1 Specifically, scholars explaining incumbent failure have documented economic, organizational, and cognitive antecedents of inertia. The economic antecedents include a disincentive to invest in a potentially cannibalizing new technology. Kenneth J. Arrow, “Economic Welfare and the Allocation of Resources for Invention,” in The Rate and Direction of Inventive Activity: Economic and Social Factors (Princeton, NJ, 1962): 609–626; Rebecca Henderson, “Underinvestment and Incompetence as Responses to Radical Innovation: Evidence from the Photolithographic Alignment Equipment Industry,” RAND Journal of Economics 24 (Summer 1993): 248–270; Jennifer F. Reinganum, “Uncertain Innovation and the Persistence of Monopoly,” American Economic Review 73 (Sept. 1983): 741–748; Jennifer F. Reinganum, “The Timing of Innovation: Research, Development, and Diffusion,” in Handbook of Industrial Organization, ed. Richard Schmalensee and Robert Willig (Amsterdam, 1989), 849–908. The organizational antecedents include resource allocation processes, invention, and commercialization routines that favor prevailing technologies and business models. Gautam Ahuja, Curba M. Lampert, and Vivek Tandon, “Moving beyond Schumpeter: Management Research on the Determinants of Technological Innovation,” Academy of Management Annals 2 (2008): 1–98; Clark G. Gilbert, “Unbundling the Structure of Inertia: Resource versus Routine Rigidity,” Academy of Management Journal 48 (2005): 741–763; Michael L. Tushman and Philip Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly 31 (Sept. 1986): 439–465. The cognitive antecedents include applying mental models rooted in the firm’s competencies, identity, business model, and complementary assets to the new technology. Mary Tripsas and Giovanni Gavetti, “Capabilities, Cognition, and Inertia: Evidence from Digital Imaging,” Strategic Management Journal 21 (Oct.–Nov. 2000): 1147–1161.

2 For an overview of this literature, see Rajshree Agarwal and Constance E. Helfat, “Strategic Renewal of Organizations,” Organization Science 20 (Mar.–Apr. 2009): 281–293 as well as Charles A. O’Reilly and Michael L. Tushman, “Organizational Ambidexterity: Past, Present, and Future,” Academy of Management Perspectives 27 (Nov. 2013): 324–338.

3 Alfred D. Chandler’s Scale and Scope thesis outlines investing in mass-production, international sales, and distribution organization and building up managerial ranks as conditions for shaping large firms’ growth (conditions the Eastman Kodak Company clearly met). However, we know less about the dynamics of such firms’ decline. Philip Scranton argues that studying these dynamics is critical for developing a richer understanding of the business history of failure. “Classic Issues and Fresh Themes in Business History,” OAH Magazine of History (Jan. 2010): 11–15.

4 World War I highlighted the dependence of US firms on the organic compounds produced by the German chemical industry. Concerned about the implications of potential disruptions to the global supply chain to film manufacturing, George Eastman founded Eastman Tennessee—a subsidiary for producing chemical inputs for Kodak’s film from local timber—in 1920.

5 Only the US Mint used more silver than Kodak. Rochester Business Journal, 2012.

6 In 1996, Interbrand ranked Kodak 4th on its list of top 10 brands in the world. Chris Roush, “McDonald’s, Coca Cola 1–2 in fame,” Atlanta Constitution, 14 Nov. 1996, 1F. In 2001, Interbrand ranked Kodak 27th of the top 100 most valuable brands in the world. Interbrand, “World’s Most Valuable Brands Ranked by Interbrand 2001,” accessed 18 Sept. 2024, https://www.museum.brandhome.com/docs/P0005_Brandvalue.pdf.

In 2010 and 2011, Reputation Institute ranked Kodak as one of the top 20 most reputable companies on the basis of a survey of 33,000 consumers in the US. Molly Cappotelli, “Kodak Ranks on List of Most Reputable Companies,” Rochester Business Journal, accessed 18 Sept. 2024, https://rbj.net/2011/04/06/kodak-ranks-on-list-of-most-reputable-companies/.

7 Brenda L. Landry, “Eastman Kodak—Company Report,” Morgan Stanley & Co., Inc. (11 Aug. 1992), 8.

8 George Eastman paid $49.58 for his set of amateur photographic equipment (including the chemicals) and an additional $5 for lessons on how to use it.

9 When Eastman became interested in photography, Rochester (population ∼89,000 in 1880) had only two other amateur photographers—George Selden and George Monroe. Samuel Crowther, “Slow Profits Today, but Sure Profits Tomorrow,” System: A Magazine of Business 28 (Oct. 1920): 608; Elizabeth Brayer, George Eastman: A Biography (Baltimore, MD, 1996), 27.

