Didn't they hold some early key patents?
Probably. They invented the digital camera for the KEYHOLE/KENNEN/CRYSTAL satellite series in the 70s, there’s undoubtedly some patents that came with it.
But, what would you have even done with a digital image in 1975? Showed it around the family Christmas party on your laptop? About 20 years too early for that.
Even in 1991 when they got serious about professional digital imaging, a DSLR came with a little suitcase attached with electronics and storage and batteries. Even in the professional market there was no interest in a shitty 1.3 megapixel image when a film camera was shooting the equivalent of a 30-40 megapixel image (using optical enlargement not scanning), nobody would want to take that kind of hit unless you needed images right now, ie news crews and military. They sold less than 1k units, at a cost of $20k per unit (in 1991 dollars!).
https://en.wikipedia.org/wiki/Kodak_DCS_100
By the time the market was ready for consumer digital cameras, in the late 90s/early 2000s, they did indeed explore that market (eg DC 210 point-and-shoot), and it was already a low-margin market and becoming lower all the time. That market instantly became a race to the bottom and by about 2004 it was already completely commoditized. I remember the Canon A40 being hot shit for a point and shoot, a couple gens later and it was just the same design rehashed over and over again, undoubtedly with margins getting thinner every time around. Look at the full Canon model list and you can see by the time the A410 comes out (around 2004-2005) the models stop because the market is just dead.
https://en.wikipedia.org/wiki/Kodak_DC_Series
https://www.imaging-resource.com/PRODS/DC210/DC210Acgi.HTM
https://www.imaging-resource.com/PRODS/DC240/DC240A.HTM
https://en.wikipedia.org/wiki/Canon_PowerShot_A#Models
https://www.imaging-resource.com/PRODS/A40/A40A.HTM
“Kodak should have done more with digital!” is a super easy thing to say, but, what specifically should they have done that they didn’t already do, and when should they have done it?
It does seem like they could have done more, or marketed better, or something, but it’s not as obvious as people think it is. It might be instructive to look at the efforts of Nikon or Minolta (eg the RD-175) by comparison and nobody else was doing significantly better than that. That was 1995, four years after Kodak went to market with their first commercial DSLR for the pro market, and four years before Kodak got serious about consumer cameras.
https://en.wikipedia.org/wiki/Minolta_RD-175
https://en.wikipedia.org/wiki/Nikon_E_series
The only real answer I can think of is that they should have gone harder in this market - the pro market where the margins were better. But Kodak was never Nikon, they had some high-end models in the 40s and 50s (Kodak Medalist, Retina series, Ektra series, and their pro MF/LF lens line) but they pretty much exited the pro market by the mid 50s, and that was before SLRs really took off. They were a consumer company and didn't have the SLR experience that, say, Nikon and Canon did to make that pivot. They didn't have the pro user-base with tons of lenses to lock users into the system, they didn't have the service network (not film but pro-tier camera/lens service), etc. Nobody in the pro market thought "kodak" at all, let alone in the SLRs, all of their prior stuff was Kodak electronics grafted to Nikon bodies, they had zero experience at building the SLR body itself, zero lens library (again the nikon bodies used Nikon lenses), etc. They would have been starting from scratch the same as any other chemical company that wanted to start building cameras.
It’s an extremely unsatisfying answer but generally the market operated efficiently here and other companies that were better suited to doing digital won the race. Kodak had no particular electronics or semiconductor expertise, they were a chemical company and a (low-end consumer junk[0]) camera company, not software or electronics. They didn’t pivot (because it didn’t make sense to pivot to a low margin market like that) and then died. It sucks and maybe they could have leveraged their brand and network better... but what specifically?
[0]: and I'm not throwing shade about it, the best camera is the one you have at hand and can afford to shoot, but, nobody is reminiscing fondly about the image quality of the Kodak Pony 135 or the Instamatic, either... Kodak's model was to get the camera into people's hands and get them shooting and sell them the film, and the cameras were junk starting from about 1960 onwards. Cheap vacuum-formed plastic or bakelite, and maybe a glass doublet for the lens, otherwise plastic doublet. 90% of everything is crap and kodak's cameras post-1960 fall into that bucket, they are NOT the ones that are going up in value again these days lol.
https://camerapedia.fandom.com/wiki/Kodak_Pony_828/135#Pony_...
And once you take away the film business, and the photo paper business (for optical prints, eg RA-4 process)... there's nothing left of Kodak. They never made SLRs, just digital conversions for Nikon's bodies. How do you pivot from that?