets' cameras. In 2001 Kodak held the No. 2 spot in U.S. digital camera sales behind number one Sony, but Kodak lost $60 USD on every camera sold. The film business, where Kodak had enjoyed high profit margins, fell 18% in 2005. The combination of these two factors resulted in disappointing profits overall.[20] Kodak's digital cameras soon became undercut by Asian competitors that could produce their offerings more cheaply. In 2007 Kodak was No. 4 in U.S. digital camera sales with a 9.6 percent share but it has lost ground since then, and by 2010 it held 7 percent in seventh place behind Canon, Sony, Nikon and others, according to research firm IDC. [21]

Kodak then began a new strategy shift. Previously Kodak had done everything in-house, but CEO Antonio Perez shut down film factories, and eliminated 27,000 jobs as it outsourced its manufacturing.[22] Perez invested heavily in digital technologies and new services which capitalize on its technology innovation to boost profit margins.[23] He also spent hundreds of millions of dollars to built up a high-margin ink business to replace shriveling film sales, and as of 2011, these new lines of inkjet printers are said to be on verge of turning a profit. Home photo printers, high-speed commercial inkjet presses, workflow software and packaging are viewed as the company's new core businesses, with sales from those four businesses projected to double to nearly $2 billion in revenue in 2013 and account for 25 percent of all sales. However in 2011, despite the turnaround progress, Kodak has been burning though its cash reserves rapidly which has stoked fears of bankruptcy; it had $957 million in cash in June, down from $1.6 billion in January.[24]

Kodak has also turned to aggressive patent litigation in order to generate revenue.[25][26] In 2010, it received $838 million from patent licensing, which included a settlement it with LG.[27] In 2011, Kodak has reportedly explored selling off or licensing its vast portfolio of patents in order to stave off bankruptcy.[28]

Timeline

1880 to 1900

1900 to 2000

2000 to 2010

2010 to present

Products and services

Current

Consumer inkjet printers and ink cartridges

Kodak entered into consumer inkjet photo printers in a joint venture with manufacturer Lexmark in 1999 with the Kodak Personal Picture Maker.

In February 2007, Kodak re-entered the market with a new product line of All-In-One (AiO) inkjet printers, which employ several technologies marketed as Kodacolor Technology. Advertising emphasizes low price for ink cartridges rather than for the printers themselves.[58]

Digital cameras and video cameras

Kodak currently produces a wide range of digital cameras and video cameras.

Many of Kodak's early compact digital cameras were designed and built by Chinon Industries, a Japanese camera manufacturer. In 2004 Kodak Japan acquired Chinon and many of its engineers and designers joined Kodak Japan.

The Kodak DCS series of digital single-lens reflex cameras and digital camera backs were released by Kodak in the 1990s and 2000s, and discontinued in 2005. They were based on existing 35mm film SLRs from Nikon and Canon and the range included the original Kodak DCS, the first commercially-available digital SLR.

In July 2006 Kodak announced that Flextronics would manufacture and help design its digital cameras.

Digital picture frames

Kodak first launched the Kodak Smart Picture Frame on the QVC shopping channel in the fourth quarter of 2000, when the majority of consumers didn't know about or understand this new digital photo frame category. Kodak's Smart Frame was designed by Weave Innovations and licensed to Kodak with an exclusive relationship with Weave's StoryBox online photo network.[59] Smart Frame owners connected to the network via an analog telephone connection built into the frame. The frame was configured to default connect at 2 a.m. to download new pictures from the Story Box network. The other option to load images onto the frame was via the CompactFlash port.

The retail price was $349 USD. The frame could hold 36 images internally and came with a six-month free subscription to the StoryBox network.[60] At the end of six months, users had the option of disconnecting from the network or paying a subscription fee of $4.95 per month for two automatic connections and two manual connections, or $9.95 per month for four automatic connections and four manual connections. Kodak re-entered the digital photo frame market at CES in 2007 with the introduction of four new EasyShare-branded models that were available in sizes from 8 to 11 inches (280 mm), included multiple memory card slots, and some of which included wi-fi capability to connect with the Kodak Gallery—although that gallery functionality has now been compromised due to gallery policy changes (see below).

