It's official: Kodak in bankruptcy

Really, guys?

1. On the patents, Kodak spent billions of dollars developing basic technology. A lot of what you spent on film (even what you spend today) went into massive R&D. In fact, Kodak and Polaroid for a time were two of the biggest IP generating shops – Rochester and Boston were the Silicon Valley of their era (in fact, were it not for Kodak, much of what you know as digital photography might not exist - starting with putting a color image on a single silicon chip). If you look at the filed dates on a lot of digital imaging patents, you'll see that they're older than you think.

Patents are a legal monopoly, and you get 20 years of exclusivity in exchange for making the information public. This is not "organized crime;" it is public policy that encourages innovation and technology transfer to society at large. People will enforce their patents. Some claims are stronger than others, and the stakes are very high (digital patents, if enforceable, are not chump change). At the same time, the USPTO has been exceedingly liberal in granting patents, and that is why there is a lot of litigation to sort out who owes whom for what. This was the case through the 1990s and 2000s.

And let’s take it a third way: the amounts for which patent cases are settled are peanuts compared to what is actually at stake (think about the Bayer sensor that underlies 99% of all digital cameras). Achieving a cheap settlement as a defendant could be called theft in its own way: you develop the idea using your R&D money, I take it, and you pay me some small fraction of what you made and what the technology cost to develop. But in many cases, settlements also incorporate actuarial discounts for the possibility that a court might have invalidated the patent.

2. There is a huge overestimation of the relative volume and technical capabilities of some smaller manufacturers.

  • Ilford has already been through a reorganization at least once. It is not a tremendous innovator (many of Ilford's films were - and are - designed to compete 1:1 with Kodak products as budget alternatives).
  • Current smaller producers in EU countries bought product lines and production lines abandoned when mainline producers got out of the business.
  • Current smaller non-EU producers, should their home countries reach accession into the EU, are going to have to upgrade their facilities to modern environmental standards. This cost Kodak a cool billion dollars and is why only five black and white films made the jump.
  • Fuji has dumped some b/w products and frankly, never made anything that exciting to begin with.

I think people under-appreciate is how expensive film is to research and make to a high level of quality control, what quantities are required to even do a run, and what a tough business it is. Do you even know if Efke and Foma are even making another master roll?

3. People seem very Pollyanna-ish about what will happen to the price of film if Kodak exits that market. It will go way up. Kodak is actually exerting downward pressure by putting a lot of volume out there.

4. And as for the question about how traditional materials are compatible with the digital market, consider that there always needs to be a way to print things. Kodak sells tons and tons of conventional minilab paper that is used to print digital images – because that’s the most cost-effective way to do it.

You may hate Kodak for discontinuing your favorite film and you may think they made some really bone-headed business moves (I do) - but you had better pray for its success in reorganization. I think you'd find a world without Kodak in the market would be pretty unpleasant.

Dante
 
Dante_Stella said:
Really, guys?

1. On the patents, Kodak spent billions of dollars developing basic technology. A lot of what you spent on film (even what you spend today) went into massive R&D. In fact, Kodak and Polaroid for a time were two of the biggest IP generating shops – Rochester and Boston were the Silicon Valley of their era (in fact, were it not for Kodak, much of what you know as digital photography might not exist - starting with putting a color image on a single silicon chip). If you look at the filed dates on a lot of digital imaging patents, you'll see that they're older than you think.

Patents are a legal monopoly, and you get 20 years of exclusivity in exchange for making the information public. This is not "organized crime;" it is public policy that encourages innovation and technology transfer to society at large. People will enforce their patents. Some claims are stronger than others, and the stakes are very high (digital patents, if enforceable, are not chump change). At the same time, the USPTO has been exceedingly liberal in granting patents, and that is why there is a lot of litigation to sort out who owes whom for what. This was the case through the 1990s and 2000s.

And let’s take it a third way: the amounts for which patent cases are settled are peanuts compared to what is actually at stake (think about the Bayer sensor that underlies 99% of all digital cameras). Achieving a cheap settlement as a defendant could be called theft in its own way: you develop the idea using your R&D money, I take it, and you pay me some small fraction of what you made and what the technology cost to develop. But in many cases, settlements also incorporate actuarial discounts for the possibility that a court might have invalidated the patent.