10 Crowther, “Slow Profits Today,” 609.

11 The film base would shift from paper to nitrocellulose in 1889, then to acetate by 1949.

12 An early legal treatise on the right to privacy (published two years after Kodak camera’s introduction) expressed concern that “instantaneous photography,” enabled by the portability of film cameras, would lead to photographing without the subject’s consent. Samuel D. Warren and Louis D. Brandeis, “Right to Privacy,” Harvard Law Review 4 (15 Dec. 1890): 195.

13 Eastman, quoted in Carl W. Ackerman, George Eastman (Boston, MA, 1930), 116.

14 Eastman, quoted in Brayer, George Eastman, 34.

15 Eastman Kodak Company, Annual Report (1977), 18.

16 Eastman, quoted in Douglas Collins, The Story of Kodak (New York, 1990), 117.

17 Eastman Kodak Company, Annual Report (1977), 18.

18 Leo J. Thomas, “The Research Nickel, the Bottom Line,” 3, Presentation to the Rochester Society of Security Analysts, Inc., Rochester, NY, 15 Nov. 1978, Box 23, Folder 8, Kodak Historical Collection #003, D.319. Legacy, Rare Books, Special Collections, and Preservation, River Campus Libraries, University of Rochester.

19 National Research Council of the National Academy of Sciences, Industrial Research Laboratories of the United States (Tempe, AZ, 1970), 169; R.R. Bowker, Directory of American Research and Technology (New Providence, NJ, 1998), 175.

20 J. Walter Thompson Company, “Review of Verifax Advertising” (17 June 1958), 13; Eastman Kodak Company, Annual Report (1958), 3.

21 Loehwing, “Photostat to Verifax,” Barron’s (12 May 1958), 3.

22 Loehwing, “Photostat to Verifax,” 3.

23 The introduction of Xerox’s machines represented a change in the user experience of copying that was reminiscent of changes in amateur photography induced by the introduction of film. Xerox’s invention enabled the user to achieve the desired outcome (i.e., nonfading copies) by pressing a button without the need to handle chemical solutions.

24 Douglas K. Smith and Robert C. Alexander, Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer (New York, 1988), 37.

25 Fortune, “Hardest Duplicating Job Xerox Ever Faced,” (Nov. 1966), 140.

26 Alexander Auerbach, “Office Copier Is Only First Page: Xerox Sparks Revolution in Print Method,” Los Angeles Times, 26 June 1977, 11.

27 “IBM Introduces Copier, and Xerox Files Patent Suit,” Wall Street Journal, 22 Apr. 1970, 4. IBM’s most successful machine, Copier II, introduced in 1972, produced 25 copies a minute and was estimated to have displaced some 20,000 Xerox machines on the market. “New Copy Machine Introduced by IBM,” Washington Post, 2 Nov. 1972, D12; Bro Uttal, “Xerox Is Trying Too Hard,” Fortune, 13 Mar. 1978, 88.

28 Colby H. Chandler, “A Handle on Kodak’s Future,” 38, Presentation to the Chicago Financial Analysts, 36, Chicago, IL, 20 Oct. 1977, Box 22, Folder 28, Kodak Historical Collection #003, D.319. Legacy, Rare Books, Special Collections, and Preservation, River Campus Libraries, University of Rochester.

29 Auerbach, “Office Copier Is Only First Page,” 11.

30 “Kodak Fights Back,” Business Week (1 Feb. 1982), 53.

31 Ann Hughey, “Economy, Aggressive Rivals Pinch Kodak,” Wall Street Journal, 18 Jan. 1983, 33.

32 Isadore Barmash, “Kodak Demonstrates a Copier That Uses Plain Paper,” New York Times, 30 Apr. 1975, 64. Per Fallon addressing the annual meeting, “To understand our reasoning, consideration should be given to industry forecasts which project a growing copier market through 1980. The segment which will be served by the Kodak entry (20,000 to 75,000 copies a month) is expected to grow at a rate of 15% annually.” James Grant, “Xerox vs. IBM et al.,” Barron’s (16 June 1975), 14.

33 Chandler, “A Handle on Kodak’s Future,” 37.

34 Howard Rudnitsky, “Why Kodak Will Buck the Recession,” Forbes (3 Sept. 1979), 43.

35 Uttal, “Xerox Is Trying Too Hard,” 88, quoting William A. Relyea, a securities analyst with Paine Webber.

36 Phil Ebersole, “‘Original’ Idea Earns Award for Kodak Engineer,” Democrat and Chronicle, 25 Jan. 1988, 2D. Kodak received a patent for the technology in 1979: “Recirculating sheet feeder,” US Patent 4169674A, filed on 8 Jan. 1976, issued on 2 Oct. 1979.

37 The Ektaprint control module incorporated the Intel 8008 chip—the predecessor to the 8088 chip IBM used in its first personal computer in 1981.

38 Subrata N. Chakravarty and Ruth Simon, “Has the World Passed Kodak By?,” Forbes (5 Nov. 1984), 188. The Ektaprint 100, as demonstrated in April 1975, was not quite ready for prime time. “Observers were impressed with the copier’s quality but typically surprised that it comes with neither a collator nor a document feed. Observes one critic, Daniel P. Lavery, associate director of Quantum Science Corporation: “It’s like selling a limousine in 1975 without power steering or air conditioning.” Grant, “Xerox vs. IBM et al.,” 14.