Document imaging

Kodak provides document imaging solutions. Historically this industry began when George Eastman partnered with banks to image checks in the 1920s. Through the development of microfilm technology, Eastman Kodak was able to provide business and government with a solution for long term document storage. Document imaging was one of the first imaging solutions to move to "digital imaging" technology. Kodak manufactured the first digital document scanners for high speed document imaging. Today Kodak has a full line of document scanners providing imaging solutions for banking, finance, insurance,[61] healthcare and other vertical industries. Kodak also provides associated document capture software and business process services. Eastman Kodak acquired the Bowe Bell & Howell scanner division in September 2009.

Flexo printing

Kodak designs and manufactures products for flexography printing. Its Flexcel [62] line of flexo printing systems allow label printers to produce their own digital plates for customized flexo printing and flexible printed packaging.

Image sensors

As part of its move toward higher end products, Kodak announced on September 15, 2006 that the new Leica M8 camera would incorporate Kodak's KAF-10500 image sensor. This was the second recent partnership between Kodak and the German optical manufacturer.

Kodak Gallery

In June 2001, Kodak purchased the photo-developing website Ofoto. It was later re-named the Kodak Gallery. At the website, users can upload their photos into albums, publish them into prints, and create mousepads, calendars, etc.

Motion picture and TV production

The Kodak company holds a vital role in the invention and development of the motion picture industry. Many cinema and TV productions are shot on Kodak film stocks. The company helped set the standard of 35 mm film, and introduced the 16 mm film format for home movie use and lower budget film productions. The home market-oriented 8 mm and Super 8 formats were also developed by Kodak. Kodak also entered the professional television production video tape market, briefly in the mid 1980s, under the product portfolio name of Eastman Professional Video Tape Products. In 1990, Kodak launched a Worldwide Student Program working with university faculty throughout the world to help nurture the future generation of film-makers. Kodak formed Educational Advisory Councils in the US, Europe and Asia made up of Deans and Chairs of some of the most prestigious film schools throughout the world to help guide the development of their program.

Kodak owns the visual effects film post-production facilities Cinesite in Los Angeles and London and also LaserPacific in Los Angeles. Kodak also owns Pro-Tek Media Preservation Services in Burbank, California. Pro-Tek is the world's premier film storage company.

Photographic film and paper

Kodak continues to produce specialty films and film for newer and more popular consumer formats, while it has also discontinued the manufacture of film in older and less popular formats.

Kodak is a leading producer of silver halide (AgX) paper used for printing from film and digital images. Minilabs located in retail stores and larger central photo lab operations (CLOs) use silver halide paper for photo printing. In 2005 Kodak announced they would stop producing black-and-white photo paper.[63]

Photo kiosks

Kodak is a manufacturer of self-service photo kiosks which produce "prints in minutes" from digital sources and scans, using thermosublimation printers; the company has placed some 80,000 Picture Kiosks in retail locations worldwide.[64] Employing similar technology, Kodak also offers larger devices intended for photo shops, under the brand name "APEX".[65]

Technical support and on-site service

Aside from technical phone support for their products, Kodak offers onsite service for other devices such as document scanners, data storage systems (optical, tape, and disk), printers, inkjet printing presses, microfilm/microfiche equipment, photo kiosks and photocopiers, for which they dispatch technicians who make repairs in the field.

Other

Kodak markets Picture CDs and other photo products such as calendars, photo books and photo enlargements through retail partners such as CVS, Walmart and Target and through its Kodak Gallery online service, formerly known as Ofoto.

