Tesla Investor And The Infamous Kodak Moment

NOV 6 2018 BY MARK KANE 49

Legacy automakers risk the fate of Kodak

Baillie Gifford & Co.’s Iain McCombie said in an interview that too many people are focusing on controversial tweets posted by Elon Musk instead of the huge opportunities ahead for Tesla.

Tesla is now selling in the U.S. more cars than Daimler and if we really think that EVs are the future, there is almost unimaginable potential of growth for electric cars (but also other Tesla businesses like solar roofs, energy storage, autonomous driving and trucks).

This is why long-term investors like Baillie Gifford (the third largest shareholder of Tesla) backs Tesla, while those engaged in legacy automakers need to decide what those manufacturers should do. Invest in EVs or risk the fate of Kodak, who missed out on the digital camera future.

Kodak developed the digital camera, but missed the opportunity. Today (well, 5 to 10 years ago actually), everyone in the automotive industry knows about electric cars, but there are still many manufacturers that are doing almost nothing. Another Kodak moment ahead for those who fail to see the future?

“There are lots of risks, of course, and “we could still be wrong”, McCombie makes clear. But it is the traditional car makers who are under pressure, he claims, suggesting this could be their “Kodak moment”.

“They spent hundreds of years building up their knowhow in industrial combustion engines and they do a great job with that, but what happens if all of us are suddenly saying ‘oh, I want an electric car’? Suddenly, that knowhow is useless,” he concludes.

“What happened with Kodak is they actually discovered the digital camera, but they buried it because it was too frightening for them. They thought it would kill their film business. But the fact that they didn’t innovate killed Kodak.””

Source: finance.yahoo.com

Categories: Tesla

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49 Comments on "Tesla Investor And The Infamous Kodak Moment"

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Doggydogworld

The Kodak myth again…..

JoeInTheUK

I agree. Digital cameras >>and equally importantly (though often missed in analyses), computer and tablet storage & displays<< were always going to kill Kodak, there was nothing they could do about it.
Sure they could have had a better camera but that wouldnt haven't staved off the elimination just not of film but also prints. Kodak were never really a camera company they sold the consumables, which digital eliminated.
The only thing they could have done was get into solid state storage (eg SD cards ) that would have given them an extra year or two.

Its like blaming a slide rule manufacturer for letting calculators putting them out of business.

The only possible "opportunity" they could have grasped was to get into flash card memory, but that is such a different business to the one they were in, same as slide rule manufacturers knowledge wouldnt equip them to make calculators.

Mister G

In capitalism you always have to evolve adapt or die CONNECT THE DOTS ON CLEAN AIR WAKE UP EARTHLINGS CO2.EARTH

John Doe

Kodak is not dead, they are smaller – but they make some mean hard working digital presses for example.
https://www.kodak.com/US/en/corp/company/default.htm

They could not compete in the camera industry, at least not without outsourcing the production to a low cost county in Asia. The volume market for Kodak was fairly cheap cameras to promote their supply of films, paper and other consumables..

The companies that manufacture SD cards now hardly makes any money on it. The carts last too long, the equipment is expensive and the margins are low.

jamcl3

Well Kodak did go bankrupt. Then again so did GM and Chrysler and…

GenSao

Kodak is a shell of a company of what it once was. After selling off everything, the company basically sells (license) it’s name on products. Everything is now outsourced with little to no patents remaining.

“Kodak” chose to be a “film” company over the long term vision of an “imaging” company. The company resisted transformation to “digital” tech and failed.

Akin to “an auto manufacturer” that chose to be a “ICE” company over the long term vision of a “vehicle/transportation” company. The company resisted transformation to “EV” tech and may fail.

Chacama

Or… they could have embraced the digital revolution by investing on building some IP around thin films, CMOS and digital camera tech just like Cannon or Fujifilm (who even has a line of “Photo Quality” Skin Care products) have been doing…. just a hunch.

Matthew Kennel

FUJIFilm also faced the same dilemma. They survived, because they had the correct understanding of their true business.

They were a chemical coatings company—that’s where their expertise is. For instance, https://www.fujifilmdiosynth.com/ is one of their businesses. They own other biological and chemical businesses.

Kodak assumed they had to be an imaging company. They would never have succeeded in digital cameras because it’s all about electronics manufacturing and chip physics which they were far from competitive.

And now FUJIFILM also owns Xerox.

Doggydogworld

Kodak spun Eastman Chemical out in 1994 so it could focus on that side of the business without getting dragged down by the difficult transition Kodak execs knew full well was coming. EMN is a $10 billion Fortune 500 company, owned by former Kodak shareholders.

marshall

We won’t know until we get there, but I believe there are several things going for Tesla. One, they are not battery constrained, two, they don’t have to fight the dealerships not wanting EVs, three, they will improve autopilot and four, they don’t have a bunch of money invested in gas vehicle manufacturing equipment.