39 Grant, “Xerox vs. IBM et al.,” 14.

40 “Kodak’s ‘Instant’ Unit Due,” Democrat and Chronicle, 23 Oct. 1975, 8D.

41 Chakravarty and Simon, “Has the World Passed Kodak By,” 188.

42 “Eastman Kodak Co. Adds Three Features to Copier-Duplicator Introduced in 1975,” Wall Street Journal, 1 Apr. 1976, 5. The users’ willingness to make do with lower copy quality than what Kodak was selling also detracted from the efficacy of Kodak’s technology as a wedge. For instance, see “Xerox Introduces 3 Copier-Duplicators, Including Direct Challenge to Kodak Item,” Wall Street Journal, 31 Oct. 1979, 6.

43 David T. Kearns and David A. Nadler, Prophets in the Dark: How Xerox Reinvented Itself and Beat Back the Japanese (New York, 1992), 82. Xerox executives were taken aback by Kodak’s entry in part because they expected IBM (given its computer expertise) to be the first company to incorporate microprocessor technology in its copiers.

44 “Xerox Introduces 3 Copier-Duplicators,” Wall Street Journal, 6.

45 Xerox’s efforts were described in a book titled Xerox: American Samurai by Gary Jacobson and John Hillkirk (New York, 1986) and culminated in Xerox winning the Malcolm Baldridge award in 1988, thus, outscoring in the final round Kodak’s Eastman Chemical subsidiary, which would not receive the award until 1993—the year it was spun off from Kodak.

46 Walter A. Fallon, “Cornerstones of the Future,” 1983 Eastman Kodak Shareholders Annual Meeting.

47 Chakravarty and Simon, “Has the World Passed Kodak By,” 188.

48 Uttal, “Xerox Is Trying Too Hard,” 88, quoting William A. Relyea.

49 Chakravarty and Simon, “Has the World Passed Kodak By,” 188.

50 Jacobson and Hillkirk, Xerox: American Samurai, 88.

51 Rudnitsky, “Why Kodak Will Buck the Recession,” 43.

52 “Eastman Kodak Co. Adds Three Features,” Wall Street Journal, 5; Linda Snyder Hayes, “What’s Kodak Developing Now?,” Fortune, 23 Mar. 1981, 82.

53 “Kodak Sets $50 Million Facility to Produce Copier-Duplicators,” Wall Street Journal, 7 Jan. 1981, 39.

54 Leslie Sopko, “Xerox Flexes in Face of New Competition,” Democrat and Chronicle, 10 Sept. 1996, 6A.

55 Kodak’s difficulties in matching Xerox’s scale are reminiscent of Alfred D. Chandler’s description of the challenges new entrants face in overcoming the large incumbent firm’s first mover advantage: “to benefit from comparable costs, challengers had to construct plants of comparable size, and to do so after the first movers had already begun to work out the bugs in the new production processes. The challengers had to create distribution and selling organisations to capture markets where first movers were already established. They had to recruit management teams to compete with those already well down the learning curve in their specialised activities of production, distribution, and (in technologically advanced industries) research and development.” Chandler, “Managerial Enterprise and Competitive Capabilities,” Business History 34, no. 1 (1992): 16.

56 The business press interpreted this development as attesting to setbacks in Kodak’s in-house R&D. See, for example, Chakravarty and Simon, “Has the World Passed Kodak By,” 188. However, the 1988 Kodak alliance with Canon undercuts the validity of this interpretation.

57 Ty Govatos, “Kodak—Company Report,” Donaldson, Lufkin & Jenrette Securities Corporation (10 July 1992), 3.

58 D. J. Mcneill, “Eastman Kodak—Company Report,” Drexel Burnham Lambert Inc. (7 July 1988), 13.

59 Clare Ansberry and Paul B. Carroll, “Kodak Agrees to Purchase Most of IBM’s U.S. Copier Business,” Wall Street Journal, 20 Apr. 1988, 3.

60 Donald Zwyer, Eastman Kodak Company—Company Report (Kidder, Peabody & Company, Inc., 11 Sept. 1989), 15.

61 Brenda L. Landry, “Eastman Kodak—Company Report,” Morgan Stanley & Co., Inc. (23 Jan. 1991), 1–3.

62 Don Leavitt, “Kodak’s Silverless Lining,” Popular Photography 87 (July 1980): 74.

63 Matthew Diserio, “Eastman Kodak Company—Company Report,” PaineWebber, Inc. (21 May 1993), 3.

64 Hughey, “Economy, Aggressive Rivals Pinch Kodak,” 33.

65 Ty Govatos, “Kodak—Company Report,” Donaldson, Lufkin & Jenrette Securities Corporation (3 Sept. 1987), 1–2.

66 Jonathan Weber, “Changing Picture at Kodak,” Los Angeles Times, 21 Apr. 1991, D9.

67 Wendy Bounds, “Kodak in Talks to Provide IBM with Copiers,” Wall Street Journal, 3 Jan. 1995, 13.

68 Joan E. Rigdon, “Kodak’s Changes Produce Plenty of Heat, Little Light,” Wall Street Journal, 8 Apr. 1992, B4.

69 Nikhil Hutheesing, “Copier Cats,” Forbes (27 Dec. 1999), 89. In 1998, Danka found itself on the verge of bankruptcy and ended its agreement with Kodak to continue investing in copier R&D and buying copiers manufactured by Kodak. In 2008, Danka was bought by Konica Minolta for $240 million.

