Fate of the US company: Cycle of renewal vs. Pile of patents

Eastman Kodak, the 131-year-old film pioneer that has been struggling for years to adapt to an increasingly digital world, filed for bankruptcy protection early on Thursday.


The American legend had tried a number of turnaround strategies and cost-cutting efforts in recent years, but the company — which since 2004 has reported only one full year of profit — ran short of cash.


First came foreign competitors, notably Fujifilm of Japan, which undercut Kodak’s prices. Then the onset of digital photography eroded demand for traditional film, squeezing Kodak’s business so much that in 2003 the company said that it would halt investing in its longtime product.


“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” Antonio M. Perez, the company’s chief executive, said in a news release. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core I.P. assets.”


Under Mr. Perez, who joined Kodak from Hewlett-Packard in 2003, the company has bet on inkjet printers. That strategy has yet to bear fruit, however. (NYTimes)

ToddA Michigan
I grew up in Rochester in a Kodak family. We bled yellow. I worked two summers at Kodak, in the factory where they made the ill-considered instant print film that went away when they lost the patent suit with Polaroid.

Kodak has been ill-managed for years, lacking leadership with a real passion for making great products and a stomach for taking the risks necessary to stay out in front. R&D was Kodak's life blood and has been gutted by the current crew, who have reduced this giant of innovation to hawking its old ideas for a few spare nickels with which to slow its demise. The great minds at the firm have been wasted, have left in disgust, or both.

Why, oh why, has Kodak continued to ride this fool of a CEO, Perez? He took a sick company, changed its focus completely to a non-core business, lobotomized it, and then moved on to selling off the extremities and internal organs. Did the Board really think this was a winning strategy?!?

I am appalled by what they have done to this brilliant company. Kodak needs a leader with the passion and determination of Steve Jobs to bring it back from the brink. The current Gil Amelio-esque bunch is utterly and completely incapable of completing the task ahead. They all need to go. Every darn last one of them.



mancuroc Rochester, NY
Kodak's recipe for decline parallels that of all too many companies too many MBAs and too many corporate lawyers running things, and not enough visionaries and technical people - this, no less, from the company that pioneered digital imaging.

It's hard to see a silver lining in bankruptcy, but if there is one, it is that the company luckily failed find a buyer for the intellectual property it foolishly tried to sell to raise money. Once you sell it, it's gone for ever; if the company survives, it will be there to license as a source of income.

If you live and breathe only by the bottom line, you die by the bottom line. There's a lesson here for American voters: beware of electing as President a bean counter whoy lacks imagination.


C. Attucks New York
Kodak could not bring to market fast enough the electronic image capture and display products they needed to produce in order to successfully compete with smaller electronic companies. Although they had the capital to dominate the digital evolution, management was reluctant to fully commit to the technology.

Many consumers are not aware that Kodak was a very successful world-wide chemical company that made chemicals for other industries besides photography. They should have kept the Eastman Chemical Division in Kingsport, Tennessee (EMN stock price as of today is $46.48) as part of a balanced portfolio. But the executive boardroom kept making decisions that addressed short term stock price concerns (e.g., Johnson & Johnson poison pill acquisition) instead of focusing on core business growth. They created a world-class health, safety and environmental program after several highly publicized chemical contamination spills and could have remained a viable chemical company since the infrastructure is still in place.


Steve Englewood Beach, FL
Kodak invented the Digital Camera, then, sat on it for 20 years. Pathetic leadership, zero vision, I feel for the Employees, past & present.


Josh Hill Connecticut
Sad. I can't think of a better example of a company that squandered its lead in new technology because of dinosaur management that was wedded to the old, dying business. Well, maybe one -- Western Union famously turned away Alexander Graham Bell.

I know a former Eastman employee who speaks with despair of management's failure to recognize what they had in the first megapixel CCD. And I don't have the impression that current management is any better -- ink jet printers, indeed.


LucS Manhattan
Kodak was not only a pioneer Film company, Kodak was also the pioneer in all forms of Digital Imaging, including the first commercial digital cameras. The birth of Digital Photography was a quandary for Kodak, as the company's cash cow were the consumables (film and paper and chemistry). I was fortunate to be on the launch team of the very first digital camera when Kodak was still one the greatest American if not International companies/corporations. They were even among the Major sponsors of all Olympic events.