I believe the self-driving car will be the biggest threat to all of the vehicle manufacturers. That’s one thing I think bob lutz and mary barra are getting right. The vehicle manufacturers that survive will be the one’s that hold the keys to self-driving technology.

GenSao

It was not much of a myth.

“Kodak did not fail because it missed the digital age. It actually invented the first digital camera in 1975. But, instead of marketing the new technology as they did in 1888, and become the market leaders in digital, the company held back for fear of hurting its lucrative film business, even after digital products were reshaping the market.

Kodak had the view that it was in the film business instead of the story telling business, and it believed that it could protect its massive share of market with its marketing. Kodak thought that its new digital technology would cannibalize its film business.

Seeing their biggest competitor hesitate, Sony and Canon saw an opening and charged ahead with their digital cameras. When Kodak finally decided to get in on the digital game it was too late. Kodak soon saw its camera market share decline, as digital became dominant.

This blind faith that it’s brand and marketing had the ability to overcome the threat from the new technology proved fatal. Kodak failed to adapt to a new marketplace and new consumer attitudes.”
https://bytomlove.com/journal/2016/11/22/brand-stories-kodak

Rolando

So based on this Kodak history, then Big-Auto might be really following the story: concentrate on ICE because they are combustion motor experts — and hold back EV to homeopathic dosage (minimum compliance) as not to cannibalize their ICE sales.

Terawatt

Whaddaya mean, myth?

Kodak did invent the digital camera, back in 1975. The first digital camera launched on the consumer market in 1984, the Apple QuickTake, was made by Kodak, not Apple. Throughout the 1990s Kodak attempted to follow a digital strategy. It’s not like they didn’t see the shift to digital coming. It’s not like the digital camera isn’t what killed Kodak. It’s not like Kodak didn’t invent the thing (although surely others would have made them anyway).

I think the Kodak case is extremely fascinating, and a very good illustration of how difficult it is to overcome legacy in a large corporation – even if nobody on the board or in management are in denial.

DEE

Never have to develop film again to see your shots. I remember coming back from vacation and then having to spend $200 so I could see all the pictures I took. Used to take a few days too.. What ever happened to all those typewriter companies before they made home computers? I know IBM used to make typewriters, but there must have been a bunch of them back then.

DEE

Also if Blockbuster got into digital streaming they would still be around and there would be no Netflix.

Jeffey Spaulding

They did get into digital streaming, but it was too little, too late. They were being run by a mercurial CEO who was more interested in acquisitions than adapting to changes in the marketplace.

Doggydogworld

Blockbuster was dead before streaming took off. Most of Blockbuster’s revenue was the 60 titles released to video in the prior two months. Redbox took that market with 1/1000th the square footage. Redbox could not replicate Blockbuster’s extensive selection of older titles, of course, but Netflix’s dvd-by-mail service took over that market with ZERO retail floor space.

All the expensive space Blockbuster leased turned into a millstone around their neck. They had no chance.

amt

That was a lot of BS to go through for a few pictures ..Kodak Got What It Deserved ! & So Will Big Auto , Because they have the same “Set In Their Ways” Twisted way of Thinking., Always Negative (No Pun) & Looking out for their “Best Interest” ?

John Doe

Some started making computers. Some laster a number of years, others was bought by other companies.
Others already made other products as well, and continued to to so (like Brother).
IBM used to make really good typewriters, and printers – even huge once for very high volume.

jamcl3

I worked at IBM on dedicated digital word processors back in 1981 when most of that IBM factory was still making Selectric typewriters. IBM got out in front of the changes. Kodak did not.

amt

I think Kodak Was too worried that they would lose out on selling Film , Developing Equipment, Flash Bulbs & other related Photo Supply Items ..But missed the Big Picture….(No Pun) It’s Very Ironic How They Buried it All Including Kodak’s Future along with it ..

theflew

Please stop using Kodak as an example. Kodak invented the digital camera and were one of the top brands in digital cameras in the consumer market. What hurt Kodak had little to do with their digital cameras. It was the convergence of technology that killed them. Digital cameras, PDAs, MP3 players and phones merged into the smartphone. And even though the converged device wasn’t as good as the individual – it was good enough for most people. You could argue their mistake was not making a smartphone.

Nothing is converging with EVs – it just a different powertrain. This is more of an evolution instead of a revolution. In the end it’s going to take higher gas prices to really accelerate the doption of EV’s. The average buyer just doesn’t see the real benefit at this time (higher purchase price, limited charging outside the home – even Tesla, and lower charging times compared to fueling).