70 Eastman Kodak Company, Annual Report (1985), 19.

71 Elaine Johnson, “Kodak Facing Big Challenges in Bid to Change,” Wall Street Journal, 22 May 1985, 6.

72 Glazer also asserted that Kodak would be interested in gene engineering in the long term. John D. Campbell, “Kodak’s Biotech Move Overdue, Analysts Say,” Democrat and Chronicle, 22 Feb. 1985, 8D.

73 Campbell, “Kodak’s Biotech Move Overdue,” 8D.

74 Denise Gellene, “Playing ‘White Knight,’ Eastman Kodak Offers $5.1 Billion for Sterling,” Los Angeles Times, 23 Jan. 1988, CSD1.

75 Phil Johnston, “Healthy Profits Underlie Biomedical Acquisitions,” Rochester Business Journal, 7 Mar. 1988, 20.

76 Campbell, “Kodak’s Biotech Move Overdue,” 8D.

77 Phil Ebersole, “Post-Holiday Film Debut Should Not Hurt Kodak,” Democrat and Chronicle, 28 June 1986, 12C. In 1986, Kodak agreed to finance the clinical trial of Virazole, ICN’s broad-spectrum antiviral drug for AIDS and influenza applications at a cost of $2 million in the first year. “Kodak Co. to Provide Funding to ICN Pharmaceuticals,” PR Newswire, 4 Mar. 1986. In 1985, Kodak agreed to spend $6.66 million to acquire 10% of the stock of Elan Corp—a 120-person Ireland-based firm founded in 1969—and bought a license of its drug delivery system. Phil Ebersole, “Purchase Means Kodak’s Widening,” Democrat and Chronicle, 26 Oct. 1985, 14D, 11D.

78 In 1985, “Kodak and ICN announced the creation of the Nucleic Acid Research Institute, a joint research venture in which the two companies would invest a total of $45 million over a period of six years for the development of new drugs for antiviral diseases, cancer and antiaging.” “Kodak Co. to Provide Funding to ICN Pharmaceuticals,” PR Newswire. In 1986, Kodak agreed to spend $6 million in R&D over three years and paid $15 million for 16% equity of Cytogen—a 60-employee Princeton, NJ, firm founded in 1980—specializing in monoclonal antibodies. “Kodak Forms Alliance with Jersey Firm,” Journal News, 16 May 1986, C7, C9. In 1987, Kodak entered into an agreement with Imperial Chemical Industries (ICI), the world’s third largest agrochemical company to investigate the pesticide and herbicide applications of its chemicals. “Kodak and ICI Licensing,” British Journal of Photography (4 Sept. 1987), 1007.

79 Clare Ansberry, “Dreams Come True for Kodak’s Thomas,” Wall Street Journal, 26 Jan. 1988, 44. While Wall Street Journal reported the goal of Kodak’s pharmaceutical business being in the top 10 by the late 1990s, Kodak’s 1988 annual report articulated the goal for the pharmaceutical business being in the top 20 by 2000. Eastman Kodak Company, Annual Report (1988), 20.

80 Phil Ebersole, “Kodak Adds Drug-Making Business,” Democrat and Chronicle, 7 Feb. 1986, 1A–2A.

81 Barnaby J. Feder, “Kodak’s Diversification Plan Moves into a Higher Gear,” New York Times, 25 Jan. 1988, D1.

82 Leslie Helm and Susan Benway, “Has Kodak Set Itself Up for a Fall?,” Business Week, 22 Feb. 1988, 136.

83 The Eastman Kodak Company, Annual Report (1985), 19.

84 Brad Rothenberg, “Kodak’s Streamlining Plans,” (Nov. 1985), 14.

85 Robin Palley, “Kodak as a Drug Co.: More Logical Than It Sounds,” Philadelphia Daily News, 18 Nov. 1986, 34. In 1989, Beecham acquired SmithKline for $7.9 billion—40% more than what Kodak paid for Sterling. In 1990, Rhone-Poulenc acquired Rorer—the smaller company on the analysts’ list of potential acquisition targets for Kodak—for $3.2 billion.

86 Susan Benway, Laura Pilarski and Gail Shares, “Why Is Sterling Spurning Hoffman La-Roche?,” Business Week, 18 Jan. 1988, 24.

