Apple and Google join forces to buy Kodak's patents

Some reports published by Bloomberg stated that Google and Apple have finally joined forces to purchase Kodak’s patents. This is an ancient company that is suffering from bankruptcy after more than 100 years of successes in the field of photography. It is known that Kodak still owns more than 11,000 thousand patents. It hopes, by selling them at auction, to pay off some of its debts and recover from the bankruptcy that has engulfed it. The price of the patents has been estimated at $2 billion, but my company hopes Apple and Google are working to make this price not exceed half a billion dollars, even though these two companies have been at war recently, but it seems that this alliance has a common interest. If it were not for it, each party would have started setting a higher price than the other to win.

Edited by Iman Al-Zubaidi, Muhammad Habash had mentioned the most important reasons for bankruptcy in his following article: As we have all heard, the bankruptcy of Kodak, a long-standing company in the camera and film industry. In this article, I will try to list the reasons for the failure of this company after a history full of successes extending to 133 years.

How could she have avoided what happened, and what were the lessons learned from this situation? Kodak was founded in 1892 by George Eastman and is a multinational company working in the field of photographic equipment, materials and tools, with its headquarters in New York. The company was famous for its photographic film products. Over the past century, it was an icon of this industry and its share reached 90% in the American market.

Since the late 1990s, the company began a series of financial struggles as a result of the decline in photographic film sales due to the advent of digital cameras (technological obsolescence). It has no longer appeared on Dow Jones' list of the 30 largest American companies since 2004, and the company has not achieved any significant profits since 2007. The price of the company's shares listed on the New York Stock Exchange amounted to less than one dollar, and the stock exchange's management warned it that its name would be removed from the lists if the situation continued as it was.

Since the beginning of the company, it has followed a strategy called the razor-blade strategy, which means selling cheap products (cameras) and obtaining a large market share of development films and papers. The company's business principles were: large production, low cost, global reach, strong advertising, customer focus and growth through continuous research. Because the situation that we will talk about today is strategic par excellence, it cannot be explained without looking at it from this angle. A company that is 133 years old has suffered from problems in the last 30 years of its life.

These are inevitably strategic problems and must be analyzed in this way... Contents of the topic Toggle The first reason: the contradiction between the logical strategy and the innovative strategy. The second reason: The contradiction between radical, revolutionary change and slow, gradual change. The third reason: The contradiction between markets and resources in strategy. The fourth reason: The contradiction between competition and cooperation. The fifth reason: The contradiction between going global or remaining at the local level. Lessons learned: The first reason: The contradiction between logical strategy and innovative strategy.

The company fell into the dilemma of comparing the rational way of thinking and the innovative way of thinking to solve the problems it encountered. While the rational method focuses on the strict application of problem-solving methods using logic, while the innovative method focuses on intuition and intuition, which makes managers use their innovative skills and think unconventionally. Difficulties began to escalate in 1984 when the Japanese company Fuji entered the American market. But Kodak refused to acknowledge that the American consumer might change his purchase to a foreign brand.

Fuji opened a factory in the United States and began to gain more market share for printing films and papers. Also, in the late 1980s, the company adhered to a fundamental vision about its work style, which made it not recognize the imminent change in the industry, which is the digital age. The company's adherence stems from the fact that it applies a logical strategy in its work, as it was the leader in its industry and believes that any change that will occur will not greatly affect it.

As for the innovative way in which the company operates, it should have raised questions and perceptions about the future scenario with this change taking place. The second reason: The contradiction between radical, revolutionary change and slow, gradual change. Even when a company sets its business strategy, it must always search for the best way to implement it in accordance with the changes. There are always two points of view, the first says that change must be gradual and revolutionary, meaning that it includes all aspects of work, and the second considers that changes must be implemented in a gentle and smooth manner.

Indications appeared in 1981 when Sony announced that it would launch the Mavica, a digital camera without film that could display images on a television screen and the images could then be printed on paper. Kodak found it difficult to believe that something would be as profitable as the traditional films it had pioneered, and then the company's CEO admitted that they had to act quickly, but by integrating film and development technology with new technology! .

