Eastman Kodak’s Quest for a Digital Future
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Kodak’s digital imaging strategy during 1992-2012 was intended to transform the company from a traditional photographic company to a leader in digital photography. In order to achieve this, the company created two different strategies: one for the consumer market and one for the professional and commercial markets.
In the first market, Kodak’s purpose was to provide security, reliability and simplicity for customers who still needed time to adapt to the new technology; that is why it offered a set of services that allowed to digitalize and edit existing printed photographs. However, learning how to use these services required much effort and time for customers. This problem was solved with the introduction of EasyShare, a system that allowed customers to view their images on different devices, print them and share them by mail, and that temporarily strengthened Kodak’s position in the market.
As concerns the professional and commercial markets, Kodak’s strategy focused on scanning and printing photos. In particular, it was based on two key elements: Kodak’s superior inkjet technology and its leadership in variable-data printing that permitted individually customized output, which was not only possible thanks to its internal resources and capabilities, but also thanks to hiring, alliances and acquisitions which were essential for the company to add value to existing activities and products. As a matter of fact, Kodak created joint ventures and strategic alliances with Canon, AOL, Intel and IBM, to name a few. The emphasis on printed images was an important point for Kodak, which believed that the digital technology would have never replaced them. That is why the company continued investing in printers in both markets. The last point of Kodak’s strategy was to divest the traditional photography business, since sales of film products had fallen dramatically, and increase investments in digital technology.
However, this strategy failed and Kodak declared bankruptcy in 2012. The reason why this happened has to be attributed first of all to the fact that Kodak relied excessively on printed photos, thinking that people would have never preferred watching pictures on a computer or a smartphone screen, and they were completely wrong. In addition to this, Kodak targeted the wrong customers or, more specifically, tried to reach too many segments by creating a vast variety of products instead of specializing on the most attractive segment. Table 5 in the case reading shows that the company suffered the biggest losses in the consumer segment, while the “Film, Photofinishing and Entertainment Group” was the only profitable segment left in 2011, even though earnings had gradually decreased overall. It is also important to remark that Kodak did not consider the diffusion of a strong substitute in the consumer segment: modern high-quality cameras embodied in modern smartphones reduced the attractiveness of existing digital cameras. In this case, competition also played an important role: although Kodak could exploit its strong brand loyalty at the first stages of its digital strategy implementation, there already were companies with more developed