Kodak: the end of a technology

A little note to make the point:

Earlier this week, Moody\’s, the ratings agency, downgraded several Kodak debt securities, sending it further towards \”junk\” status. Fitch downgraded the company a day later.

Its shares are at their lowest since June 1935.

There\’s no particular reason why a company should last forever: in the larger scheme of things it\’s a method of exploiting a technology, a market position. If that technology becomes redundant, the market position disappears, there\’s no real reason for the company to continue to exist.

Sure, maybe it should have diversified: but perhaps not. All the systems, all the assets, the knowledge, were there to handle photography. That doesn\’t particularly translate into being good at digital cameras (entirely different technology cycles, a very different business to be in) let alone anything else.Being good at film is just great: but when no one wants film any more than the assets, the knowledge, they probably should be sold off, dispersed: asset stripped if you like. Moved to other higher valued uses, creating wealth in the process.

This seems obvious with Kodak: but the same is true of all companies in the end. There\’s a good argument sometimes put forward that Microsoft should stop investing. The money all came from owning the desktop: that stage of computing isn\’t over, by a long way, but there\’s no particular advantage that the company has outside the desktop: ecept for pots and pots of money of course. So why not return that money to the shareholders. Regard that near mkonopoly of the desktop as a wasting asset to be sweated for maximum return rather than having the money pilfered for Zune and other such nonsenses.

Or BP, Shell: great oil companies but that\’s the point, they\’re in oil. Not energy, not electricity, not solar, windmills. That\’s not their skill. When we no longer want oil they probably won\’t exist: and we also probably shouldn\’t be shouting at them to invest in those things like wind and solar that they don\’t know much about.

(Yes, I do know that Shell is in wind and BP was in solar, but they\’re not actually what each company is good at).

12 thoughts on “Kodak: the end of a technology”

  1. I feel a little sad in a purely nostalgic way about the death of film; Kodachrome is synonymous with my childhood; that particular colour cast it has, and the endless dreary slides of other people enjoying themselves “and here we are at, where’s this Barbara, is that Corfe Castle or Carew Castle?” while the viewers consider creeping away under cover of darkness. Feels sad for the whole technology disappearing. I felt the same a whilte ago when I walked into my local Maplin and it suddenly struck me that everything was digital, and all the analogue audio technology I’d mastered as a lad was completely gone. Strange feeling. I’m old, then.

    But this thing about “the desktop”, I dunno. Maybe I’m just being a techno-conservative again, but I like “the desktop”. Everyone talks about “the desktop” like it’s a horse and buggy; but I fear the new generation. Their eyes are too shiny, their speech a little too fast, there is a little too much utopian excitement for my liking. It seems to me that they are all running towards this exciting future where the computer returns to being just a terminal connected to a mainframe owned by somebody else; they give it a happy clappy buzzword, “the cloud”, but thin clients, that’s all it is. And I do not like a world where everything I do is timesharing on somebody else’s machine. I imagine them monitoring my word processing for politically incorrect content, and flagging a police computer elsewhere in “the cloud” and…

    Microsoft and Apple, but particularly Microsoft, created a world of individualist computing, in which you owned your processor cycles, rather than renting them from somebody else. That’s “the desktop”, really. Everyone now around me appears to be a collectivist who can’t wait to be part of a “cloud” ruled by some greasy, disturbing “left-capitalist” monster like Google, who have openly stated that they aim to know what I should want before I want it, and tell me so, and provide it whether I like that or not.

    This old-fashioned horse’n’buggy “desktop” machine I’m typing this on, it still works without a network. I can write letters and draw pictures and all sorts, all without anyone else’s permission. It’s mine, not merely a part of an “experience” provided by some notionally benign dictator.

    The future scares me, really it does. We gained a lot of individual freedoms in the gap between Victorianism I and Victorianism II; one by one they are sliding away; and this time around they have the hegemonic technologies with which to enable levels of control that last time around were the stuff of dreams.

  2. ^^^

    Excellent post, Ian; if it’s any consolation, I feel rather the same way. I’ve kept a weather eye on Kodak for some time (indeed, knew one of their corporate treasury bods in the 1980s – they were feeling a little sweaty even then) and it’s clear to me that they have been in trouble for some time.

    But there’s another issue; the Ratings Agencies. It has always seemed to me that they perform a similar function to those who bayonet the wounded after the battle is over.

    Are these the same cunts who took money to give AAA ratings to trailerpark mortgage packages?

    Conflict of interest? Naaaaaaaah.

  3. The shelf-life of corporations is much shorter than we think. You can juggle cap size, etc., but from peak to trough (closure) it’s less than a generation. Those which survive are the ones we remember. The One Thing that I would never wish to be is a ‘darling of the stock market’…

  4. There’s a good argument sometimes put forward that Microsoft should stop investing. The money all came from owning the desktop: that stage of computing isn’t over, by a long way, but there’s no particular advantage that the company has outside the desktop.

    The other problem for Microsoft is that people keep things like office suites and operating systems for much longer now. Both things have reached a level of maturity where upgrading just doesn’t deliver much to the user.

    But I also think that Apple have some rough times ahead for the same reason. Smartphones have basically reached the point where the next phone will barely do more than the last one for the customer, so it’s now going to be about prices falling.

  5. But the way the left talk about jobs is always about ‘preserving’ them, like one of those period museums where everybody dresses in Ye Olde Worlde costumes.

    Interesting to find out how Kodak is different to, say, mining, or car manufacture. Should people be forced to buy film cameras so that Kodak workers can stay in jobs?

  6. Or BP, Shell: great oil companies but that’s the point, they’re in oil. Not energy, not electricity, not solar, windmills. That’s not their skill.

    Correct, and if you were to look at it a bit closer you’d find the supermajors are only really investing in four areas for the future: LNG, heavy oils, deep water, and non-conventionals (e.g. tar sands). This is the stuff the smaller companies and the nationals can’t do.

    And looking at it even closer, the oil majors are only really good at two things: the geology side of the business (which is highly skilled and few others can do) and the forging of partnerships which bring enormous amounts of capital to a project. The rest of it they are really not that good at.

  7. …is that Corfe Castle or Carew Castle

    I can’t believe there is somebody on here who knows Carew Castle! One of the oddities about Carew was that it consisted of about ten houses yet always produced at least two superb cricket teams.

  8. Someone once described to me his view of Kodak: as part of their biz they had become ace at various aspects of difficult technical chemistry. If they had had the insight to say that their game wasn’t imageing, but chemistry, they could have survived and thrived.

  9. At film school we had several lectures from an ex-kodak guy. Sometimes out of interest, sometimes out of sport, we would ask leading questions about digital technology and the rate of improvement. We didn’t believe his contention that film would be around for ever and that there would be two markets etc. His favourite line, repeated ad nauseum, was ‘my pension is safe’. It seems as we thought, it isn’t. Hopefully he diversified.

  10. there is one employment group that lasts near forever – government. I’m not sure what it makes.

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