87 “Kodak to Merge with Sterling Drugs,” British Journal of Photography (4 Feb. 1988), 5.

88 Ellen Goldbaum, “Kodak Finds a Good Fit with Sterling,” Chemical Week, 3 Feb. 1988, 9. An overview in Democrat and Chronicle offered a list of the potential drug candidates for testing that Kodak assembled prior to the Sterling acquisition: “These include five heart drugs with Enzon Inc. of South Plainfield, N.J., six cancer diagnosis and three cancer treatment drugs with NeoRx Corporation of Seattle, six cancer diagnosis drugs with Cytogen Corporation of Princeton, N.J., and a drug to reactivate the body’s immune system through its Immunology Ventures joint venture in Seattle.” Phil Ebersole, “Kodak Busy Planning for Future,” Democrat and Chronicle, 6 Mar. 1988, 10F.

89 Clare Ansberry, “Kodak Agrees to Acquire Sterling Drug,” Wall Street Journal, 25 Jan. 1988, 3, 12.

90 Kodak managers’ key concern in consummating the Sterling Drug acquisition was moving quickly to avoid the possibility of Kodak being outbid by another firm. According to Paul Smith, Kodak’s CFO who led the search for prospective acquisitions, “If we hadn’t done a lot of preliminary work, and knew that the board was comfortable with this level of debt, we could never have moved so fast.” Leah Nathans, “Kodak Is Pleased with Its Purchase,” Business Month (June 1988), 81.

91 Ansberry, “Dreams Come True for Kodak’s Thomas,” 44.

92 “Antidote for a Hostile Offer,” Journal of Business Strategy (Sept./Oct. 1989), 6.

93 Claudia H. Deutsch, “Kodak Pays the Price for Change,” New York Times, 6 Mar. 1988, F1.

94 Ebersole, “Kodak Busy Planning for Future,” 1F, 10F. Kodak’s biggest acquisition before Verbatim was its acquisition of Atex—a printing systems maker—for $77 million in 1981.

95 Phil Ebersole, “Kodak Swallows a Big Pill,” Democrat and Chronicle, 31 Jan. 1988, F1.

96 Ty Govatos, “Kodak Reorganization—Company Report,” Donaldson, Lufkin & Jenrette Securities Corporation (27 Nov. 1984), 1.

97 Timothy Dougherty, “Analysts Speculate on Kodak, Duracell,” Democrat and Chronicle, 5 Dec. 1987, 12D.

98 Helm and Benway, “Has Kodak Set Itself up for a Fall,” 136.

99 “Beware Big Boats,” The Economist, 9 Jan. 1988, 63; Ansberry, “Kodak Agrees to Acquire Sterling Drug,” 3, 12. Ironically, Hoffman La-Roche was primarily interested in Sterling’s over-the-counter drug rather than prescription drug business. Benway, Pilarski, and Shares, “Why Is Sterling Spurning Hoffman La-Roche,” 24.

100 Ansberry, “Kodak Agrees to Acquire Sterling Drug,” 3.

101 Deutsch, “Kodak Pays the Price for Change,” F1.

102 The percentage of debt in Kodak’s capital structure had risen from 4 to 35% in the decade preceding the acquisition. Phil Ebersole, “Kodak Officials Make Their Case on Wall Street,” Democrat and Chronicle, 26 Feb. 1988, 1A, 4A; “Bondholders Unite,” Barron’s, 4 July 1988, 9; “Kodak Debt Rating Lowered by Moody’s,” Wall Street Journal, 23 Feb. 1988, 55. S&P issued its downgrade on $3.6 billion of Kodak’s debt and Moody’s on $2.47 billion. Both S&P and Moody’s also downgraded Sterling Drug’s $333 million debt from AAA to A- and from double A-1 to single A-2, respectively.

103 Alex Beam, “Polaroid Seeks $5.7 Billion from Kodak in Patent Suit,” Boston Globe, 20 Feb. 1988, 1.

104 Helm and Benway, “Has Kodak Set Itself up for a Fall,” 134–138.

105 Goldbaum, “Kodak Finds a Good Fit with Sterling,” 9.

106 Enderlin, quoted in The Wall Street Transcript, “Photography & Electronic Imaging—Industry Report: A TWST Roundtable Discussion,” 6 Nov. 1989 (emphasis added).

107 Daniel F. Cuff, “Kodak Merger Shifts Sterling Management,” New York Times, 24 May 1988, D3.

108 In 1989, Kodak reorganized its business units into four divisions: imaging, chemicals, health, and information. Eastman Kodak Company, Annual Report (1989).

109 Keith H. Hammonds, “Kodak May Wish It Never Went to the Drugstore,” Business Week, 4 Dec. 1989, 72–76.

110 “Kodak & Sterling Winthrop Describe Successes since Acquisition,” PR Newswire, 17 Dec. 1992.

