Is Kodak Smartly Exiting a Dying Business?

Kodak Instamatic
Kodak Instamatic

I’m part of the problem: I never owned a Kodak digital camera. In fact, I’m not sure if I ever owned a Kodak camera–not counting disposable ones–period.

Still, my instinct upon hearing that Kodak is going to stop making digital cameras (along with video cameras and digital picture frames) was to take the loss personally. Kodak says it wants to license its legendary name to other manufacturers–as Polaroid, Sylvania, and other companies do–but it’s not going to be the same.

Kodak’s decision obviously relates to its recent bankruptcy. It would presumably prefer to be one of the top camera companies and raking in vast profits from the category. But even if the exit stems from financial woes, I’m not so sure that it isn’t, in its own way, a forward-looking move–a sign that Kodak is agile rather than a sign that it’s a failure.

After all, there’s plenty of evidence that camera phones are cutting into the sales and usage of basic, consumer-oriented digital cameras–the very kind that Kodak has focused on for many years. The point-and-shoot business probably isn’t going to grow; it’s going to shrink over time, and the products in it will get more commoditized and less profitable. Maybe it’s better to get out of the market than to continue to be part of the furious race to the bottom.

You can argue that Kodak should have been smart enough to invent the camera phone. You can point out that digital SLRs and other fancier stand-alone cameras–the sort that Kodak chose not to make–are still selling well. Given the situation as it exists, though, I think that Kodak is making the right decision, sad though it may be. And it’s quite possible that other companies that make point-and-shoots may follow its lead over the next few years.

[Art at top of post: Detail from 1965 Kodak ad.]

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