Lessons learned from Kodak and how to best Adapt to New Technologies
By Armin Monajemi
This piece has been adapted from a talk given by CEO David Lyman on November 16th, 2016 at the Hardwired NYC event in Chelsea, Manhattan.
The Fall of Kodak and the Rise of Drones. Lessons in early adoption and adapting to new technologies.
In 1888 the Eastman Kodak Company was founded and shortly thereafter became the most dominant household name in the sales of cameras and film. The company operated on the sales premise similar to that of razors and blades. Consumers would purchase cheap cameras and the company reaped large margins on repeatedly selling new film cartridges. Through the release of products such as Kodachrome in the 1930s, Kodak became a household name and entered popular culture. Whether it was the famous song ‘Kodachrome’ by Paul Simon, or today Pitbull singing about ‘Kodak’ moments, the brand will last for generations as a cultural force.
A Vintage Kodak Advertisement
While the brand may be fresh in our minds and steeped in nostalgia, Kodak the company itself is in dire straits. In 1997 the stock traded in the 90-dollar range. It was a solid buy. Kodak had nearly 15 billion in revenue, thousands of key patents, and a stranglehold on the market for film despite the emergence of rival such as Fujifilm. 15 years later the company traded for pennies a share. The NYSE said that it had 30 days to get its share price over one dollar or it would be de-listed. Kodak ultimately filed for Chapter 11 bankruptcy protection in January of 2012. Kodak had gone from the darling of photographers and stock traders to the de facto example of a company failing to adapt to new technology.
Many people initially think that the fall of Kodak is solely because of the rise of digital cameras. The truth isn’t that simple. Kodak actually invented the digital camera in 1975. While the first cameras were nowhere near capable of the resolutions that were demanded by consumers (.1 Megapixels!) the proof was in the pudding — the days of analog film were numbered. By the 1990s the market for digital cameras was tight and Kodak had a number of forays into the market.
Apple Quick Take 100
Remember this? That’s the Apple Quick Take 100 which was actually built by Kodak. The product launched in 1994 to great fanfare as it was one of the first digital cameras directed towards consumers. This proprietary camera was capable of storing eight photos at a 640×480 resolution. At the introductory price of 749 dollars its needless to say that the product was not a big seller given its limited features. Kodak was split between two worlds. The rise of digital was on the horizon, but the high profit margins of analog film dictated business strategy.
The Chasm in Technological Adoption
Kodak fell into ‘the chasm’ of technological adoption. They were the innovators of digital film and attempted to drive early adoption. Initial consumers saw the benefits of digital — no repeated trips to the store to develop film and the ability to digitally touch-up photos. The major hang-up was price. The technology simply wasn’t there yet to drive down prices.
The Rise of Digital Film
As the chart above demonstrates ‘the chasm’ was finally crossed by the end of the 1990s. Moore’s law and the development of better and cheaper sensors opened the market to a variety of companies to produce their own cameras and market them directly to consumers. Olympus and Sony were two early adopters who made a foray into the market. In 1999 Nikon introduced the D1 — one of the world’s first DSLR cameras. Digital hit the mainstream and Kodak was forced into a price war. Digital cameras were a low-margin business which required constant development to stay ahead of savvy consumers. By contrast, the Kodak model had relied upon steady sales of mass-produced film for over a century. Kodak was undercut by more nimble rivals who were able to release cheaper and superior products.
Now what does this have to do with the drone industry?
We at BetterView believe that the drone industry has just passed the infamous chasm that was described earlier. Decades of research by the government to create military drones opened up avenues for consumer development. Improvements in computing power, battery efficiency, and wireless transmissions have brought what was reserved initially to hundred-million-dollar military budgets down to only $400 for the latest DJI Phantom 3. Drones are available to anyone and commercial industries are taking notice. Simply put, it is our opinion that drone adoption today is at the same inflection point as digital photography in 1999.
2016 was a big year for the drone industry. The release of FAA Part 107 has wholly legitimized civilian drone usage and businesses in nearly every sector are taking note and launching pilot programs to test real-world applications of drones. We believe that 2017 will be a water-shed year as commercial drone use moves from concept to integration in everyday business. The market will only continue to grow. Goldman Sachs recently estimated that global sales of drones will total nearly 1.8 million per year by 2021.
Drones are Taking Off!
Drones are at a take-off point both literally and figuratively. The technology is here and real-life use cases for commercial applications are realized every day. BetterView has worked with property owners, insurers, pavers, and many other diverse business groups to use drone technology to enhance business operations. Elsewhere we have seen drones used to survey wildlife, identify regions which need humanitarian assistance, and deliver pizza. The future is looking sky high for drones. So back to Kodak — it is important to realize when the world around you is fundamentally changing. Drones are going to be as much a part of any businesses toolkit as any other piece of technology. Don’t be a laggard and fall victim to changing technological trends. Evaluate what drones can do for you today.