Former

Film cameras

On January 13, 2004, Kodak announced it would stop marketing traditional film cameras (excluding disposable cameras) in the United States, Canada and Western Europe, but would continue to sell film cameras in India, Latin America, Eastern Europe and China.[66] By the end of 2005, Kodak had ceased manufacturing cameras that used the Advanced Photo System. Kodak licensed the manufacture of Kodak branded cameras to Vivitar in 2005 and 2006. After 2007 Kodak did not license the manufacture of any film camera with the Kodak name.

Instant cameras

After losing a patent battle with Polaroid Corporation, Kodak left the instant camera business on January 9, 1986. The Kodak instant camera included models known as the Kodamatic and the Colorburst.

Polaroid was awarded damages in the patent trial in the amount of US $909,457,567.00, a record at the time. (Polaroid Corp. v. Eastman Kodak Co., U.S. District Court District of Massachusetts, decided October 12, 1990, case no. 76-1634-MA. Published in the U.S. Patent Quarterly as 16 USPQ2d 1481). See also the following cases: Polaroid Corp. v. Eastman Kodak Co., 641 F.Supp. 828 [228 USPQ 305] (D. Mass. 1985), stay denied, 833 F.2d 930 [5 USPQ2d 1080] (Fed. Cir.), aff'd, 789 F.2d 1556 [229 USPQ 561] (Fed. Cir.), cert. denied, 479 U.S. 850 (1986).[67]

Kodak had been the exclusive supplier of negatives for Polaroid cameras from 1963 until 1969, when Polaroid chose to manufacture its own instant film.

Kodak Research Laboratories

The Kodak Research Laboratories (KRL) were founded in 1912 with Dr. Mees as director.[68] Principal components of the Kodak Research Laboratories were the Photographic Research Laboratories and then the Imaging Research Laboratories. Additional organizations included the Corporate Research Laboratories. Over nearly a century of R&D, scientists at these laboratories produced thousands of patents and scientific publications.

Partnerships

Motorola

In 2006 Motorola, Inc. and Kodak announced a 10-year global product, cross licensing and marketing alliance intended to fulfill the promise of mobile imaging for the benefit of consumers. By incorporating Kodak’s image science and system integration expertise with Motorola's mobile device design, the two companies goal was to greatly improve the ease-of-use and image capture experience of camera phones. The collaboration covers licensing, sourcing, software integration, marketing, and extends to co-development of image-rich devices with joint engineering teams. For example, Kodak expects to supply its CMOS sensors to Motorola for use in its camera phones, as well as in any future devices the companies co-develop. Additionally, the cooperation to seamlessly integrate millions of Motorola mobile devices with Kodak home printers, retail kiosks, and the Kodak EasyShare Gallery will provide a solution to consumers who want a quick and easy way to get their images out of the phone for sharing. Under the alliance, Motorola and Kodak plan to initially expand access to and awareness of mobile-imaging services – including retail programs, online services and customized operator-led initiatives that deliver a seamless, easy experience for consumers. Later plans are to launch handsets and co-created mobile devices with integrated software to enable consumers to access and manage their mobile images seamlessly and conveniently. This cross-licensing agreement between Kodak and Motorola delivers royalty revenues to Kodak.

Notable people

Chief executives

Chief executives
Name Title Tenure
Henry A. Strong President 1884 – July 26, 1919
George Eastman President 1921 – April 7, 1925
William G. Stuber President 1925–1934
Frank W. Lovejoy President 1934–1941
Thomas J. Hargrave President 1941–1952
Albert K. Chapman President 1952–1960
William S. Vaughn President and CEO 1960 – December 31, 1968
Louis K. Eilers President and CEO January 1, 1969 – May 17, 1972
Walter A. Fallon President and CEO May 18, 1972 – 1983
Colby H. Chandler CEO May, 1983–1990
Kay R. Whitmore CEO 1990 – October 27, 1993
George M. C. Fisher CEO October 28, 1993 – December 31, 1999
Daniel A. Carp CEO January 1, 2000 – May 31, 2005
Antonio M. Perez Chairman and CEO June 1, 2005 – present

