Friday, January 20, 2012

Kodak failure a lesson for all, but not surprising

It's sad about Kodak, the venerable brand that has played a central role in capturing a big chunk of modern natural and human history. Perhaps more sad is that fact that the people running it either a) didn't see digital coming or b) saw it coming and buried their heads in the sand and refused to embrace it.

The company's demise is no surprise to me. I consulted to another long-established and highly respected brand in the 1990s - Agfa. They were in the film production business also and arguably produced the best consumer film product on the market.

The interesting thing about Agfa was that it had seen the digital age coming and was actually a leader in the area of high-resolution medical and pre-press imaging (remnants of it still are, as far as I know). Even in the mid-range scanning segment, some of Agfa's flatbed scanners were second to none. So there was no excuse for its rapid demise and disappearance in the consumer imaging sphere.

The writing was on the wall for me when I was asked to promote Agfa's range of digital cameras. I had a stockpile of them in my office that I promoted to the camera cognizenty in the media to 'road test'. I remember them clearly - 2 megapixel resolution on the base model, with a premium 4 mPx on the upmarket model.

That was great for about six months, but not for the several years that the company promoted the range. It got to the point where I was forced to have a very robust conversation with the company's executives about the wisdom of maintaining the media evaluation program when competitors were rapidly moving on to a whopping 6 mPx and beyond.

In fact, in my famously diplomatic way, I shipped all the test units back to them declaring that there was no evidence that the company had any commitment to the segment and no product development strategy that I could see.

Twelve months later, and to my cost, I received the inevitable call from Agfa Australia. I was to lose a significant marcoms account - not because of what I said, but because I had been proved right and the Belgian HQ had announced Agfa was withdrawing from the consumer digital imaging market. That was back in 2001 and, in my view Kodak was not looking much healthier even then - remember the $15 million Australian Government subsidy to retain Kodak in Australia when Ziggy Switowski headed up the operation? Perhaps we'd rather forget this in the context of the auto industry funding debate!

But, back to the knitting. I was later told that Agfa had withdrawn from the sector because it saw mobile phone and electronics companies as the future players in photography for the masses. And hey, they were correct. The digital cameras offered in mobile devices today are vastly superior to their early offerings. But the point is, why didn't they take action to forge alliances or even negotiate mergers with some of these operators?

Agfa's brand in consumer photography was massive in Europe, respected in the United States and growing in Asia-Pacific. It had strong advocacy in professional photographic ranks. But it appeared the executive placed no real value on the potential for their brand to assist other companies not already in the consumer imaging space to, at minimum, develop and manufacture products for them.

I am not close enough to Eastman-Kodak to know the intricacies of why they went broke, but Rupert Goodwins of technology website, ZDNet sees it this way:

"Kodak made all its money from selling film, then the digital camera came along and now no-one's buying film. It's not like they didn't see it coming. Kodak hesitated because they didn't want to eviscerate their business," he said.

Sounds a hell of a lot like history repeating itself to me and there are lessons in it for all of us. Purists might argue film produces superior images with more subtle colour gradations and so on, but no one wants it. Some audiophiles still argue vinyl LPs deliver a warmer sound than CDs. And even I believe CDs deliver superior sound to mpeg devices. But those views don't matter if the masses don't believe them.

Consumer demand drives our businesses, not the widgets we might develop or service models and systems we might think are good, or even superior,  for them.

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