Kodak has a new strategy

The new economy is here and the new economy will intensify. Old giants drop like stones, but how can companies foresight their competitors next move? Take a look at the good old giant Kodak. What have happened to them?

Kodak`s annual sales 25 years ago was $19 billion, but that was then. Now, it`s all turned up side down. Their workforce has been cut from 145,000 to only 8,000, and their annual sales today is only $2 billion. A sharp drop for the New York City company Kodak.

Kodak-film-roll

When you hear the name Kodak, you probably think film, but another film-company was not the reason why Kodak plummeted. The film-company Kodak was losing market shares because of the new mobile phone revolution.

Today, many of the pictures is taken by a mobile phone. A cell phone. How many pictures do you think is taken only with the iPhone worldwide? And how could the dominant brand in photography see that coming?

Kodak tried to make some things to participate in the shift in the market, but as photography started to move from analog film to digital, Kodak were largely left behind. When film went from «essential» to «nostalgic» the film giant Kodak did never recover.

Not only the film-company disappeared, but also the retailers in the same business. No one is delivering their film to the retailer anymore. Not only Kodak lost on this shift, but the retailers was also hardly hit by the new economy.

You all know what the dominant camera is today. Kodak is and was not a phone company and that`s probably why they didn`t make a new phone, because that`s the product that really killed the film giant.

What should Kodak do?

It`s difficult for a company to make the right decisions when the revenues is plummeting, but it can be easy for other to look back and say you should do this and that. In my opinion, there is big opportunities for everyone. For example, Steve Jobs built and rebuilt Apple, but they were not the first phone maker on the market.

Take a look at the finnish multinational communications and information technology company Nokia. The worlds biggest phone maker a few years ago. Nokia`s history started in 1865 when mining engineer Fredrik Idestam established a ground wood pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, Finland (then part of the Russian Empire).

The predecessors of the modern Nokia were the Nokia Company, Finnish Rubber Works Ltc and Finnish Cable Works Ltd. In 2014, Nokia employed 61,656 people across 120 countries with annual revenue of around €12,73 billion. It is the world`s 27th-largest company.

The Finnish business and Nokia`s founder and leader Eduard Polòn founded Finnish rubber Works. A manufacturer of galoshes and other rubber products. He decided to use the name «Nokia» (the town) as a brand name for his products to differentiate his products from Russian competitors.

The legacy of Suomen Gummitehdas lives on in Nokian Tyres.

The electronics section of the cable division was founded in 1960. In the 1970`s, Nokia became more involved in the telecommunications industry by developing the Nokia DX 200, a digital switch for telephone exchanges. Nokia was a key developer of GSM (2G) (Global System for Mobile Communications), the second-generation mobile technology that could carry data as well as voice traffic.

NMT (Nordic Mobile Telephony), the world`s first mobile telephony standard to allow international roaming, provided expertise for Nokia in developing GSM, which was adopted in 1987 as the new European standard for digital mobile technology.

One year later, in 1988, Nokian Tyres, manufacturer of tyres, split from Nokia Corporation.

In the 1980s under CEO Kari Kairamo, Nokia expanded into new fields, mostly by acquisitions. In the late 1980s and early 1990s, the corporation ran into serious financial problems, partly due to heavy losses in its television manufacturing division.

Kairamo committed suicide in 1988. After Kairamo’s death, Simo Vuorilehto became Nokia’s chairman and CEO. In 1990–1993, Finland underwent a severe recession which also struck Nokia.

Probably the most important strategic change in Nokia`s history was made in 1992, when the new CEO Jorma Ollila made a crucial strategic decision to concentrate solely on telecommunications.

As late as 1991, more than a quarter of Nokia`s turnover came from sales in Finland. However, after the strategic change of 1992, Nokia sales to North America, South America and Asia became significant.

The worldwide popularity of mobile telephones, beyond even Nokia`s most optimistic predictions, created a logistical crises in the mid-1990`s, prompting Nokia to overhaul its entire supply chain.

By 1998, Nokia`s focus on telecommunications and its early investment in GSM technologies had made the company the world`s largest mobile phone manufacturer, a position it held until 2012.

Between 1996 and 2001, Nokia`s turnover increased almost fivefold from 6,5 billion euros to 31 billion euros. Nokia acquired Smartphone, a company making Smartphone OS. Sybian was Nokia`s main smartphone operating system until 2011.

Apple`s iPhone, originally launched in 2007, was initially still outsold by Nokia smartphones, most notably the Nokia N95 for some time. Symbian had a dominating 62,5% market share as of Q4 2007, ahead of Microsoft`s Windows Mobile (11,9%) and RIM (10,9%).

Symbian dropped and Apple and Android grew. On 2 September 2013, Microsoft announced that it would acquire Nokia`s mobile device business in a deal worth €3,79 bn, along with another €1,65 bn to licence Nokia`s portfolio of patents for 10 years; a deal totaling at over €6,5 bn.

Steve Ballmer considered the purchase to be a «bold step into the future» for both companies.

Kodak has a new plan to grow and stay alive. The company is mining its patent library to find new business models. People around the world use their phones to take pictures and Kodak will try to reach the phone market by an old patent.

Kodak need to look for their intellectual property and be innovative in the photography business. They probably have an old patent that can turn talent in optics and chemistry into new money in other industries?

Nokia`s history shows us that everything is possible!

 


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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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