The Consequences of Strategic Missteps: The Decline of Kodak

The Golden Era: Master of the Film Market

From the mid-20th century, Kodak stood at the very peak of the photography industry. To say that “taking a photo” was almost synonymous with “Kodak” worldwide would not be an exaggeration. At its height, the company controlled 80–90% of the global film market, leaving little room for competitors and showcasing its unmatched power and influence.

In 1976, a striking 85% of all cameras sold in the United States carried the Kodak name—a testament to the brand’s dominance and consumer trust. Beyond cameras, film sales generated the bulk of Kodak’s revenue, ensuring the company’s stability. As Business History Review (2003) noted, film at the time was Kodak’s greatest “gold mine.”

During the 1970s, Kodak earned an average of $10 billion annually—a staggering sum by the standards of that era. It ranked among the most profitable sectors in American manufacturing. Life’s most treasured moments—family vacations, graduations, weddings, a child’s first birthday—were all preserved on film rolls packaged in the iconic yellow Kodak boxes.

Kodak’s marketing brilliance further fueled its success. The slogan “You press the button, we do the rest” revolutionized consumer experience, making photography accessible to everyone. All users had to do was click a button—Kodak handled everything else. This approach was one of the earliest and most effective examples of simplifying user experience through marketing.

Thus, Kodak’s yellow logo became deeply woven into American households, symbolizing more than just a product—it became the very emblem of photography itself. That period marked the true golden era of Kodak.

Decline: A Strategic Failure to Embrace Digital Transformation

Kodak’s downfall began in the 1980s. Ironically, it was a Kodak engineer, Steven Sasson, who invented the first digital camera—an innovation that could have reshaped the future of photography. Yet, Kodak’s leadership dismissed the invention, seeing it as a threat rather than an opportunity. To them, digital photography was the “enemy” of their most profitable business—film. As a result, Kodak failed to capitalize on a technology it had pioneered, leaving the door wide open for competitors.

• A Policy Trapped in Film

  By 1990, more than 70% of Kodak’s profits came from film sales. Executives feared that investing in digital technology would erode short-term revenue, and this short-sighted view proved to be one of the company’s greatest mistakes. In reality, digital transformation was inevitable, and Kodak had the unique opportunity to lead it. Instead, the company clung to its golden cash cow, sacrificing its long-term vision.

• Misreading Consumer Behavior

  In 1999, global sales of digital cameras were just 5 million units. By 2005, that figure had skyrocketed to 50 million (IDC Report, 2006). Consumers were rapidly shifting toward digital convenience—saving photos instantly and sharing them online. This wasn’t just a technological shift, but a fundamental lifestyle change. Yet Kodak underestimated the speed and scale of this transition and failed to reflect it in its strategy.

• Competitors’ Swift Response

  Meanwhile, companies like Sony, Canon, and Nikon invested aggressively in digital technology, capturing the new demand. By 2007, they controlled nearly 80% of the digital camera market, while Kodak’s share had shrunk to a mere 7%. Even the late attempts Kodak made to catch up with digital products could not win back a meaningful position in the market.

The End and Bankruptcy

The culmination of these strategic missteps led Kodak to file for Chapter 11 bankruptcy protection in 2012—a legal process in the United States that allows companies to restructure debt and attempt recovery rather than shut down entirely. For a brand once hailed as one of the world’s most powerful, this marked the most formidable challenge in its history.

Kodak’s fall from dominance stands today as a cautionary tale in business strategy—a stark reminder that even industry giants can collapse when they fail to adapt to technological change and evolving consumer needs.

Revival: A New Direction and Business Model

After filing for bankruptcy protection in 2012, Kodak had no choice but to completely reinvent its business model. With the film market gone and consumers fully embracing digital, the company set out to create a “new Kodak.”

• Digital Printing and Printers

  Kodak shifted its focus from household photography to serving businesses and organizations, entering the market for commercial color printing and photo printers. This transition enabled the company to diversify revenue streams beyond consumer photography and pursue more stable, long-term growth. Innovation in printing technology was positioned as Kodak’s next growth engine.

• Industrial Materials

  Post-bankruptcy, Kodak moved away from traditional consumer photography products and concentrated on industrial chemicals, medical imaging, and film production materials. This strategy marked a deliberate pivot from consumer goods to the B2B market. Today, a significant portion of Kodak’s revenue comes from its printing solutions and industrial materials business.

