In 1998, Kodak Had 170,000 Employees, Sold 85% of Photo Paper –Fiction!

Summary of eRumor:

A commentary on the power of innovation and digital disruption of long-standing markets tells the story of Kodak’s decline from having 170,000 employees and an 85 percent market share of photo paper in 1998 to filing chapter 11 bankruptcy by early 2012.

The Truth:

Specific claims that Kodak had 170,000 employees and sold 85 percent of photo paper worldwide in 1998 aren’t accurate — Kodak’s decline was slow and unfolded over decades as the company failed to keep pace with new technologies .

The post has commonly been attributed to a German student named Udo Gollub who posted it to his personal Facebook page under the headline, “Into the Future” in August 2016.  However, the commentary was in circulation before that. The Kodak commentary appeared in various forums throughout 2015, and the earliest version of the commentary we could find dates back to 2013. Because most versions don’t list an author, and it’s nearly impossible to verify time stamps on various web pages, it’s not possible to verify the original author of the commentary.

We can, however, investigate the specific claims made by in the Kodak post. The first and most striking claim is that Kodak went from having 170,000 employees in 1998 to filing bankruptcy by early 2012. However, available data contradicts that claim. A 2011 profile of Kodak that appeared in The Week reported that Kodak had approximately 120,000 employees in 1973, 86,000 employees in 1998, and 18,800 employees in 2011. BrandChannel, a website that reports exclusively on branding, reported that Kodak reached its peak in 1988 with 145,000 employees. So, the company had 86,000 employees in 1998, not 170,000.

And the claim that Kodak sold 85 percent of all photo paper in the world in 1998 is also false. Kodak once held an 80-90 percent market share for film, or photo processing paper, but that started to change by the early 1980s. Thomas Finnerty, a doctoral candidate at Pace University wrote in a 2000 report titled “Kodak vs. Fuji: the Battle for Global Market Share” that the wheels of change had been set in motion by 1984:

The dynamics within the photo industry have changed dramatically within the past 15 years. Once upon a time, the film industry within the United States was basically stable and predictable, with industry leader Eastman Kodak, a US based company headquartered in Rochester, N.Y., having a commanding share of the industry, hovering between 80 to 90%. No competitors even had a double-digit percentage of the amateur photo market and many consumers automatically equated Kodak when they thought of film. Competitors were left to fight for the scraps off Kodak’s table and the pickings were slim. Then, beginning in 1984, the general photographic market and particularly Kodak has noticed a subtle change in consumer attitude. Kodak still retains its enviable and commanding share of the market, but the market-savvy consumers of the new millennium now have more choices and do not automatically and faithfully equate film with Kodak alone. 

By 1995, Kodak held a 44 percent market share of global photo paper (film) sales, and Fuji held a 33 percent marketshare. So, while it’s true that Kodak once sold 80-90 percent of all the photo paper in the world, that was long before 1998. Again, the commentary misstated Kodak’s market position, over-exaggerating the magnitude of the photo-giant’s downfall.

In reality, the downfall of Kodak was a gradual process that happened over a span of three decades or more. Jaideep Prabhu, co-author of “Frugal Innovation – How to Do More with Less,” cited Kodak’s resistance to technology dating back to the 1970s as one of the primary reasons for its downfall: “Kodak, for example, had patents and technology in place for digital photography as far back as the 1970s but there was huge internal resistance to a strategy that it was felt would blow away decades of investment in its traditional products.”

A lengthy report published by the University of Pennsylvania’s Wharton School of Business documents Kodak’s downfall in great detail, summarizing that the company’s management failed to grasp changing markets and disruptive innovation over decades:

When new technologies change the world, some companies are caught off-guard. Others see change coming and are able to adapt in time. And then there are companies like Kodak — which saw the future and simply couldn’t figure out what to do. Kodak’s Chapter 11 bankruptcy filing on January 19 culminates the company’s 30-year slide from innovation giant to aging behemoth crippled by its own legacy.

Adapting to technological change can be especially challenging for established companies like Kodak, Wharton experts say, because entrenched leadership often finds it difficult to break old patterns that once spelled success. Kodak’s history shows that innovation alone isn’t enough; companies must also have a clear business strategy that can adapt to changing times. Without one, disruptive innovations can sink a company’s fortunes — even when the innovations are its own.

In the end, we can’t verify the original author of this post. We can, however, debunk specific claims that Kodak had 170,000 employees and an 85 percent share of the photo paper market in 1998. In reality, Kodak’s decline occurred over a 30-year period, not in a sudden downturn that began in 1998 and ended when the company filed for bankruptcy in 2012.

A real example of the eRumor as it has appeared on the Internet:

Collected on: 04/17/2017

In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.

Within just a few years, their business model disappeared and they got bankrupt.

What happened to Kodak will happen in a lot of industries in the next 10 year – and most people don’t see it coming. Did you think in 1998 that 3 years later you would never take pictures on paper film again?

Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superiour and got mainstream in only a few short years. It will now happen with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs. Welcome to the 4th Industrial Revolution.

Welcome to the Exponential Age.

Software will disrupt most traditional industries in the next 5-10 years.

Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world. Airbnb is now the biggest hotel company in the world, although they don’t own any properties.