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Innovation Failure

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Innovation Failure

Eastman Kodak. For nearly a century, no company commercialized the camera as successfully as Kodak, whose breakthroughs included the Brownie camera in 1900, Kodachrome color film, the handheld movie camera, and the easy-load Instamatic camera. But Kodak's storied run began to end with the advent of digital photography and all the printers, software, file sharing, and third-party apps that Kodak has mostly missed out on. Since the late 1980s, Kodak has tried to expand into pharmaceuticals, memory chips, healthcare imaging, document management, and many other fields, but the magic has never returned. Its stock price is now about 96 percent below the peak it hit in 1997.

Sony. Not long ago, the Walkman was as ubiquitous as the iPod is today, and Sony dominated the market for TVs, cameras, video recorders, and many other consumer electronics. But as Sony became a huge conglomerate with film and music divisions, it lost leadership in many of its core product lines. What tripped up Sony and some of its competitors was the move from hardware to software, which put the emphasis on the brains of the device rather than the circuitry. As a result, faster-moving competitors like LG, Samsung, Vizio, Apple, and the various makers of cell phones—which of course come with cameras these days—have outpaced this old-school innovator. Yahoo. When Web search and aggregation were still virgin territory, the pioneering Yahoo tried to charge for services like E-mail and file sharing, while upstart Google offered everything for free. Customers flocked to Google, which surged to a commanding lead in search that it still holds. Yahoo still grew into a huge Web portal, with strong sports, financial, and news coverage that generates billions in advertising revenue, but it also drifted into job-hunting services, video streaming, original entertainment, and other ventures it has since sold or folded. And Yahoo's snub of a $45 billion buyout offer from Microsoft in 2008 now looks like a huge gaffe, since Yahoo's market value has fallen to a scant $19 billion or so. CEO Carol Bartz arrived in 2009 with a mandate to clarify the company's focus and amp up profitability. One of her first moves: a partnership with old suitor Microsoft meant to increase revenue for both firms without the tension of a buyout.

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