Instagram thrives; Kodak barely survives

Here’s a tale of two photography businesses with very contrasting fortunes.

Eastman Kodak Co introduced the handheld camera to the world in 1888. Kodak also invented film, which proved quite the boon for the movie industry. They were the official camera of choice for Neil Armstrong when he took aerial photography to the extreme in 1969. Paul Simon sung a ditty about Kodachrome film in 1973. Kodak came up with the digital camera in 1975. They employ 17,000 people across the United States.

And on 19 January of this year Kodak filed for bankruptcy, with debt outweighing assets by $1.7 billion.

Instagram is a free photo-sharing application that allows people to take photos, apply special digital effects, and share them online. This was launched in October 2010 through Apple’s app store, making them about 19 months old. Last week they launched Instagram for Android. They now have 30 million users, a dozen employees, and no revenue.

This morning, 10 April 2012, Facebook bought Instagram for $1 billion in cash and stock.

So what the heck happened?

You can trace Kodak’s decline to their 1975 invention. Having created the digital camera, they then bizarrely determined it posed too much of a threat to their lucrative film business. Having decided Kodachrome was going to be fashionable forever – it was a number 2 Billboard hit after all – they promptly put the digital camera on the backburner.

Canon and Hewlett Packard, having no such emotional attachment, then led the way in digital cameras and printers. By the time Kodak decided to try to catch up it was too late. That 17,000 workforce? 47,000 less than in 2003. Kodachrome film went out of production (sorry Paul) in 2009, and Kodak has effectively followed suit less than three years later.

They will likely downsize their way out of this but effectively, after 130 years, they are about as relevant as a Six-20 Brownie model 4.

The story today of course is Instagram and their newly super rich owners Mike Krieger and Kevin Systrom. They, like George Eastman once upon a time, saw a gap in the market and knew how to fill it. They are visionaries – even if right now they are seeing little else other than big dollar signs.

Those photo albums at the back of your cupboard are a thing of the past. There is a huge future in digital photos and social media, as tens of millions of new photographers will tell you. More and more people are buying smart phones which all come, as a matter of course, with a camera. With merely a few clicks what you just saw can be shared with everyone.

That old cliché ‘move with the times’ has again rung true. A great big company was too slow to adapt and now they’re dying. A tiny business with a big vision embraced the future and, with a billion dollars in the bank and Facebook’s backing, they have never been more alive.

The WSJ's David Weidner's view on the Instagram sale

3 thoughts on “Instagram thrives; Kodak barely survives

  1. Pingback: Facebook spends billion on Instagram, baffles billions with ‘Camera’ app | Open2view

  2. Pingback: We’d take these cameras over a cell phone any day | Open2view

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