Apple, Nintendo and Kodak: Three Innovators and How They Faced Extinction

Today I’d like to talk about three tech companies that have each had their ups and downs. Apple, Nintendo and Kodak: How are these companies alike? How are they different?

We’ll discuss how an industry leader falls from grace and whether or not it’s possible to be saved once that happens.

A Heritage of Innovation

You might think that Kodak, Nintendo and Apple are a fairly odd mix of companies to lump together, but I see them as very similar, especially from a historical perspective.

None of these companies really invented the product that they would become known for: Kodak didn’t invent the camera, Apple didn’t invent the computer and Nintendo didn’t invent the video game console. What they did instead was turn their respective product niches into something commonly found in American households.

“In 1900, Kodak released the Brownie, which was definitely the Macintosh of the camera industry.”


In 1900, Kodak released the Brownie, which was definitely the Macintosh of the camera industry. It wasn’t the best camera ever produced, instead it was a simple cardboard box. The innovation was that it was both extremely cheap (only $1 when it first arrived) and extremely easy to use. I have a No.2A Brownie from 1920 sitting on my desk which I’ve recently used to snap a few photos and I can attest to the allure of its simple design and user-friendly nature. The Brownie was the first mass market personal camera. It was a huge hit and continued to be a big seller for decades.

screenshot

My Still-Functional 1920 No.2A Brownie

Nintendo has a similar story, though it began with the dethroning of another great innovator. Atari had really been the pioneer in home game consoles and was selling millions by the early 80s. However, in the great video game crash of 1983, Atari and its competitors hit a slump, likely due to increased competition from the PC market. Companies were declaring bankruptcy, Atari was treading water, it looked like the end for the console gaming industry. Then Nintendo came along with it’s amazing 8-bit console, simple controller and intensely addicting games like Super Mario Bros. The NES changed gaming forever and marked the launch of decades of Nintendo consoles and games, creating addicts like me who spent far too many weekends indoors playing Mike Tyson’s Punch-Out.

The Apple story you already know. Both the Apple II and the original Macintosh are widely regarded as some the most significant products responsible for the personal computing industry that we know today.

Falling Out of Favor

Another major similarity between these companies is that they all had a pretty long fall from the top of their markets.

“By the time the Gamecube rolled around, Nintendo was starting to look like the old guy who just couldn’t keep up.”


Nintendo has struggled with competition for decades: first Sega, then Sony and finally Microsoft were all responsible for the bruises that Nintendo’s market share took over the years. By the time the Gamecube rolled around, Nintendo was starting to look like the old guy who just couldn’t keep up.

Similarly, Kodak and its film-driven legacy have been all but destroyed by the rise of digital cameras. They fought the change for far too long and chose to invest too much into ultimately unprofitable markets such as inkjet printers. In 1996, Kodak’s stock was selling for over $80 per share, today it hovers around a dollar and whispers of bankruptcy are on the rise.

After Jobs’ ouster in the late 80s, Apple tanked. Microsoft and Windows took over the world and Apple tried unsuccessfully to regain the fame that it once had. A stream of poor leaders and a fragmented product line very nearly killed the company.

Sink or Swim

The history of these three companies teaches us an important lesson. Innovation that changes the world certainly isn’t easy, but perhaps even harder is reinventing yourself and repeating that success after the world has moved on to something new.

The really key to this story comes when you look at how each company handled their pending doom.

Apple

“Apple went from staring bankruptcy in the face to being the most valuable company on the planet.”


Apple was by far the most drastic of the three: the board fired the CEO and brought back the man who started the company, who then ironically fired the board in addition to scrapping most of Apple’s products. Rather than clinging to the past, Jobs took Apple to the future. He made the iMac, which challenged our very definition of a computer.

More importantly, he led Apple to create the iPod, which launched them on a journey that has led to their worldwide dominance in music players, cell phones and tablets. Apple went from staring bankruptcy in the face to being the most valuable company on the planet. They performed this feat by turning an unremarkable computer company into the most stylish and innovative personal electronics company around.

Nintendo

Nintendo was less extreme, but they still made a huge gamble. The Wii (originally codenamed “Revolution”) represented a complete re-imagining of how we interact with video games. When I first saw that controller I couldn’t believe my eyes. This would surely either mark the rebirth of Nintendo or the death of it.