• R&D and Patent

  Decades of investment in research and development left Kodak with a vast portfolio of patents. After bankruptcy, the company leveraged this intellectual property to rebuild financial stability and fund its new ventures. In 2012, Kodak sold more than 1,100 patents to tech giants including Apple, Google, Samsung, Facebook, Amazon, and Microsoft for $525 million—a critical lifeline for its recovery.

Kodak’s Patents: A Priceless Legacy of the Digital Transition

Kodak was never just a film and camera manufacturer. It was also the pioneer behind many of the earliest patents in digital imaging technology—patents directly tied to the cameras in today’s iPhones and Android devices. Yet during its financial collapse, Kodak sold these valuable assets at a fraction of their true worth, leaving behind one of the most striking lessons in business history.

• Digital Cameras and Imaging Technology

  Kodak’s scientists and engineers held numerous patents covering the core foundations of digital cameras, including:

  - CCD (Charge-Coupled Device) sensor–based camera patents

  - Auto-focus and auto white balance systems

  - Image-enhancing algorithms such as noise reduction and sharpening

These technologies became the backbone of virtually every digital camera in existence today.

• Storing and Sharing Images

Kodak also patented early solutions for storing and transmitting images digitally, such as:

-Technology to transfer photos from a camera to a computer

-A system to send images directly from a camera via email

(the precursor to today’s “share” function)

-Patents for digital image compression and file formats, including

JPEG-related algorithms and Kodak’s proprietary methods

These innovations laid the foundation for instant photo sharing—an essential feature of today’s social media era.

• Digital Camera + Mobile Phone Integration

  Years before smartphones became mainstream, Kodak patented technologies that integrated cameras into mobile phones, including:

  - Embedding camera lenses and sensors directly into phones

  - Automating photo storage and sharing from a mobile device

These patents became fundamental to the smartphone camera revolution.

Key Examples

- US Patent 5,493,335 – Core architecture for digital cameras

- US Patent 6,292,218 – Method for storing and transmitting electronic images

- US Patent 5,226,161 – Camera technology based on CCD sensors

These patents underpin the technology behind modern smartphone cameras such as those in the iPhone and Samsung Galaxy.

Why They Mattered

Between 2010 and 2014, Apple, Samsung, and other manufacturers were locked in the infamous “smartphone camera patent wars.” Kodak’s patents became pivotal bargaining chips, forcing tech giants to cooperate and purchase them as a defensive strategy.

📌 Fact: Kodak’s portfolio of 1,100 patents was initially valued at $2–3 billion. However, due to urgent liquidity needs during bankruptcy, the company sold them for just $525 million to Apple, Google, Samsung, and other tech giants.

Kodak Today (2020s)

Having overcome the difficult post-bankruptcy years, Kodak today fully understands that it can no longer survive solely on its film business. Consequently, the company has undertaken a strategic transformation, aiming to reestablish itself as an innovation-driven enterprise focused on multiple areas, including technology, materials solutions, and the printing industry.

First and foremost, Kodak has placed special emphasis on high-density industrial printing technologies, securing a strong position in the packaging and color printing markets. At the same time, the company’s decades of accumulated photochemical expertise have provided a successful entry point into medical imaging and industrial materials businesses.

Yet the sector that most strongly reminds the world of Kodak remains motion picture film. Renowned Hollywood directors such as Quentin Tarantino and Christopher Nolan insist on using Kodak film for their productions, highlighting its ability to deliver the “cinematic quality that stands apart from ordinary digital imaging.” This has become a key factor not only in generating business revenue but also in preserving Kodak’s brand heritage. 📌 Evidence of this legacy: 12 out of the world’s top 20 film studios still use Kodak film today.

Of course, not all new ventures have been successful. For example, in 2020, during the COVID-19 pandemic, Kodak attempted to enter pharmaceutical manufacturing with support from the U.S. government. However, the project’s scale was too large and the company’s experience limited, resulting in only modest success. Nevertheless, this initiative reaffirmed a fundamental principle for Kodak: to survive, it must experiment and take risks.

Lesson

The voice of the customer is the compass that guides a business. Companies that ignore it have lost decades of built reputation and market position with a single strategic misstep. For this reason, placing the question “What do customers truly want?” at the center of business strategy is always the right decision.

Kodak’s story is not just about the rise and fall of one company—it is a recurring lesson in the business world. Ultimately, Kodak’s history reinforces one fundamental truth: ignoring the voice of the customer is the greatest mistake a company can make.