111 Landry, “Eastman Kodak,” 11 Aug. 1992, 8.

112 Nancy Hass, “Flash Dance,” Financial World, 16 Feb. 1993, 22.

113 In 1993, Kodak’s debt stood at $9.5 billion. Michael Cosgrove, “Tough Challenges Remain for Kodak,” Rochester Business Journal (18 June 1993), 1.

114 Giovanni Gavetti, Kodak: Interview with Dr. George Fisher (DVD), Harvard Business School Video Supplement 706–802, (2005).

115 In 1993, Kodak spun off Eastman Chemical as a standalone company with $2 billion in debt (to help pay down Kodak’s debt) and $1.1 billion in equity. Cosgrove, “Tough Challenges Remain for Kodak,” 1.

116 Katie Rodgers, “Giant Mergers among Drug Firms March On,” Drug Topics, 19 Sept. 1994, 19; The Economist, “Household Products: Flush with Brands,” 1 Oct. 1994, 84.

117 Ebersole, “Kodak Swallows a Big Pill,” F1.

118 In 2020, eight years after Kodak’s bankruptcy, the company resumed its interest in pharmaceuticals, founding Kodak Pharmaceuticals division to produce ingredients for generic drugs.

119 Eastman Kodak Company, Annual Report (1967), 14.

120 Phil Ebersole, “For Kodak Scientist, Religion Shapes Laboratory’s Miracles,” Journal News (21 July 1987), E3.

121 Barney J. Feder, “Kodak’s Quest for a New Camera,” New York Times, 6 Dec. 1981, F4.

122 Gareth A. Lloyd and Steven J. Sasson, “Electronic Still Camera,” US Patent US4131919A filed 20 May 1977, issued 26 Dec. 1978.

123 John Robertson, General Manager, Consumer/Professional and Finishing Markets summarized Kodak’s view of electronic photography as follows: “For any number of reasons—including costs, convenience, quality, and size among others—electronic systems don’t meet the needs and expectations of the amateur still-picture taker.” Quoted in Leendert Drukker, “How Will Sony’s Video Camera Affect Photography?,” Popular Photography 88 (Nov. 1981), 204.

124 “Video Still from Sony,” British Journal of Photography (4 Sept. 1981), 900.

125 For example, see John Free, “Amazing New World of Electronic Photography,” Popular Science 219, no. 6 (Dec. 1981), 87–89, 124; Geoffrey Crawley, “The Sold State Still Camera and the Future,” British Journal of Photography (30 Oct. 1981): 1112–1115, 1122–1124.

126 Steve Lohr, “Filmless Video Camera Is Introduced by Sony,” New York Times, 25 Aug. 1981, D1–D5.

127 Peter Popham, “Sony’s Video Snap-Shooter,” Design (Nov. 1981), 19; Nobutoshi Kihara, Tadahiko Nakamura, Hidehiko Okada, and Yoshimaru Maruno, “A System for Transmitting Electronic Photographs,” IEEE Transactions on Consumer Electronics CE-28, no. 3 (Aug. 1982): 332–336.

128 A separate viewer device was projected to cost an additional 220, and each disk $2.60. Leendert Drukker, “Sony’s Revolutionary Video Still Camera,” Popular Photography 88, no. 11 (Oct. 1981): 234.

129 For discussions of Sony’s challenges, see Andrew Goldsmith, “Canon’s All-Electronic Camera Shoots the Olympics,” Popular Photography 91, no. 10 (Oct. 1984): 48–49 and Andrew Pollack, “Sony’s Troubled New Camera,” New York Times, 31 July 1984, D1.

130 At the time of its US launch in 1987, the Mavica camera cost $4,000 ($11,260 in 2025 dollars) and had a resolution of 380,000 pixels.

131 John Durniak, “Tape Tells the Story in Canon’s New System,” New York Times, 20 July 1986, 43.

132 Sean Callahan and Norman Goldberg, “The Future Arrives,” Popular Photography (July 1986), 63–64.

133 Kodak’s still video system did not include a camera, which was developed but never marketed. Terry Atkinson, “Still Video—After All These Years,” Los Angeles Times, 17 July 1987, E23.

134 Majid Rabbani and Scott Daly explain the relationship between the Kodak and JPEG compression algorithms as: “Although independently developed, in many respects it is similar to the algorithm proposed by the CCITT/ISO standardization committee as the world standard compression algorithm for image transmission.” Rabbani and Daly “An optimized image data compression technique utilized in the Kodak SV9600 still video transceiver,” Proceedings of SPIE 1071, Optical Sensors and Electronic Photography (23 May 1989), 247.

135 Both companies received the award for their respective transmission equipment working with different news networks: Sony with CNN, United Press International, “Sony Gets Emmy for Technology in Tiananmen Square Coverage,” 9 Oct. 1990, accessed 17 Jan. 2025, https://www.upi.com/Archives/1990/10/09/Sony-gets-Emmy-for-technology-in-Tiananmen-Square-coverage/8104655444800/; Kodak with CBS Broadcasting, “Kodak,” 15 Oct. 1990, 7; Eastman Kodak Company, Annual Report (1990), 21; Hollywood Reporter, “TV Techs Get Share of Emmy Glory,” 11 Oct. 1990, 4.

