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Eastman Kodak is often mischaracterized as a company whose managers didn’t recognize soon enough that digital technology would decimate its traditional business.However, what really happened at Kodak is much more complicated — and instructive. is often cited as an iconic example of a company that failed to grasp the significance of a technological transition that threatened its business.I remember when the yearly sales of a particular type of Kodak film went below a single wide, roll production batch.
First, digital imaging was based on a general-purpose semiconductor technology platform that had nothing to do with film manufacturing — it had its own scale and learning curves.
The broad applicability of the technology platform meant that it could be scaled up in numerous high-volume markets (such as microprocessors, logic circuits, and communications chips) apart from digital imaging.
After decades of being an undisputed world leader in film photography, Kodak built the first digital camera back in 1975.
But then, the story goes, the company couldn’t see the fundamental shift (in its particular case, from analog to digital technology) that was happening right under its nose.
Semiconductor technology was well outside of Kodak’s core know-how and organizational capabilities.
Even though the company invested lots of money in the basic research and manufacturing of solid-state semiconductor image sensors and developed some notable inventions (including the color filter array that is used on virtually every color image sensor), it had little hope of being a competitive volume supplier of image sensor components, and it was difficult for Kodak to offer something distinctive.For a while, Kodak was fortunate that motion picture print film manufacturing was able to absorb a huge proportion of factory overhead.But when theaters finally moved to digital projection, the company couldn’t slash costs fast enough to keep up with declining volumes.Management was constantly tracking the rate at which digital media was replacing film.But several factors made it exceedingly difficult for Kodak to shift gears and emerge with a consumer franchise that would be sustainable over the long term.Wide rolls had to be changed over and spliced continuously in real time; the coated film had to be cut to size and packaged — all in the dark. Only two competitors — Fujifilm and Agfa-Gevaert — had enough expertise and production scale to challenge Kodak seriously.The transition from analog to digital imaging brought several challenges.The big problem with this version of events is that it’s wrong.Moreover, it obscures some important lessons that other companies can learn from.Color film was an extremely complex product to manufacture.The 60-inch “wide rolls” of plastic base material had to be coated with as many as 24 layers of sophisticated chemicals: photosensitizers, dyes, couplers, and other materials deposited at precise thicknesses while traveling at 300 feet per minute.