The reason I left Kodak in the mid 1990's is the same reason Kodak is filing for Bankruptcy today. Even though it had been an innovative technology company, its outlook was provincial, and its reach slowed down by a stodgy corporate culture with its roots in the 19th Century.

Despite the excitement of many of us back then at the arrival of Digital, we were also apprehensive of its effect on revenues from silver halide products and would even joke about which one of us would turn the lights off. The days of mass manufacturing of film are numbered. It simply does not make business sense to keep huge factories running to sell only small batches. Film is the darling of young photography enthusiasts because it is different. We would even joke back then that if Digital was first, people would be Wow'ed by the invention of film. And even if film manufacturing was still feasible, the Lab infrastructure is no longer there to support it.

The End Indeed.


dr MA
Clearly, OLEDs are the next big imaging technology, and Kodak should be pushing their position there. But unfortunately, they sold the technology to LG a few years ago.

Economic future & Patent law

America Invents Act is latest bill in the US patent law system, aimed more at defending entrenched economic interests rather than anything else. The bill changes the method for determining the priority of patent applications to a “first to file” system from the long-standing “first to invent” method.

According to the NYTimes, the major two views about this bill are:

• “This bill is unequivocally a job killer,” said Valerie S. Gaydos, a Baltimore-based investor in early-stage companies. “It will create a rush to the patent office, with innovators seeking to file anything and everything. The applications will be less complete, less well written and it will create more of a backlog.”

vs.

• David S. Kappos, the patent office director and under secretary of commerce for intellectual property, disagreed, saying that the first-to-invent system was flawed because it essentially granted an inventor the right to legally defend his contention that he came up with an idea first. By changing to a first-to-file system, which is used in nearly every other country around the world, priority is clearly established, he said.
  Many large corporations — like General Electric, Caterpillar and I.B.M. — supported the bill, which opponents suggested was evidence that the bill favors behemoths at the expense of the little guy. They point out that Mr. Kappos worked at I.B.M. for 27 years before taking the patent office job. 

Here are some public views  on the matter:


Anon
Boston

The Framers - at the urging of the Paris-based Thomas Jefferson - gave Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries" (Art I Sec. 8). The idea was clearly to encourage individual innovators to commercialize their ideas, reap the rewards of their ingenuity, and teach others their inventions so they might be improved upon. But most of all, the hope was to bring the benefits of invention to the public, to agriculture and to industry. The cotton gin, the McCormack reaper, the telegraph, the electric lightbulb, and countless other inventions benefited both their inventors and the public in this way.

The patent system has degenerated into a big money corporate game. Most utility patents are trivial improvements on existing technologies, and rarely encompass the whole of the value of the product: a smartphone may incorporate hundreds of patented ideas. Patents are often issued on ideas that are already in the public domain, and it is extremely difficult to overturn an issued patent. Despite the high cost of prosecuting a patent, companies like Motorola, Apple and Microsoft file thousands of them each year, almost indiscriminately. The inventors get a modest award for each filing and a second if the patent is granted. And rather than being an incentive to innovation, they are trading cards in litigation.

Worse still, patents get abused by non-practicing patent holders (who often buy them cheaply) for barefaced extortion schemes that create no economic value and only serve to raise the price of technology products to consumers or keep valuable products off the market. The patent portfolio of the failed Nortel Networks had more value in bankruptcy than all the other assets of the company combined, in a cynical bidding war.

Jefferson must be spinning in his grave.

Court of Customs and Patent Appeals Reports (Patent Cases) in a large DC law library.

Lafayette75
Paris

Be careful, folks, anything that tends to bigness also arrives at awfullness in America. It is an ineluctable destination in an America gone crazy over Bigness is Beautiful.

What market bigness does is this: It creates oligopolies where too many customers go chasing too few suppliers. This is already happening to the Interconnect Industry, which is why DSL-interconnect is so much more expensive than elsewhere.

Which means what? My take: It means that our right to interconnect is not universal but based upon companies cherrypicking markets according to the number of cherries the market will produce.

Which means inevitably that some people will have to go without, sooner or later. It is one of the reasons why rural Internet Interconnect is lagging in the US. I live a very tiny village in the boonies of France, and yet my interconnect cost is only $20 a month.

Why? Because the government decided that citizens had the right to be informed (by TV, Telecom, Telephony) and that right should come at the lowest possible cost. Beyond that, whatever content they wanted could be priced at whatever the market will bear.

This notion is lost in America, which takes pride in Large Numbers bounced around the media, reported in the NYT, that makes mouths water.