(Note that radical change is not accepted.) Kodak wanted to keep pace with this development, but slowly so as not to cause pain to the company through a radical change in the work style. Because it is not an easy process to abandon the 100-year legacy of leadership in the field of films and chemical development and enter the field of completely new digital technology.

The third reason: The contradiction between markets and resources in the strategy. Kodak raised a question about what is the real resource for the competitive advantage it possesses? Should the company reposition itself in a way that makes it benefit from the positives of changing markets, or should it remain as it is with its basic resources? The problem seemed clear. Kodak controls its manufacturing capabilities in films, printing papers, acidification chemicals, and image processing, but the digital age is completely different, as it depends on technology.

This is not the first time that Kodak has tried to look for the future behind films. In 2003, the company announced a change in its strategy to expand into the digital age through the consumer and commercial markets and medical products (radiography devices). It also tried to enter the field of screens and ink printers to build new competitive advantages for itself. Fourth reason: The contradiction between competition and cooperation. How should companies deal with competitors?

There are two contradictory points of view. The first says that relations with them must be at a minimum and under strict conditions, while the other sees the importance of building a relationship with competitors to encourage them to accept mergers and acquisitions, especially in the case of small competitors. When a company acquires a small competitor, it gets the opportunity to enter a new market to which it had not given sufficient attention, as well as to build new production capabilities and technology through what this competitor offers. Kodak fell into this dilemma as well, as it made some acquisitions to try to recover from the failure that befell it, but it hardly cooperated with some small competitors.

The company had to define its position more precisely and move towards acquisition and merger with all competitors who provide it with new capabilities. (Note how every week Google acquires a very small competitor that develops a certain technology. This acquisition provides benefits to both parties. Google acquires a new technology at a relatively cheap price and removes a competitor from the arena that may grow later. The company acquires a purchase at a price it did not expect before and remains in the management of its project.) The fifth reason: The contradiction between going global or staying at the local level tempts people. Most companies go into the world, which prompts them to rush into this field, until they run into the problem of differences in cultures, customer styles, behaviors, and purchasing habits. It is also tempting for many companies to stay at the local level, as they know their markets, customers, technologies, and competitors well and control a large share, so why venture into the unknown for the sake of greater profitability? So, it can be said that Kodak was unable to determine its future effectively, and it is considered an example of strategic failures that companies have committed. It was unable to realize the digital future quickly, and when it became certain of this, its reaction was slow to respond to continuous change.

This change was like a high tidal wave that toppled traditional Kodak. Unfortunately, Kodak could have invested the billions of dollars it earned from its traditional products, especially in the medical field, to restructure itself to also control the new digital era as well. Lessons learned: 1- All companies must respond to (the innovation dilemma) or (the innovation solution), which means that there are things that may happen (new innovations, for example) that may completely overthrow the greatest company, no matter how old it is (Kodak was 100 years old at the time). 2- Companies should not stay on the safe side and only count the billions they make.

3- Companies should always think about which industry they are operating in now, because their competitors are doing so, and industries change their forms over time. For example, Johnson & Johnson was not thinking about manufacturing contact lenses for the eyes, even though it had the necessary technology. When it thought again about manufacturing them correctly, it saw that this industry should be entered into it, and this is what actually happened.

4- Companies must have an independent work team whose mission is to destroy the company by introducing new products! Or inventing a new technology that undermines the current technology you are working with. 5- Large companies must buy small companies that develop new technology that can benefit them in their core work.

Caution must be taken here, as if the company waits until this technology comes into effect, it will be very expensive to purchase it. The example is clear: Yahoo and Microsoft had the opportunity to buy Google before.

Notice what you do with them today. Finally, we take a lesson from this story that the development and change taking place in the company’s external environment inevitably calls for intervention and action in some way, and this change may be a new opportunity or lead you to bankruptcy.