Kodak: How the Company That Invented the Digital Camera Was Destroyed by It

In 1975, a young Kodak engineer named Steven Sasson built a strange device. It was the size of a toaster, weighed about 4 kilograms and took 23 seconds to record a black-and-white image onto a cassette tape. It was the first known digital camera.

Sasson later recalled showing it to Kodak managers. Their reaction, he said, was cautious. Why would anyone want to look at pictures on a television screen?

Kodak kept making film. In 2012, it filed for bankruptcy.

The Context

For most of the 20th century, Kodak was photography. It made cameras, film, paper and chemicals. Its slogan, “You press the button, we do the rest,” had made photography accessible to ordinary people since the 1880s. The phrase “Kodak moment” entered everyday language.

The business model was extremely profitable. Kodak sold cameras cheaply and made its money on film and processing. Every photo taken meant more film, more prints and more chemicals. The company was widely reported to hold about 90% of US film sales in the 1970s.

Digital photography threatened all of that. If pictures did not need film, Kodak’s most profitable business would disappear.

The Campaign

Kodak did not ignore digital. It invested heavily in research and held many important digital imaging patents. In the 1990s and 2000s, it produced digital cameras, and for a time its EasyShare cameras were among the best-selling in the US.

But the company’s strategy was shaped by the need to protect film. Leaders worried that pushing digital would reduce film sales. Some internal research reportedly predicted that digital would take a long time to replace film, which encouraged a gradual approach.

Kodak also tried to find ways for digital to support its existing business. It promoted printing digital photos at home and in shops, using Kodak paper and ink. It bought an online photo service, Ofoto, in 2001, but focused it on selling prints rather than on sharing.

Meanwhile, the market moved faster than expected. Digital cameras became cheap and good. Then camera phones arrived, and later smartphones. People stopped printing photos and started sharing them online. Facebook and later Instagram, which Facebook bought for $1 billion in 2012, the same year Kodak went bankrupt, became the new photo albums.

Kodak’s leadership did see the risk. In the early 1980s, a Kodak internal study reportedly concluded that digital photography could replace film but that the company had about ten years to prepare. Kodak spent heavily on digital research during that period. It developed image sensors and held many patents, which later earned it significant licensing income.

The company also experimented with products that bridged film and digital. The Advantix system, launched in the 1990s, used a new film format with some digital features, but it arrived as digital cameras were improving rapidly. Kodak also produced Photo CD, which put film images onto discs. These products tried to keep film at the centre, rather than embracing digital fully.

Kodak’s leadership changed several times, and each CEO faced the same dilemma. Film was still generating large profits well into the 2000s. Shareholders and employees depended on that business. Moving resources to a lower-margin, highly competitive digital market was hard to justify when the old business was still paying the bills.

Why It Failed

It protected its most profitable business. Film generated huge profits. Moving fully into digital meant accepting much lower margins. Kodak moved slowly to avoid destroying its own revenue.

It misunderstood what digital would mean. Kodak saw digital photography as a new way to make prints. Customers saw it as a way to take unlimited photos and share them instantly. The value moved from printing to sharing.

It faced strong competitors. Japanese companies such as Sony and Canon moved quickly into digital cameras. Kodak could not compete on hardware margins.

Its culture resisted change. A company built on chemistry and manufacturing struggled to become a technology and software company.

The Results

Kodak’s revenue and employee numbers fell sharply through the 2000s. It sold businesses and patents to raise cash. In January 2012, it filed for bankruptcy protection.

Kodak emerged from bankruptcy in 2013 as a much smaller company focused on commercial printing and imaging. The consumer photography business that had made it famous was largely gone.

Fujifilm, Kodak’s great rival in film, faced the same threat but diversified more successfully into areas such as healthcare, cosmetics and materials.

Kodak’s patents became one of its most valuable assets in its final years. It earned substantial income from licensing digital imaging technology to other manufacturers, and it sold a large portfolio of digital imaging patents in 2012 as part of its bankruptcy process. In effect, other companies profited from the technology that Kodak had invented but not fully exploited.

The brand also lived on in unexpected ways. Film photography enjoyed a revival among younger people in the 2010s and 2020s, and Kodak film became fashionable again. The phrase “Kodak moment” remained widely used, even among people who had never used a Kodak product. It was a reminder that a brand can outlast the business that created it.

The Lesson for Today’s Marketers

Inventing the future is not enough. Companies must be willing to act on it, even when it threatens their existing business.

Understand how customers will use new technology, not how it fits your current model. Kodak saw digital as a new route to prints. Customers saw it as a new way to share their lives.

And look beyond the product to the behaviour. The real change was not from film to digital cameras. It was from keeping photos to sharing them.