Mister G

Nothing is converging with EVs…the capability to supply your own electrons that power your EV in the comfort of your home is a big convergence. No more oil price fluctuations and less pollution is a big convergence. CONNECT THE DOTS ON CLEAN AIR WAKE UP EARTHLINGS CO2.EARTH

Andy

So you mean the oil companies will suffer, not the car manufacturers?

Ron Swanson's Mustache

Someday I’ll meet you in real life, and I will be totally bemused when it turns out you look exactly how I picture you in my head.

PeterK

Kodak’s demise wasn’t inevitable. Fuji Film, the #2 in film to Kodak’s #1, has continued and prospered in related fields including digital cameras, instant photo cameras and films (what used to be Polaroid’s domain), medical imaging and more.

Larry Al

“convergence of technology” is exactly what is happening. Electric vehicles which reduce costs of fuel, maintenance and repairs. Shift to MaaS (Mobility as a Service). Self Driving Car Technologies enabling TaaS. and more . . .

jamcl3

Then use Motorola as an example (although I think Kodak is a better example). Motorola led the market for mobile phones for a long time but they were a little late moving to digital modulation from analog and Nokia crushed them. Then Apple crushed Nokia. We will see about Android.

But you really think the fact that FujiFilm survived while Kodak went bankrupt does not make Kodak a good example? “While both film manufacturers recognized this fundamental change, Fuji Photo adapted to this shift much more successfully” than Eastman Kodak. -Wikipedia

Another Euro point of view

About to have two Evannex now on this site, when the third one ?

Brian

No, just killing time until the OEMs make a modern EV instead of bringing ’14 Model S60 competitors to market.

Chris O

Look on the bright side: more stuff to troll for you.

Mike
I don’t know if the Kodak moment is the best analogy because, as was pointed out, Kodak was really about the consumables and I don’t think they were huge in the microprocessors and optics necessary to independently develop digital imagery. My guess is that most of the legacy companies will be end up contracting with companies like LG and Samsung for both batteries, motors and the supporting hardware. Whether they can compete with a vertically integrated companies like Tesla, and whatever the Chinese end up with, will be the challenge. Margins are already pretty slim so giving a subcontractor 20-30% of your profit margin will be rough, but it is not like Intel actually makes any of the laptops people buy. Now what will be interesting is to look back 10 years from now and conclude that the smart thing for the legacy companies to do was to buy some of the early startups that ended up going broke. Imagine if Ford had bought A123. That company was doing the Fisker batteries, but it went under during the financial crisis. Should Fiat have rescued Faraday Future and used their automotive manufacturing knowledge to quickly get into the luxury EV market?
John Doe

I think FIAT should spend some money on Faraday Future for sure. They’re also developing their own platform for EVs, but will take a few years before it’s finished. We’re talking 2024-2027 before the product is in production.

G2

Arguably, the “consumables-Kodak” analogy works if you look at big oil’s ownership in LICE industry. The LICE vehicle is the film camera while gas/diesel/oil are their profitable consumables.

jamcl3

Does your acronym stand for Legacy Internal Combustion Engine? That is a new one on me. Kudos. It is kinda mean, but…

jamcl3

Kodak was a technology leader in digital imaging (maybe still is?) but they did not make money a it. Fuji diversified (starting in the 1980’s maybe?) into copiers, etc. Fuji is not what it was but they did better than Kodak in the transition.

Andy
In the car world Kodak was the equivalent of an Oil company (BP/Shell/Esso) that also made cars that used their fuel. In that world the Oil comany invented the electric car, then spent billions building really expensive, high performance EV’s, before realising the market was more interested in cheaper, lower priced cars being made by dedicated car manufacturers. By that point their oil business profits had dried up and they didn’t have any money to invest in the direction the market had actually taken. Subsequently they went Bankrupt… Kodak made around 85% of their money from film, their cameras were just a method of increasing the sales on their film. The billions they spent leading the market in Digital at the beginning is a warning that should be taken to heed by many car manufacturers. Going all in too fast is one recipe for disaster, but also assuming the market won’t change (which is NOT what Kodak did) is a recipe for disaster. Companies like Tesla are high risk for that very reason, but the investors usually know that the risk is high, but that the rewards when it goes right are also high. Companies like VAG/Ford/Toyota are not, and… Read more »
Alaa Sadek

If the Legacy guys are unable to compete with Tesla today, how will they do that in say 2 years time? Tesla alone made 60% of the world’s battery production and ALL the others including phones toys etc tried to get some of the remaining 40% of the world’s battery production. So what chance do these legacy guys have?

