Through the Lens of Kodak's Past, We May Be Seeing RIM's Future

By Trevor Gilbert , written on July 3, 2012

From The News Desk

You know that scene in "Return of the Jedi" where Leia is choking Jabba the Hut with the chain, and he's thrashing about trying to survive, but there's nothing he can do? That's the image that comes to mind when I think of Kodak now, the once powerful camera company.

And it may be a preview of what's to come with RIM.

Kodak and RIM were both marketplace leaders at one point, and were the dominating forces in the camera and communications markets, respectively. Yet despite this dominance, both companies fell prey to the same basic problem: ignoring a known threat.

Kodak boomed in the 90's, with the stock skyrocketing, which made investors ecstatic. Then digital cameras came onto the scene, and weren't the same quality as film cameras. Seeing that the new entrant wasn't a big threat, Kodak decided to ignore it. After all, the investors were happy, the company was making plenty of money, and the future seemed bright.

Then Kodak was blindsided by quick and powerful strides in the digital camera market, pushing Kodak's products into irrelevancy. The company began to struggle, laying off thousands, and selling off a number of valuable assets. It was the beginning of the death throes, which resulted in being kicked off of the DJIA and S&P 500, and finally, earlier this year, bankruptcy court.

RIM is following a similar path. RIM was dominant, and despite seeing the arrival of iOS and Android, decided to do little about it. The customers were happy, the investors were happy, and the company was making money. Why change?

To be clear, many companies fail because an upstart comes along and takes away part of the revenue stream, seemingly out of nowhere. Yet the difference here is that Kodak and RIM not only saw the competition, but dismissed it out of hand. Sure, Yahoo was taken down by Google in the search engine space, but that's not because Yahoo didn't try to innovate. RIM and Kodak ignored new entrants, instead of taking them head on in a battle from the get-go.

But RIM could still recover. It could leapfrog the competition, and it could avoid the messy litigation that comes with a bankruptcy. What the company needs to do, and what Kodak never could do, is use the skills that it already has, and put them to good use in a new market. Instead of just focusing on the consumer electronics world, RIM could use its existing position in the cellular market and do some hardcore, Google X labs-esque research, not for the public, but to license out to other companies.

It may sound like being a patent troll, but there's a way to do this well. If RIM was to follow the business model of LiquidMetal by creating new technology and selling it to companies like Google, Samsung, and Apple, it would access a clear revenue stream. This would allow the company to regroup, and possibly in a few years, it would be in a financial secure position enough to sell electronics directly.

RIM could do what other companies haven't been able to do to survive the death throes. But it'll take learning the history of other like-minded companies, and taking care not to keep on with the same mistakes.