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Kodak, Lifetouch, and Xerox: Three “Disrupteds” and Their Paths Forward

By David Yockelson | February 02, 2018 | 0 Comments

Non-Tech to Tech Providersdigital disruptionDigital Business

This week, there was an interesting convergence in the disruption cosmos. At least I thought it was interesting, since I could draw (create?) some similarities across the different circumstances and companies involved. Here’s what happened:

Kodak – which had recently experienced a stock market explosion relative to its past after it announced a combined digital rights/cryptocurrency set of offerings and strategy – noted after significant interest in its KODAKcoin ICO (“initial coin offering” – think IPO but for cryptocurrency), it was moving to what is known as the “accredited investor” stage. This means it was now sifting through the set of people that registered interest and separating those that are “accredited” (i.e., meat certain financial requirements) prior to accepting investment. THAT means that the process would be slowed down, a factor that Kodak investors didn’t appreciate. Add to that the SEC’s concerns with other cryptocurrencies attempting to launch ICOs, and the market responded badly in the wake of this news. While it’s an interesting value proposition to photographers to apply a combination of rights management and distributed ledger system to their work such that they’re art is protected and they’re paid for that work (without the interference of a middleman), it might be a bit of a stretch to evaluate Kodak purely like Bitcoin. But this isn’t the first time we’ve seen such behavior (read: ecommerce/ebusiness ~2000).

Shutterfly, the online photo and related services company, announced it would acquire privately held Lifetouch, a (traditionally NOT online) provider of photo products and services, largely to the education world. For $825M, Shutterfly adds 10M Lifetouch customers driving some $964M of annual revenues (as of FYE2017) according to this article. It’s useful to note that Shutterfly is a growing $1B+ company, while Lifetouch’s revenues were declining. While this isn’t exactly the equivalent of Amazon buying Whole Foods, there is some similarity in a new generation entity (Shutterfly) acquiring a “brick and mortar”-ish company (Lifetouch) to gain customers, markets, and the ability to upsell and perhaps educate a new generation of customers about Shutterfly. The market rewarded Shutterfly immediately following the announcement.

Lastly, Xerox announced that it would be acquired by Fujifilm (Japan) and subsumed by the combined 50-year old entity Fuji Xerox (created to market and sell products in Asia Pacific). The reality: office printing and copying are diminishing in volume, and both Fujfilm and Xerox independently were experiencing losses those related business areas. Fujifilm noted that it was cutting jobs in part to address this (more details here); either in spite of this or because of this, the market reacted unfavorably in the immediate aftermath of all the news. This combination also causes us to ask, “Do we now fujixerox our copies, or do we still just xerox them?” It’s not every company whose name becomes a generic term.

Kodak (150 years old), Lifetouch (82 years old), and Xerox (102 years old) are in various stages of attempted rejuvenation. Digital disruptions (smartphones and digital cameras; cryptocurrency and blockchain; email and other digital workplace capabilities) have played significant roles in the current state of these organizations. It will be their abilities to adopt, maintain, or respond as part of a willful disruption strategy that will dictate their future states.

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