What a bunch of children. Money can't buy you happiness, but it should be able to buy you a decently priced interconnect ISP.

RAPIER
CITY OF ANGELS

It's really boils down to control and domination. The realm of patent abuse has gone off the charts. Patents are being used by too big corps to dominate and control large marketplaces and LIMIT choices and increase costs to consumers thereby increasing their profits. Frenzied patent activity is occurring in every market; genetically modified food (and seeds), bio-med, etc. It's just another method to noose consumers with technology.

Farmers can't get a pineapple seed without buying a patented one from a giant Japanese firm because they GMOed it so now they own all the pineapple seeds.

Most of these corps don't create anything new. They just suck up other entrepreneurs' and inventors' ideas or products and/or steal them. A smaller entity or an individual has no chance to fight them in court. What are these patent vampires really producing that is truly beneficial to society at large? Drone jobs? Disposable technology to contaminate the planet further? Too rich executives? Contributing to an elite economic class and destroying the middle class? What is their true value to western civilization beyond Wall Street money changing and fostering a trend towards corporate state fascism?

Recently, congress was attempting to 'reform' the patent office filing from who had the idea first to who files first. Mammoth corporations employ mammoth law firms to do all that legwork. Tesla died poverty stricken. JP MORGAN bought or stole his ideas.

_______________

So, the present seems to favor a future characterized by economic monstrosities, also known, gingerly,  as too big to fail.

The mind as lens into the future

Vannevar Bush
Originally uploaded by UltimateLibrarian

Vannevar Bush, dean of engineering at M.I.T., in The Atlantic, July 1945:

Consider a future device for individual use, which is a sort of mechanized private file and library. It needs a name, and, to coin one at random, "memex" will do. A memex is a device in which an individual stores all his books, records, and communications, and which is mechanized so that it may be consulted with exceeding speed and flexibility. It is an enlarged intimate supplement to his memory. It consists of a desk, and while it can presumably be operated from a distance, it is primarily the piece of furniture at which he works. On the top are slanting translucent screens, on which material can be projected for convenient reading. There is a keyboard, and sets of buttons and levers. Otherwise it looks like an ordinary desk.

In one end is the stored material. The matter of bulk is well taken care of by improved microfilm. Only a small part of the interior of the memex is devoted to storage, the rest to mechanism. Yet if the user inserted 5000 pages of material a day it would take him hundreds of years to fill the repository, so he can be profligate and enter material freely.

Lead time to another harvest...

I've been arguing on different forums that people got addicted to the late '90s returns on hi-tech innovation, without understanding that they were harvesting the fruits whose seeds were planted for ~45 years (read, investments in fundamental science and such). In a recent exchange on LinkedIn, the following link came up.



Right now, we can see that innovation still goes on in the Military and bio-sciences. Indeed, it's due to the big money spent on these.

From Siprnet to Cablegate: An information system gone wrong

SIPRNet is an acronym that stands for Secret Internet Protocol Router Network. SIPRNet is "a system of interconnected computer networks used by the United States Department of Defense and the U.S. Department of State to transmit classified information (up to and including information classified SECRET) by packet switching over the TCP/IP protocols in a 'completely secure' environment." It came into being in the aftermath of 9/11, as a way to share information easily among the many government employees, with the objective, or hope, that key intelligence no longer gets obscured in information silos or "stovepipes."

SIPRNet is an information system, or a combination of people and technology. The whole Cablegate episode becomes also interesting from the perspective of our confidence in, and expectations from, technology. One should only recall the early rhetoric surrounding internet technology, which probably made its way also to/from the State Department.

Now, we are waiting again for technology to save us from peak-oil.

In all these instances, I ask, where have the investments been? Not in people, it appears...

ideas in motion: covering mirrors

Question

Without following the finer points bibliophiles make in reaction to e-book readers, how closely and how soon will the book industry resemble the music and film industries? 

A hard disk drive back in 1956... with 5 MB of storage

In September 1956 IBM launched the 305 RAMAC, the first 'SUPER' computer with a hard disk drive (HDD). The HDD weighed over a ton and stored a 'whopping' 5 MB of data. Do you appreciate your 8 GB memory stick a little more now?

deconstructing the iphone

Globalization is apace, despite increasing awareness to negative externalities, jobs displacement and higher costs. In 2006, it was Sonicare, now is iPhone. Some things never change, they keep mutating at the edges.