Case 1: Kodak Questions

1. When the digital camera was first introduced to the mainstream market by Sony, analog cameras had been in use for just under a century. The analog camera was much less expensive and smaller than the clunky original digital camera. Kodak operated in a razor blade scheme of selling very inexpensive cameras, but drove revenue through their film sales. As time went on though, the digital camera increased in its advancement of shutter speed and clarity, while decreasing, relatively, in cost. Today, while analog cameras can be found in the form of disposable and home use cameras, they are cheaper to buy than digital cameras. Although, the efficiency and longevity of a digital camera have made it a more mainstream and economical choice. The performance of a digital camera raises above the analog it the terms of its increased megapixel clarity, increased shutter speed, and the network externalities of sharing pictures with friends and family. Digital cameras allow a user to take a picture and instantly upload it to the internet to share with others via email and online websites, while the analog camera can be sent through the mail or in disposable terms, on a CD. Digital cameras become more of a dominant choice for consumers through their ease of distribution to others. A consumer can use either their home computer, kiosk in a store, lab in the store, or through email. Digital cameras are constantly being innovated in terms of their performance and quality of the pictures and also by allowing users to connect to the internet via wi-fi on the camera directly to share pictures. Such changes can be made to the digital cameras format easily with its electronic basis, while analog cameras make slow advances in only picture quality. 2. Kodak actually invented the digital camera in 1975, but failed to see the viability in the then current market. As foreign film companies began to distribute digital cameras into America and other countries, Kodak realized they needed to push into the digital market and spent 5 billion dollars on digital research. Unfortunately, this research went into effect in their scanners rather than digital cameras. By the time they seriously went into the digital camera market, it was a heavily concentrated industry and they struggled to find a market niche. They continually spent more money on research of cameras, when the money should have been spent on reinventing the company. Digital substitution has not only taken away money from the analog market of cameras, but other markets such as the movie industry are now switching to digital cameras which lowers the profitability of analog companies. In terms of distribution, Kodak found its grounding in its 80 to 90 percent market share of wholesale film distribution in mom and pop shops across America. As big box retailers such as Walmart began to grow in prominence, consumers started to demand quality products at lower prices. Fuji film found its entrance in such a market where they could distribute their product in large retailers at low prices that Kodak couldn’t compete with. Soon the film market share was equally distributed between Kodak and other firms from foreign countries.

3. In the original analog state, the acquisition process of taking a picture was done on traditional film cameras. Kodak pioneered the process and thusly controlled the majority market share of the film camera market until the mid sixties when Fuji Film from Japan undercut their revenues by selling less expensive film and cameras. The contrasted with the marketing method that Kodak employed of razor-blade pricing; cameras were extremely cheap, but film drove the revenues. Soon other brands began producing analog film cameras such as Nikon, Sony, and Canon. The technology that most of these brands employed was silver halide processing technology. The distinction between Kodak and most of its competitors was Kodak used vertical integration and controlled the