Silicon Insider: The Digital Photography Revolution

Jan. 27, 2005 -- -- You may have missed the Wednesday business news story about Kodak's fourth-quarter earnings. It wasn't exactly something that would perk up your ears: just another earnings period in what seems like an endless run of red ink quarters for yet another once-great company fallen on hard times by changing technology.

Kodak (more properly Eastman Kodak, giving old George his proper due) announced a fourth-quarter net loss of $12 million, one of those "who cares?" improvements over a $17 million loss a year ago. Making the numbers even more depressing was the added announcement by the company that it had discovered some "accounting errors," thus tripping the new Sarbanes-Oxley securities regulation created by the Enron scandal, and potentially forcing Kodak to restate last quarter's numbers again in the near future.

In other words, it had all the ingredients of the classic story of an aging company that has lost its way and is wandering off into a well-deserved oblivion.

So why did Kodak's stock almost instantly jump up a buck on the news?

Because of another bit of news in the announcement: that the company's digital camera and printing sales had jumped 40 percent, making it a key contributor to the company's overall revenue growth of 3 percent (for a total of more than $14 billion). This good news offset the company's 16 percent decline in its traditional "analog" film business.

All of this combined to create a milestone in both the history of Kodak and the tech revolution -- in 2005, the company predicts, its digital sales will exceed its traditional sales for the first time.

That digital photography has all but overrun traditional photography should come as news to no one who ever takes a snapshot. But look back five years, to the days when digital cameras were either expensive low-grade novelties or really expensive backup tools for professional photographers. Would you have ever guessed that the revolution would be so fast, and so complete? That we would read the news about Kodak less with amazement than with a shrug that says, "What took them so long?"

Such is the power of Moore's Law, as we've been shown over and over. But there is a second force as well: technology amnesia. At any given moment, thousands of new products and technologies compete both for our acceptance and market share. Outside of a few geeks and early adopters, most of us have learned over the years to read these announcements with a certain curious skepticism and then move on, content in the knowledge that if they really matter we'll be hearing all about them soon enough. That was the state of digital photography in the early 1990s.

The next phase is when one of these technologies or inventions re-emerges into the public eye a few years later, usually when a techno mag like Wired announces it as the next big thing, or your teenager starts talking about wanting one, or some major corporation like Microsoft suddenly announces a new initiative in the field.

Now, suddenly, the story seems to be everywhere. Opinion makers and Hollywood stars suddenly seem to own the new devices … and everybody you know in the know seems to know what there is to know about the product. You find yourself pondering a purchase yourself, but you decide to put it off because you've "heard there are some problems," it costs too much for your needs and the very thought of having to learn a whole new technology and its operating system makes you feel sleepy.