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Feb 11, 2012
Kodak, Google and Amazon: The eroding barrier between digital and analog
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In the Internet age, there are new demands on business. Whether or not business can meet these demands will have a lot to do with whether or not they thrive or fall by the wayside. This isn’t just a case of old-fashioned, “brick and mortar” type businesses being able to adapt to the Internet age. It’s also a question of how the Internet relates to the non-virtual world.

It’s been less than a year since Borders went out of business, leaving Barnes & Noble as the only significant big box book retailer in the United States. While lots of people buy books online, Barnes & Noble was able to stay in business. Why? Because Barnes & Noble went aggressively after the e-reader market in a way that Borders did not. The Barnes & Noble Nook became a legitimate competitor for Amazon's Kindle, while the Borders Kobo failed to capture the public imagination -- have you even heard of the Kobo? Exactly.

Recently, the Kodak camera has gone the way of the Walkman. Twenty years ago it would have been nearly impossible to imagine a world without Kodak cameras. Now, the company is in receivership and looking toward licensing its brand out to other companies. A Kodak engineer invented the digital camera, however, the company was dismissive about it, saying “That’s cute, but I don’t think we’ll tell anyone about it.” In 2011, very few people shoot with traditional film, with digital photography vastly outstripping analog.

On the other hand, tech is filled with a number of examples of tech firms just not getting it. Friendster and MySpace are perhaps the most obvious examples, but it would be hard to make the case that companies like Yahoo! and Microsoft have truly understood social media and personal computer usage in the 21st Century. Google represents the opposite end of the spectrum. Not only did they completely overhaul the way the Internet is used, they were also quick to realize the potential of social media. When they had fallen behind a touch, they completely overhauled their search engine and continue to update as need be.

Now, Google seems to be moving more into the physical world with a rumored “entertainment device.” Realizing that there’s a value for the virtual world to keep a toe in the world of concrete goods and services, Amazon and Google want to sell tech devices as well as images. They can do so on the strength of their brand. Further, the presence of durable goods in the market helps strengthen the brand, creating a feedback loop between the world of virtual tech and the world of “hard” tech.

While much digital ink has been spilled over non-virtual businesses not being able to hack it in the 21st Century world of tech, what gets less press is companies in the world of tech who realize that they have to adapt to make products for the real world in order to remain relevant. It is arguably Amazon’s ability to survive the dot-com bust (without turning significant profits) that clued it in to the realities of straddling the line between virtual goods and durable goods. The line between the two spheres is rapidly breaking down. Those companies who stick to their own little fiefdom rather than expanding will surely fall behind those who diversify -- regardless of what side of the fence they start out on. 

Comment (2) Favorite (1)
Pedram Sameni Same as Steven Sasson at Kodak, Xerox also invented many great products such as mouse, ... but they never got the attention they deserved.
Feb 11, 2012
Anonymous In my opinion, diversification is good and should be part of the strategy of every company as long as it doesn't hurt the focus of the company. Apple on the other side killed many products when Steve Jobs returned in late 90s just to maintain their focus. Not sure if Google will repeat it's success by trying to be in every market.
Feb 11, 2012