136 Specifically, Kodak managers saw the image quality of its 35 mm photographic film as the standard by which they measured technological progress in digital photography. For instance, Kodak’s CEO Walter Fallon described the capacity of electronic sensors in 1982: “And a 35 mm frame of [Kodacolor] film offers the equivalent of 40 times the capacity of today’s sensors.” Fallon, “Photography’s Future: Technology Meets the Marketplace,” 5, Presentation to the 58th Annual Convention Photo Marketing Association, International, Las Vegas, NV, 18 Feb. 1982, Box 25, Folder 14, Kodak Historical Collection #003, D.319. Legacy, Rare Books, Special Collections, and Preservation, River Campus Libraries, University of Rochester. In the same presentation, Fallon also argued, “If we were to use our Kodacolor HR film in a 35 mm format, the information recording capability of one frame of film would be the equivalent of what we might expect from an electronic camera with about 18.5 million sensor element” Fallon, “Photography’s Future: Technology Meets the Marketplace,” 7a. Even in touting Kodak’s breakthrough, award-winning 1.4 megapixel sensor, Wilbur J. Prezzano, Group Vice President and General Manager of Photographic Products, argued, “In spite of its great power and improvements over earlier video systems, this sensor is still 15 times below the information storage capacity of a single frame of 35 mm film” Prezzano, “The Future of Photography,” British Journal of Photography (19 Sept. 1986), 1086.

137 These included lines of industrial (Megaplus) and professional (DCS) digital cameras in the 1980s and 1990s, the Photo CD introduced in 1992, as well as multiple consumer digital camera lines (e.g., DC and EasyShare) in 1990s and 2000s, respectively.

138 Attesting to the degree of Kodak’s sophistication in electronics, George Gagliardi, an Arthur D. Little consultant, argued, “The development of the sensor by an American company took the industry by surprise. Most people had expected the advances to come from the Japanese, who have taken the lead in the industrial electronic camera market” Calvin Sims, “Electronic Imaging Gains,” New York Times, 5 June 1986, D2.

139 John Larish, “New Pricing Strategy for Megaplus,” Rochester Democrat & Chronicle, 6 Nov. 1986, 10D.

140 Bradley Paxton argued that the number of pixels in the camera’s sensor was motivated, in part, by the goal of making a photographic quality 5” × 7” print. Paxton, Pictures, Pop Bottles and Pills: Kodak Electronics Technology that Made a Better World but Didn’t Save the Day, 2nd ed. (Rochester, NY, 2020), 55–56. Gus Kawahi, the manager of Kodak’s Videk subsidiary, described Megaplus resolution as 16 times higher than that of the low-resolution cameras marketed by Canon and Sony. “Videk Taking Orders for Megaplus,” Rochester Democrat & Chronicle, 5 Nov. 1986, 8D.

141 Jim McGarvey, The DCS Story (June 2004), accessed 22 Aug. 2022, http://eocamera.jemcgarvey.com/pdf/dcsstory.pdf.

142 McGarvey, 6. In 1995, Kodak partnered with Canon to produce the EOS-DCS D-SLR line of professional digital cameras that were marketed by both Kodak and Canon.

143 Douglass C. Harvey, “Challenges for the Photographic Industry in the 1980’s,” 18. Keynote Address to the National Association of Photographic Manufacturers, 5 Nov. 1981, Lago Mar, FL, Box 25, Folder 8, Kodak Historical Collection #003, D.319. Legacy, Rare Books, Special Collections, and Preservation, River Campus Libraries, University of Rochester.

144 Clare Ansberry, “Makers of ‘Still-Video’ Cameras Refocus Marketing Efforts on Commercial Users,” Wall Street Journal, 24 June 1987, 29. Video Home System (VHS) tapes were a dominant analog format for recording consumer video introduced by the Victor Company of Japan (JVC) in 1976.

145 Harvey, “Challenges for the Photographic Industry in the 1980s,” 23.

146 Everett H. Ortner, “The Coming Electronic Revolution in Photography,” Popular Science 226, no. 3 (Mar. 1985): 60–62, 105, 106.

147 The kiosks, first rolled out in Australia starting in the fourth quarter of 1993, enabled customers to manipulate and print their images at the local photofinishing provider, becoming Kodak’s only hybrid product that turned a profit. We are grateful to Ken Parulski for providing us with the kiosk development timeline.

148 Inspired by Kodak’s 1982 demonstration, at the 1984 Photokina, Fujifilm demonstrated its Photo-TV System. This device allowed consumers to view their photos on the TV screen by first using a photo processing service that would save their negatives on a 2-inch still video floppy disk. Fuji priced the TV-Photo System in Japan at about US $200. Unlike the Photo CD announced by Kodak in 1990 which displayed high resolution images, Fuji’s TV-Photo viewer displayed lower-resolution images compatible with the Still Video Floppy Disc standard originated by Sony. Peter West, “Electronic Still Cameras at Photokina,” British Journal of Photography (23 Nov. 1984), 1258.