DS

That would be a valid point of supply was fixed and no one could, say, build new battery factories.

Scott Franco

Like Kodak in that the car business relies on use of a product continually after purchase (film, gas). Unlike Kodak in that the car companies don’t make that product. Also unlike Kodak in that people are not going to be satisfied with just one brand of car, since consumers have got used to many styles of cars (trucks). That is also unlike Ford in the old days.

G2

The oil industry is heavily invested in the LICE industry, which is another reason LICE can’t escape their oily grip.

john1701a

Tortoise and the Hare

That would be a more accurate description of the situation playing out now. Being “ahead” at the moment is by no means a guarantee an automaker will win the race. This is where the often overlooked or dismissed detail of design cost & efficiency will really make a difference.

Matthew Kennel

LG, Samsung and the Chinese battery manufacturers will hold the keys, like Intel & Microsoft did for the PC market for 20 years.

Bloggin
VW Group is the only ICE automaker that is actually shifting to EVs at a deliberate pace. The others are trying to hang on to ICE engineering as long as possible. BMW has its identity tied to ICE and it’s transmissions(Ultimate Driving ‘Machine’), which will mean a big identity shift moving to EVs. MB had its identity tied to safety, but Tesla already took that crown. Sports cars, super-Exotic sports cars, and American pony cars had the fastest 0-60 as their claim, but Tesla took that with a big 4-door family sedan and the new Roadster makes it clear they can’t get there with ICE. EV technology has created a new level playing field, but all above what ICE is capable of. ICE automakers created compromise(range/design) EVs early on, and on purpose to try and discourage consumers from wanting an EV, but Tesla offered the EV potential…..and now at more reasonable prices. And anyone who has driven any Tesla model or iPace can tell you that after that experience, there is no going back to ICE. The race is on….and it’s not about who will win the race, but who survives the race.
Philo
For a very good explanation of the demise of Kodak (and how Fujifilm prospered by quitting the camera business altogether) read this: https://petapixel.com/2018/10/19/why-kodak-died-and-fujifilm-thrived-a-tale-of-two-film-companies/ The kodak failure meme is bandied around way too much and its relevance to car companies is not valid. If you want an analogy its the oil companies who can be compared to Kodak as almost their entire business will evaporate (albeit over 20+ years, not the 2 like Kodak). And if you want to carry the camera industry analogy further, all car companies (Tesla included) are like the legacy camera makers (ie NOT Kodak but Nikon, Canon, Pentax, Minolta, Leica etc) who faced the transition to digital – ie some tech the same (lenses, ergonomics) some new (sensors, no film). Most of these companies shrank, died or moved away from the camera business- but what really killed them was the cell phone where photos ceased having any value as they were never printed. The killer product for all cars (Tesla included) will be self driving cars because at this point they will be a called upon service and private car ownership will probably cease. When this happens (when???), car brands are finished – when was the… Read more »
Terawatt

I think you are alluding to the “Kodak invented the digital camera, which killed it” story, but that is NOT what the idiom “Kodak moment” means. It stems from their ad campaigns, and is described on thefreedictionary.com as

“A particularly poignant, memorable, or emotionally touching moment or event, i.e., one that would be well-suited to be captured in a photograph. Taken from an advertising slogan for Eastman Kodak photographic film and cameras. Sometimes used ironically or satirically.”

Stephen

Kodak Moment used to mean what the ad campaigns intended, but it is now used to derisively describe what happened to companies that fail to adapt to changes in the marketplace precisely because it was used in their ad campaigns.

Pushmi-Pullyu

[quote] “They spent hundreds of years building up their knowhow in industrial combustion engines and they do a great job with that, but what happens if all of us are suddenly saying ‘oh, I want an electric car’? Suddenly, that knowhow is useless,” he concludes.[/quote]

Yeah, but what about the rest of the car? Tesla struggles with erratic quality, and wastes time, money and other resources on unrealistic attempts to fundamentally change the way cars are mass produced. No legacy auto maker will make the mistake of thinking that the entire assembly line can be automated, with no human assembly at all; and no legacy auto maker will claim that factories can improve their speed of assembly by 5x or 10x by speeding up the assembly robots to eye-blurring speed.

Tesla has made significant advances in making EV powertrains, and significant advances in integrating its cars, both integration of the build and integration of how the driver operates the car. It’s literally true to say a Tesla car is “Greater than the sum of its parts.”

But Tesla still has a lot to learn in terms of making cars with consistent quality in large volumes. Lessons legacy auto makers have already learned.

G2

PP- arguably Tesla has trod the same path as the LICE industry, recalibrated it’s (his) hubris, and now produces quality on par with the industry they now lead.