I worked with an ex-Kodak guy, and he related the following story to me from the 80’s or early 90’s.

Xerox was kicking their ass, they were completely owning the copier market. But it was a natural fit for Kodak, they knew imaging better than everybody, why couldn’t they get into this market? This guy was on a crack team of engineers a VP assembled to create a competing product. 9 months later, they demo a fully digital copy machine, working, ready to go, with competitive pricing and features.

But the higher ups at Kodak were incensed. They told the product needs a redesign, because Kodak was a film company, so the product needed to use film for copying. The revised product was a complete failure, and was the reason said engineer left Kodak shortly thereafter.

My take is devotion to brand identity is death during these critical inflection points. YMMV

The problem was that Kodak essentially was a film chemical production company pretending to be an imaging company. The switch to digital meant they could no longer get the fat recurring profits from selling film that they were used to. Kodak's value peaked at $31 billion in 1996 ($58 billion in 2025 dollars) while the total value of the digital camera industry today is around $8 billion (https://www.researchandmarkets.com/report/digital-camera). Even if Kodak had pulled off a masterful pivot to digital and captured the entire market, it would have been disastrous for the company and led to it shedding most of its employees.

I think camera is a major smartphone selling point and certainly cannibalized the digital camera business. Kodak could have upgraded from camera to phone like Apple upgraded from mp3 player.

I doubt that Kodak could have built a complete phone. But they certainly could have been a tier-1 supplier of camera components and software to Apple and other phone manufacturers. It seems like Kodak didn't even really try.

If Kodak were to have survived, it should have kept Eastman Chemical and morphed into that as imagining declined.

Digital was disaster so the plan after 1996 was delay and deny. The question is: did it do enough extra business in those transitional years to make up for going bankrupt in 2012? And was it better ultimately for shareholders?

Yea, but, like, phones are digital cameras…

This sounds like an apocryphal story. Kodak did actually make copiers in the 80s/90s, I know because my elementary school had one (early 90s, in a suburb of Rochester). It was one of the very large models that do duplex, stapling, ~100 copies per minute, etc. They just presumably weren’t good enough/cheap enough to get much market share vs. Xerox and Canon. I’m not aware of any of their copiers using film, not even sure how that would work.

Large companies struggle to cannibalize their cash cows from within. Powerful managers step up and fight against change.

I think Microsoft is a notable exception. I was impressed how they went all in on Cloud Computing (at the cost of installed software business like Windows and classic Office) and think it‘s now doing the same with AI. Maybe it‘s because they almost missed the internet revolution and arguably lost in mobile.

That's fascinating. It really seems that a lot of businesses end up hyper-optimized to deliver what they already offer, up until the point where anything that isn't a current offer is attacked by corporate antibodies. And that's when the growth they've optimized for suddenly stops.

There's way too much worship of Steve Jobs, but one thing he had right - either you develop the product that eats your cash cow, or someone else is going to do it.

I’ll never not talk about how he killed their most successful product ever at the time, in 2005— the iPod mini.

In one fell swoop, the small form factor iPod switched from a tiny hard disk to flash memory and the former model was discontinued, before competitors had even really come close to catching up.

Not to mention the iPhone, which erased the iPod. He also seemed to make that move with zero regret.

They did continue to sell iPod Classic in parallel to iPod touch for a while afterward, and even revamped the UI on the nano to look and feel more like iOS. But yeah, there was obvious cannibalism there, no question about it.

Kodak also bought Ofoto in 2001. So basically they had over a decade lead on Instagram. What did they do with it? Try to drive people to print more photos, on Kodak paper. I don't think they ever really embraced digital, maybe isolated parts of the company did, but the film/print cultural inertia was just too strong.

If you aren’t already familiar, Clayton Christensen’s theories on this, on innovation and disruption, are widely praised.

https://en.wikipedia.org/wiki/Clayton_Christensen

Yeah, this is classic disruption. The amazing part is, I can almost guarantee that execs at Kodak read The Innovator's Dilemma, but it didn't help. Same goes for Nokia. Knowledge of the problem is apparently insufficient.

Sometimes there is no clear path from A to B. There is some weird fallacy where people tend to think every single company can make every single product if they simply hired the right engineers and throw money at it.

I think it comes from underestimating the role of process, structure, and competency, which are the DNA and codebase of a company.

Sometimes the market says the most efficient outcome is for your company to die and a replacement rise from the ground elsewhere.

Old, tired companies with lots of sunk costs and old employees are at a disadvantage.

Moreover, sometimes the most efficient outcome for owners is milk what you can from the business then close up shop. The idea of a public market with fractional ownership is you dont have to keep all your eggs in one basket.

Kodak does not need to become a cellphone company. You can take your dividends from Kodak and invest in Apple. When Kodak profits go to zero, you sell the the assets and move on.

I'm definitely not saying any company can make any product, but it is striking when a company which is making a product refuses to believe the product category is going to evolve—even when they themselves are doing the original R&D to evolve it.

I was basically agreeing with you earlier post. I do think that there is a bias where people tend to conflate a failure to believe for legitimate concerns. Both happen.

Maybe Kodak was right in the traditional telling of the story? What if the best course would have been to ignore digital entirely, milk film for all it's worth, and then go down with the ship?

https://hbr.org/2016/07/kodaks-downfall-wasnt-about-technolo...

One of the problems for Kodak was that selling people digital cameras was always going to be just a fraction of the profit of selling them film.

Today, in 2025, Fujifilm makes more money from selling film (Instax instant photo film) than they do from digital, even though they "won" in digital over Kodak to some extent.

The theory is already out there, it’s called Counter-Positioning. Hamilton Helmer in 7 Powers.

It’s a bit more nuanced as Kodak isn’t such a case due to digital photo being commodity.