149 John Hillkirk, “Picture This: Kodak Offers Photo CD Album,” USA TODAY, 18 Sept. 1990, 2B.

150 Andy Grundberg, “Kodak Announces Tantalizing Bits from Its World of New Technologies,” New York Times, 23 Sept. 1990, 67.

151 Alexis Gerard, “A Conversation with Don Strickland—Part 2,” Future Image 4, no. 8 (Jan.–Feb. 1997), 3.

152 PR Newswire, “Kodak Announces New Digital Imaging Organization,” 28 Mar. 1994.

153 Geoffrey Smith, “A Whole New Bag of Digital Tricks,” Business Week, 22 Nov. 1999, 138.

154 “Kodak seizes U.S. digital camera lead” New York Times, 3 Feb. 2005, accessed 10 Feb. 2022, https://www.nytimes.com/2005/02/03/business/worldbusiness/kodak-seizes-us-digital-camera-lead.html; “Kodak tops U.S. digital-camera market,” NBC News, 9 Feb. 2006, accessed 10 Feb. 2022, https://www.nbcnews.com/id/wbna11258928.

155 Eastman Kodak Company, 3rd Quarter Sales and Earnings Conference Call, 22 Oct. 2003, 4. Securities analysts expected Kodak’s digital business to break even in 2002. For example, see Caroline Sabbagha and Sherry Kim, “Eastman Kodak: When Being the Best Might Not Be Enough,” Lehman Brothers (7 Sept. 2000), 16. The anticipated timeline for achieving profitability was pushed out several times. Peter C. Ausnit and Matthew F. Kelly, “Eastman Kodak Company,” Deutsche Bank Securities Inc. (3 Jan. 2003), 5.

156 Ty Govatos, “Kodak—Company Report,” Donaldson, Lufkin & Jenrette Securities Corporation (29 July 1992), 1–2. Mary J. Benner argues that securities analysts tend to be skeptical of incumbents’ efforts to invest in disruptive technologies. For example, see Mary J. Benner, “Securities Analysts and Incumbent Response to Radical Technological Change: “Evidence from Digital Photography and Internet Telephony,” Organization Science 21 (Jan.–Feb. 2010): 42–62 and Mary J. Benner, “A Non-Event Study in Two Industries,” Industrial and Corporate Change 17 (July 2007): 109–154.

157 The low barriers to entry in the digital camera industry stemmed from the availability of technology licensing for the key components of the camera and contract manufacturers capable of producing state-of-the art cameras.

158 Kodak acquired Mead Digital Systems in 1983. The division, renamed Diconix, introduced the first portable inkjet printer in 1984. Kodak sold the division to Scitex in 1993 and reacquired the company in 2004. Paxton, Pictures, Pop Bottles and Pills, 47–49, 96. Kodak also worked with Hewlett-Packard on developing a high-quality inkjet printer in 1995. Wendy Bounds and Joan E. Rigdon, “Kodak, Seeking Inroad in Digital Arena, Opens Up Proprietary Photo CD System,” Wall Street Journal, 29 Mar. 1995, B9. Kodak also introduced an inkjet printer in 1999 in partnership with Lexmark, albeit with limited success. Bruce Upbin, “Kodak’s Digital Moment,” Forbes (21 Aug. 2000), 109.

159 Sabbagha and Kim, “Eastman Kodak,” 8.

160 Ron Adner, Winning the Right Game (Cambridge, MA, 2021). The delayed acceptance, followed by the rapid demise of the demand for digital cameras, mirrors the trajectory of fax machines. While the first patent for a fax machine was granted in 1843, as late as the 1970s, an affordable machine that could transmit a page in less than a minute remained out of reach. Following the rapid acceptance of fax machines in the 1980s, the mass market declined in the late 1990s as electronic forms of communication gained popularity. For a detailed history of the fax technology and its commercialization, see Jonathan Coopersmith, Faxed: The Rise and Fall of the Fax Machine (Baltimore, MD, 2015). We thank an anonymous reviewer for highlighting the similarities in the trajectories of digital cameras and fax machines.

161 For a discussion of how Xerox’s experience with the 914 affected its evaluation of future markets, see Natalya Vinokurova and Rahul Kapoor, “Converting Inventions into Innovations in Large Firms: How Inventors at Xerox Navigated the Innovation Process to Commercialize Their Ideas,” Strategic Management Journal (Dec. 2020), 2372–2399.

162 For an important analysis of the securities analyst response to Kodak’s digital initiatives during the 1990s see Benner “Financial Market Reactions Following Technological Discontinuities” and “Securities Analysts and Incumbent Response to Radical Technological Change.”