One of the best discussions of this kind of issue I've read was Warren Buffet on the shutdown of Berkshire Hathaway's textile business. Berkshire was a textile business when he bought it which faced a decline similar to that of Kodak's film business. His answer, to reallocate capital to completely different businesses that were healthy. It was kind of what Fuji did when they switched from film to cosmetics and Buffett's reallocations allowed Berkshire to do very well rather than going bust.
The discussion is in the 85 letter if you scroll down to "Shutdown of Textile Business." http://www.berkshirehathaway.com/letters/1985.html
> Over the years, we had the option of making large capital expenditures in the textile operation that would have allowed us to somewhat reduce variable costs. Each proposal to do so looked like an immediate winner.
> But the promised benefits from these textile investments were illusory. Many of our competitors, both domestic and foreign, were stepping up to the same kind of expenditures and, once enough companies did so, their reduced costs became the baseline for reduced prices industrywide.
This is a great illustration of why capitalism is not inherently innovational. If it is cheaper to exploit workers than to automate, the market will exploit workers instead of automating.
I am not so sure Kodak had any other developed businesses where they could have re-allocated so much capital. Something similar seems to be happening with Yahoo now.
Now China's entire export economy to the entire world is only thirty-something million TEU annually. Figure 50K pounds cargo per TEU and compare, and if I did the math right in my head, one obscure lube oil and plastic resin company sells about 1% of China's total worldwide export capacity.
(All of the above is accurate to about one sig fig, and if China has finally topped 40 megaTEU thats all very nice but doesn't fundamentally change the conclusion anyway)
I mean, that's not realistic to ship across the planet, just too much of it, too heavy, global shipping isn't "big enough" to eat low value product.
Now something high value per pound like photographic film, Kodak would be out of business today in the USA anyway even if film were still in business. Ready to use photo film has a high enough dollar per pound density to be worth shipping across the world.
*The exception being highly sought after material not available nearby.
This.
During my seven years at the Windsor, CO Kodak plant (see my other comment below for more) it was crazy to hear of the heyday (I was there 2002-2009, not the heyday). It was the 2nd largest Kodak manufacturing center (bested only by Rochester) and built in the 60s. It was a sprawling campus of huge concrete buildings with almost no windows (great for film!). The campus had it's own fire department and power plant.
It was a ghost of it's former self when I started but by the time I left entire buildings were vacant. At it's peak the plant had 3,200 employees. A lot of people there had worked in Rochester and from their stories I could hardly fathom the manufacturing operation there being so much larger than ours.
Maybe that's part of the reason Kodak moved so slow - all those buildings and people and essentially small factory cities are not something you can change overnight.
But they do exist in China. Plants in some cities dump sludge into wastelands the size of lakes. Some factories are small towns unto themselves where people work, sleep and live on company property.
We still need to the scale Kodak had for their market at the time, but economics has moved it overseas and the market is totally different.
It's still consumerism though, and a frightening scale. It's just abstracted away from most of the western world, so we don't see it.
In Back to the Future Part III, Dr. Emmett "Doc" Brown--the 1955 version of himself--discovers that the DeLorean time machine car has broken down because of a faulty chip made in 1985.
Doc Brown: Unbelievable that this little piece of junk could be such a big problem. No wonder this circuit failed. It says, "Made in Japan."
Marty McFly: What do you mean, Doc? All the best stuff is made in Japan."
https://books.google.com/ngrams/graph?content=made+in+China%...
I remember seeing that in various things, ever since my father pointed it out. It was common enough to exist in daily lingo.
Most of the time it was a synonym for cheap knock-offs.
https://books.google.com/ngrams/graph?content=made+in+China%...
Could they have bought NeXT in the mid '90s? Then maybe we'd all be walking around with a "smartcam" that also makes calls.
Without divining, based on now-known realities, that they had no insight into, what could have been done?
Apple's total disintegration isn't entirely imaginable at this precise moment, but planning for some dreaded rainy day, what disaster strategies could they use to anticipate a total failure of their bread and butter?
Microsoft probably IS facing this scenario. What can they do?
I do agree with your assessment of AAPL vs MSFT. Apple has ingrained itself into the fabric of our personal lives in a way that would be very hard to challenge. Microsoft never achieved that - because it was run by corporate sales folk.
Apple's undoing, if anything, will be from being to greedy.
Meanwhile, consider that Microsoft was very strong in 2003, but through a few minor misteps, just missed the boat on a some key changes in technology. Then, when the things that killed their advantageous position finally made an appearance, they refused to give chase. Why they failed to jump on the new bandwagons, and how their own boat started taking on water, has a complex story of its own.
But yeah all that business, corporate, government, enterprise activity is probably plenty more than just life support. It's not like I read shareholder earnings reports or anything, though.
I've worked with some of Xerox's workhorse printers, multi-hundred-thousand-dollar systems that can crank out 120 prints per minute, sustained (hot-swappable paper trays, so you don't even have to stop to reload). But all of those were already being dwarfed in document presentation by a freely-available arrangement of software, with a $1,000 - $10,000 piece of server kit capable of kicking out millions of pages per day. A large print shop with several workhorse printers might make 1 million copies/day.
And at a fraction the cost.
Yeah, Xerox completely dropped the ball.
Source: worked tech support for better part of the 2000's and had to get Xerox printers on our networks often. Spent a lot of time updating settings when the contracts renewed and new printers were leased.
I believe you meant to say "that there was a business model".
I worked at Kodak as a summer intern in '85. Was the era of the disk camera. Was also my first programming job. Lotus 1-2-3.
Most people today can't comprehend the scale of American manufacturing as it still was at that time. The Elmgrove plant where I worked (one of a dozen facilities in the Rochester area) has over 14 thousand employees. Our start and end times were staggered in 7 minute increments to manage traffic flow.
That none of that would exist 20 years later was inconceivable at the time. The word "disruption" wasn't in business vocabulary. Nor was the phrase "made in China". Some senior technical managers saw the "digital" writing on the wall. But what could they do? What could anyone do? There was no way to turn that aircraft carrier on a dime.
At the end of my summer internship, I attended a presentation that our small team gave to more senior managers at the top of Kodak Tower in the conference room adjacent to President Chandler's office. One of the managers took me to the window and pointed out to me different plants and facilities of the vast Kodak empire spread out across the Rochester region. I assumed like many that Kodak had a bright future ahead because they had a world-renowned brand and excellent scientists and engineers. What many at the time didn't yet recognize was that there was no business model in digital cameras that would employ 100 thousand engineers, managers, factory workers, technicians, and staff. There were certainly no senior managers willing or able to sacrifice the golden goose of film to pursue something entirely different.