The Camera Kodak Built and the Business It Could Not Break

In 1975 a Kodak engineer named Steven Sasson built a camera that recorded black and white images of one hundred by one hundred pixels onto a cassette tape. The device is reported to have weighed about eight pounds and to have taken more than twenty seconds to store each picture. Sasson has recalled that the reaction from management was cool, and that colleagues asked why anyone would wish to look at photographs on a television screen.

The popular lesson drawn from the later collapse of Kodak is simple. The company, which sought bankruptcy protection in January 2012, is said to have buried its own invention because it feared harming its film business. The record is less tidy. Kodak did invest heavily in digital technology, and by 2005 it was reported to rank first in digital camera sales in the United States.

Some analysts, among them Scott Anthony of the consultancy Innosight, have argued that the difficulty lay in economics and not in technology. Film and printing yielded high profit margins, while digital photographs were shared on screens and rarely printed. Each digital sale therefore earned a company built on chemicals and paper less than the film sale it replaced.

Film and printing yielded high profit margins, while digital photographs were shared on screens and rarely printed.

A firm may see the future clearly and still be unable to profit from it, because the new business requires dismantling the old one that pays for everything. Whether Kodak could have survived by earning less sooner is a question its shareholders might never have allowed it to ask.