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The invincible course of events that proves Kodak is far from immovable

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martin pawley

Some years ago I wrote a column on this page charting the performance of all the word processors I had owned, from a lowly Amstrad to an elegant Dell Dimension.This progression, I wrote, was a plain example of evolution in action - a glimpse of an invincible force overwhelming an immovable object that nobody could dispute, however hard they tried.The thing I didn't get into at the time was just how hard people have tried to hold back the course of events.

Take the ongoing voyage to extinction of the roll-film camera at the hands of its digital successor.This smouldering struggle was recently brought back to the front page of the business news section by the publication of Eastman Kodak's fourth-quarter profits figures, which showed a whopping 82 per cent drop from the year before, from $113 million down to $19 million.

Shortly after this event the company announced it planned to shed up to 15,000 jobs worldwide, more than a fifth of its large workforce.

This was more than just a wake-up call - it was a cry for help. So much so that you might wonder how it came about that a once massively profitable company like Eastman Kodak, which had held a virtual monopoly on popular colour photography for 20 years, and had already let 10 years of digital development pass by all but uncontested, had not taken steps to protect itself long ago. The answer is that it did take steps, but in a manner that is almost incomprehensible to us, even with the benefit of hindsight.

This part of the story begins more than a hundred years ago with the rise of George Eastman, the founder of Kodak and inventor of roll film and the eponymous Kodak camera. Eastman was an inventor in the grand American tradition. Like Thomas Alva Edison, who invented the electric light bulb, he number-crunched his way to success by trying out materials and methods thrown up by a huge spectrum of ideas.

As the Kodak corporation became more and more successful, Eastman increasingly used its profits to buy out potential competition, no matter how far-fetched. In this way the company fought off competition from the German Agfa colour printing process in the 1930s, and contained the threat of Japanese Fuji colour film in the 1960s.

George Eastman died in 1932, but his tradition of lavish purchasing outlived him and still has its adherents in the company today, as shareholders have recently complained. During a century of growth, Kodak spent billions of dollars on securing the patent rights to the occult ideas of lone inventors on the off chance that they might come in useful to block a competitor one day.Alas, when the day did come, they proved to be not only useless but valueless too.

Enter evolution again.This time Darwin's revenge takes the form of the sudden appearance of an entirely consumerised imaging system based on home computer processing and display, a system far more flexible than roll film and, in commercial terms, a death sentence on every phase of roll-film photography - camera sales, film sales and processing too.

So how does Kodak respond? Since 1998, when it finally began to take the digital threat seriously, the company has cut 22,000 jobs, not including the 15,000 cited above. But it has also reversed its fight or flight posture by announcing an accelerated conversion to digital imaging backed by the purchase of a large shareholding in Chinon Industries, a Japanese digital camera supplier. Ignoring the example of Carl Zeiss in Jena, where the same grim choice struck in the 1990s, Kodak might be changing horses in midstream.

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