Kodak to Shareholder: We believe digital technology will be the future of photography and result in great profits, but it will take billions of R&D and probably a few decades to get there.
Shareholder to Kodak: Screw that. We need to make earnings next quarter or I'm selling. Don't miss your earnings by even $0.01/share or you're toast.
The problem is when new tech is going to be a brutal slug fest like digital photography it's really hard for bloated companies to compete. Intel and Kodak both had decades of brand recognition, but that only goes so far when many competitors keep entering the market.
Consider, Google paid 1 billion for YouTube, that's relatively speaking chump change. Microsoft could have just bought Nintendo vs Dumping 10's of billions on X-Box. Remember, buying means you get revenue from day one to offset that initial investment where R&D takes years and might not pay off. Of course you need to time this when the competitors are still affordable.
Kodak is the perfect example. They managed to collect for every single picture you took, between the film, processing, and printing. There's no revenue stream in digital that had the potential to replace it, so they were doomed from the start. They certainly did see it coming.
With that kind of money, they could've been investing in consumer storage (e.g., NAS and even flash for phones) and point & shoot digital camera components. With perfect hindsight, of course.
Which has also been a razor-thin margin commodity business. Fujifilm does provide some insights into how Kodak could have moved forward but they struggled too and were a smaller company.
The high-end camera makers have done OK in digital photography (although there's been churn in that space as well) but Kodak had long ceded that market to the Japanese by the time digital photography was much more than a glimmer.
The print consumables market was also pretty good for a while but that ended up being relatively ephemeral.
Even with the advantage of 20-20 hindsight, Kodak was in a tough position to directly leverage either their existing tech or their channels.
It's really hard for huge companies to disrupt themselves. You need a strong visionary leader like Reed Hastings or Steve Jobs to make it happen. When the decision making power is distributed and consensus is the operative selection metric the chances of radical change become almost nonexistent.
Did Apple under Jobs ever really "disrupt themselves?" I suppose the iPhone disrupted the iPod business, and the iPad cannibalizes Macs somewhat, and the original Mac was a semi-successful attempt to supplant the Apple II, but all of those, while innovative, were fairly logical extensions of their existing product lines.
The iPod and going from Apple-the-PC-company to Apple-the-gizmo-company could be considered one, but I think it's giving Jobs too much credit to claim he started development on an MP3 player because he knew in advance how wildly successful it and the products it spawned would be.
