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THE WHITEBOARD
Kodak is in big trouble. Its stock, which traded at nearly $30 a share just five years ago, is hovering around $1. An event in Kodak's own laboratories in 1975 had the potential to be the driver of either the company's 21st century success or its ruin.
Thirty-five years ago, Kodak was a leading component of the Dow Jones Industrial Average. Its photographic films, papers and processing services were the world's gold standard for quality. Its retail business model was well established and very similar to the razor blade model made famous by Gillette.
Gillette sells inexpensive razors, not to make a profit on the razors but to capture the users' ongoing business for profitable razor blades. Amazon, selling electronic books via its Kindle reader, has implemented a high-tech version of the same model. Kodak built its empire selling inexpensive mass-produced cameras to drive ongoing sales of film, photo paper and developing services.
In 1975, engineers at Kodak invented the first camera that captured images using a charge-coupled device instead of film. A CCD is an array of tiny electronic sensors that convert the intensity of light into proportional electric charges. These are processed through software to proportionally light the pixels on an electronic screen. Digital photography was born.
The...