A recent email from a friend offered comments about the short-sightedness of film producers such as Eastman Kodak regarding the advent of digital photography.
Since I spent a lot of my career as an Image Scientist working at Kodak, I thought I’d share some relevant information on this subject.
Steven Sasson, Inventor of the first digital camera, receives National Medal of Technology and Innovation
Steven Sasson invented digital photography at Kodak in 1975. I worked for Steve, and for the manager of Camera Manufacturing at EKC. They told me of their attempt to get Kodak to mass produce digital cameras long before any other vendor had anything to offer. At that time, Kodak had plenty of cash available to create such a new product area (the estimate at that time was around $2B). Kodak decided NOT to introduce digital photography for two reasons: (1) the profit level for silver halide (film, paper) products was 10-20 times greater than the profit level for electronics and digital products; and (2) all digital camera sales would steal market share from silver halide sales, not some other technology or business (so they’d be competing with themselves and destroying their own business).
So Kodak decided to keep silver halide products alive and healthy for as long as they could (i.e. they choose to ride their “cash cow” into the ground.) In addition, Kodak took many different steps to insure digital photography did NOT get adopted from other sources for as long as possible. They did this in many ways including selling off profitable operations (e.g. Eastman Chemical, Government Systems Division, Copiers) to maintain the silver halide business, foot-dragging on international standards, patent wars, issuing competing products that intentionally confused the customer base, etc.
Don’t forget that there were other silver halide product vendors such as Fuji and Agfa actively supported the Kodak delaying strategy by their own delaying actions, and they did this for the same reasons.
All of these efforts prolonged the life of silver halide products by perhaps a decade or more.
As an aside, you may not know that Kodak made 100% of Polaroid hardware and media products from its inception until around 1969. Polaroid has been a weak competitor since the 1970s with the decline and demise of instant photography, and deserves no significant consideration in the photo market.
One other aspect should be discussed: market segmentation. The vast majority of images are taken by people with no knowledge of photography — as long as they can identify a blurry image as being someone they know, they are happy; another example is the low quality imagery for real estate photos in advertising; Internet images are terrible; etc. Businesses such as advertising and professional photography such as portraiture require better quality, but represent a much smaller volume of business. Extreme quality products are infrequently needed (e.g. aerial and satellite imagery).
Digital photography is most competitive in the low quality, high volume market for people with no knowledge of photography. Professionals and businesses utilize very expensive digital equipment to achieve image quality that is almost but not quite as good as silver halide imagery taken with the same quality optics. In general, silver halide will still produce a better quality image if all other variables are equivalent. But as the cost of digital equipment comes down, and the production of silver halide products decreases, this statement may not be true for many more years.
To summarize, the producers of film products delayed the adoption of digital photography as long as they could in order to protect the much higher profit margins from silver halide systems. The quality of digital photography is still lower than a comparable film system. However low quality imagery represents the largest percentage of images created, so digital cameras now dominate the photography industry.