2. There is a huge overestimation of the relative volume and technical capabilities of some smaller manufacturers.
  • Ilford has already been through a reorganization at least once. It is not a tremendous innovator (many of Ilford's films were - and are - designed to compete 1:1 with Kodak products as budget alternatives).
  • Current smaller producers in EU countries bought product lines and production lines abandoned when mainline producers got out of the business.
  • Current smaller non-EU producers, should their home countries reach accession into the EU, are going to have to upgrade their facilities to modern environmental standards. This cost Kodak a cool billion dollars and is why only five black and white films made the jump.
  • Fuji has dumped some b/w products and frankly, never made anything that exciting to begin with.
I think people under-appreciate is how expensive film is to research and make to a high level of quality control, what quantities are required to even do a run, and what a tough business it is. Do you even know if Efke and Foma are even making another master roll?

3. People seem very Pollyanna-ish about what will happen to the price of film if Kodak exits that market. It will go way up. Kodak is actually exerting downward pressure by putting a lot of volume out there.

4. And as for the question about how traditional materials are compatible with the digital market, consider that there always needs to be a way to print things. Kodak sells tons and tons of conventional minilab paper that is used to print digital images – because that’s the most cost-effective way to do it.

You may hate Kodak for discontinuing your favorite film and you may think they made some really bone-headed business moves (I do) - but you had better pray for its success in reorganization. I think you'd find a world without Kodak in the market would be pretty unpleasant.

Dante
Click to expand...


I just felt a cold wind blow through the room! 🙁
 
Thank you, Dante, for a superb and mildly contrarian contribution to this thread. It says a number of things that badly needed to be said.
 
Dante_Stella said:
  • Current smaller non-EU producers, should their home countries reach accession into the EU, are going to have to upgrade their facilities to modern environmental standards. This cost Kodak a cool billion dollars and is why only five black and white films made the jump.
Click to expand...
Good point. It appears Croatia will join the EU sometime in 2013, it will be interesting to see if this is of any consequence for Efke. In the case of FOMA, the Czech Republic is part of the EU for seven years now. If there was any impact by the implementation of EU environmental standards, it wasn't enough to make them stop making film.
 
joeswe said:
Good point. It appears Croatia will join the EU sometime in 2013, it will be interesting to see if this is of any consequence for Efke. In the case of FOMA, the Czech Republic is part of the EU for seven years now. If there was any impact by the implementation of EU environmental standards, it wasn't enough to make them stop making film.
Click to expand...
Don't forget that Germany is still making B&W film in large quantities (ORWO) to.
 
ibcrewin said:
Here are my 2 cents...

I see this restructuring as a major opportunity to save kodak film. Kodak is just a brand. The machines and the people who make the film are the heart and soul of what we expose light onto. Suppose kodak sells off the film business to say Freestyle. The same machines, and the same people will be making the film. The trick here is to sell the film arm to someone who values it and isnt' going to drive it into the ground. .
Click to expand...
This happened with Agfa when Adox took over. And nothing. No new APX have seen the light. Maybe this environmental thing had something to do with it ?
 
Also recall that you can have environmental regulation changes even if you are already part of a country, as Kodak's experience in the U.S. Sometimes adherence is mandatory, sometimes you are "grandfathered" in, sometimes it happens when you build a new plant or buy new machines. But you can probably bet that processes involving metals will become more tightly regulated over time. Sadly.
 
Dante_Stella said:
Also recall that you can have environmental regulation changes even if you are already part of a country, as Kodak's experience in the U.S. Sometimes adherence is mandatory, sometimes you are "grandfathered" in, sometimes it happens when you build a new plant or buy new machines. But you can probably bet that processes involving metals will become more tightly regulated over time. Sadly.
Click to expand...

Sad, unless you don't want a poisoned environment.
 
timor said:
This happened with Agfa when Adox took over. And nothing. No new APX have seen the light. Maybe this environmental thing had something to do with it ?
Click to expand...

The APX successor by ADOX is still in the works. If I understand correctly, they had a production scale test run of the ADOX 400 about a year ago that revealed some quality issues, so they decided to postpone the launch of the product to get it right. This is a small company with limited financial and human resources and they are dependent on the cooperation of outside partners and they work on other projects like the rebirth of the Forte Polywarmtone paper, so it's natural they can do only one step at a time. The sharp rise in silver prices last year might have played a role, too. But the project is far from dead, I think Mirko of ADOX recently dropped a remark that things look rather good at the moment.

John
 
You must log in or register to reply here.
Back
Top Bottom