Fortunately, it turned out to be the former. In the early days the Wii outsold the Xbox 360 and Playstation 3 in just about every location where they were sold. More importantly, it brought gaming back from the depths of nerd-only purgatory and back into something that anyone could enjoy. Suddenly grandparents were lining up for video game systems that they wouldn’t then hand off to their grandkids, but would instead hook up to their own televisions and play for hours on end.

Without a doubt, Nintendo did an admirable job of re-inventing itself and indeed the entire industry (the Wii sparked competing gesture-driven systems from both Playstation and Microsoft). The major question we’re now asking is, “Was it enough?” The quickly aging Wii is now losing its grasp, getting a beat-down from Microsoft’s Xbox 360 and its hoard of wildly successful games. Nintendo is once again faced with the choice of whether to cling to its past successes or fight to win the future. Hopefully, their upcoming “Wii U” system with its fancy new touchscreen controller will be enough. It doesn’t quite sound like a major industry game-changer to me, but I hope they prove me wrong. There is perhaps a new looming foe in this market as well. If Apple ever decides to bring its “anyone can make games” App Store model to television-based gaming, Nintendo will face its largest threat to date.

Kodak

Kodak’s story is currently not an uplifting tale of rebirth, it’s a tragedy. This once beloved and powerful company is now desperately grasping for air. Unlike Apple, a company that cut out their old products in favor of a few choice gambles on the future, Kodak clung to aging technology and feared the revolution that eventually left it in the dust.

“Unlike Apple, a company that cut out their old products in favor of a few choice gambles on the future, Kodak clung to aging technology and feared the revolution that eventually left it in the dust.”


Like post-Steve Apple in the early 90s, they spread out into plenty of other areas, which led to a similar fate. Their focus was never clear and they chose not to innovate but to look around and jump into wherever they could find even a hint of a potential market. If you look under the “Commercial Businesses” section of the Kodak website, you see a confusing gaggle of ventures ranging from commercial packaging to gelatin manufacturing.

As Kodak continues to publicly deny its impending doom, they’re undoubtedly in need of some Jobs-like leadership capable of completely revolutionizing who the company is and what it stands for. Unfortunately, many fear the opportunity for such a change has long passed.

The Apple Way

The point of this article is to serve as a case study for why Apple was so successful in bringing itself back from the grave. It’s a rather precarious thing to do and we can clearly see from Kodak that not every company sees such success in this venture. Even Nintendo, a clear leader in innovation, is staring at an uncertain future only a few years after taking back its throne.

As I think of other companies that fit these archetypes, Microsoft brings to mind a clear example of a company that could turn into Kodak if it doesn’t pull its act together. It was once on top of the world, but innovation after innovation from competing companies over the last decade has left it playing catch-up, and its doing a poor job of it. Failures like the Zune, Kin, Windows Mobile, tablets that never launched and even Surface make us all wonder how sustainable Microsoft’s future really is.

Looking around the industry, do you see any other Apples, Nintendos or Kodaks? Where does Google fit into this story? How about Amazon?


  • http://www.greasypigstudios.com Arvin

    “This would surely either mark the rebirth of Nintendo or the death of it.

    Fortunately, it turned out to be the latter.”

    - Is this a typo? I know your final assessment of Nintendo isn’t super positive, but the way this paragraph is laid out I think you meant “the former” instead of “latter”

    • http://www.coroflot.com/joshuajohnson Joshua Johnson

      Yep, you’re right. I reworked that first sentence and forgot to update the second… The former was true, not the latter.

  • http://gatorshop.wordpress.com/ Debi

    The is a crazy, uninformative post, and where do you think Apple is going (besides up)?

  • http://Www.eberlin.co.uk eberlin

    The parallels you draw between the three companies make interesting reading.

    I’m an ex employee of Kodak and have a great deal of time for them. I would be sorry to see them go bankrupt but I fear that they have an unsustainable business model at the moment. Whilst at Kodak, our great rivals were Fuji. They seem to have ridden the digital storm and have also launched two innovative and good quality cameras with the x100 and x10. Maybe there is a lesson there for Kodak?

    As for me, I will carry on buying Kodak films for as long as I can….

theatre-aglow
theatre-aglow
theatre-aglow
theatre-aglow