Scientists

Archive donation to Ryerson University

In 2005, Kodak Canada donated its entire historic company archives to Ryerson University in Toronto. The Ryerson University Library also acquired an extensive collection of materials on the history of photography from the private collection of Nicholas M. & Marilyn A. Graver of Rochester, New York.[69] The Kodak Archives, which begin in 1909, contain the company's Camera Collection, historic photos, files, trade circulars, Kodak magazines, price lists, daily record books, equipment, and other ephemera. It includes the contents of the Kodak Heritage Collection Museum, a museum established in 1999 for Kodak Canada's centennial but which Kodak closed in 2005 along with the company's entire 'Kodak Heights' manufacturing campus in Mount Dennis, Toronto.[70]

Environmental record

Kodak has been widely criticized by environmentalists and researchers as one of the worst polluters in the United States. According to scorecard.org, a web site which collects information on corporate pollution, Kodak is the worst polluter in New York state, releasing 4,433,749 pounds (2,011,115 kg) of chemicals into the air and water supply.[71]

The Political Economy Research Institute at the University of Massachusetts, which compiled the Toxic 100, ranked Kodak the seventh largest polluter in the United States in 2002.[72] In 2004, the Citizens' Environmental Coalition's (CEC) of New York awarded Kodak one of its "Dirty Dozen" awards to highlight its consistently high rates of pollution.[73]

However, in 2005, the U.S. Environmental Protection Agency (EPA) granted Kodak the EnergyStar Sustained Excellence Award for "outstanding and continued leadership in reducing greenhouse gas emissions through superior energy management."

Kodak details its annual progress in global sustainability, as well as health, safety, and environment, in its global sustainability report.[74]

Controversies

Better Business Bureau expulsion proceedings

On 26 March 2007, the Council of Better Business Bureaus (CBBB) announced that Eastman Kodak had advised it that the company was resigning its national membership in the wake of expulsion proceedings initiated by the CBBB Board of Directors.[75] In 2006, Kodak had notified the BBB of Upstate New York that it would no longer accept or respond to consumer complaints submitted by them. In prior years, Kodak had responded by offering consumers an adjustment or an explanation of the company’s position. The BBB file contains consumer complaints of problems with repairs of Kodak digital cameras, as well as difficulty communicating with Kodak customer service. Among other complaints, consumers say that their cameras broke and they were charged for repairs when the failure was not the result of any damage or abuse. Some say their cameras failed again after being repaired.

Kodak said its customer service and customer privacy teams concluded that 99 percent of all complaints forwarded by the BBB already had been handled directly with the customer. Brian O’Connor, Kodak chief privacy officer, said the company was surprised by the news release distributed by the Better Business Bureau:

It is inaccurate in the facts presented as well as those the BBB chose to omit. Ironically, we ultimately decided to resign our membership because we were extremely unhappy with the customer service we received from the local office of the BBB. After years of unproductive discussions with the local office regarding their Web site postings about Kodak, which in our view were consistently inaccurate, we came to the conclusion that their process added no value to our own. Our commitment to our customers is unwavering. That will not change. What has changed is that, for us, the BBB’s customer complaint process has become redundant, given the multiple and immediate ways that customers have to address their concerns directly with Kodak.
[76]Kodak

Patent litigation

In 2010, Apple filed a patent-infringement claim against Kodak. On May 12, 2011, Judge Robert Rogers rejected Apple's claims that two of its digital photography patents were being violated by Kodak.[77]

On July 1, 2011, the U.S. International Trade Commission partially reversed a January decision by an administrative law judge stating that neither Apple nor Research in Motion had infringed upon Kodak's patents. The ITC remanded the matter for further proceedings before the ALJ."Notice of Commission Determination."

See also

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