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Don't Spare The Cow.

In 1975, a brilliant engineer at Kodak invented the first digital camera. In an effort to protect its film business, the management team at Kodak hid the invention. Almost four decades later, this pioneer of the photography industry has filed for bankruptcy.

In 2002, Apple invented the iPod. It quickly conquered the music player industry, and by 2007 almost 50% of Apple's revenues came from the iPod. That year a new phone was released, one that would cannibalize iPod sales and eventually dominate both the mobile phone and mobile media markets. A mere five years later, the iPod has been relegated to a minuscule 3% of Apple revenues.

At face value, the paths of these two innovative companies seem to have taken a turn for the worst with the introduction of newer, better technologies. But there is a conspicuous difference, that changes the picture (no pun intended) entirely. The device that killed the Apple iPod was the Apple iPhone. What's even more remarkable is that Apple deliberately set out to create a device, that would destroy their wildly successful music player.

Apple knew that the iPod would not be forever successful. They recognized the potential for smartphones to kill their cash cow. They also recognized massive room for improvement in the user experience offered by mobile phones. They decided to effect a paradigm shift, a change that would make mobile phones better to use, and also the ultimate media device.

Apple bet their iPod revenues on the success of the iPhone. The results of this gamble paid off. Five years later, with consistent and steady growth, Apple is the largest company in the world, and it's $100,000,000,000 in the bank is more money than even the US government has in its coffers. A stark contrast to the bankrupt Kodak.

Kodak died because their management lacked vision. They should have known better, as their founder  twice before gave up profitable business models to move to disruptive new technologies. The well timed moves from dry plate to film, and then from black and white to colour kept Kodak at the helm of the photography industry for decades. 

Kodak completely missed the digital photography revolution, when they could have been it's vanguard. And as irony would have it, ultimately it wasn't the digital camera which killed Kodak. It was the popularity of the mobile phone, with the iPhone leading the pack. While Kodak was desperately trying to compete in the digital camera market, that market's death knell sounded every time a camera equipped cell phone faked a shutter sound.

Kodak and Apple were two very different companies, in unrelated industries, taking unrelated decisions. Their industries were brought together by fate, culminating in the death of one, and the dominance of another. Had Kodak maintained the vision of its founder, it could have dominated the digital photography industry, perhaps offering advanced digital technology to the likes of Apple and other mobile phone makers.

Apple killed their cash cow and birthed an even bigger one. Kodak watched their cow wither and die. To enjoy continued, unrivaled success, companies should realize that protecting their cash cow may require that they sacrifice it on the altar of progress.
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