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Kodak: The End of an American Moment

Stocks in this article: EK AAPL EMN BBRY

The major components for the film-making process could be manufactured internally by the picture company with little outside assistance, and Kodak Park (since renamed Eastman Business Park) was like a small city: the company operated its own power plant, a water treatment system, a railroad, internal trucking operations and its own fire department. Kodak even had its own gelatin plant, although contrary to popular belief, George Eastman never bought cows to create his own gelatin. The cow story was an "untrue legend," says Kodak spokesman Christopher Veronda.

So, even though Kodak was a small city in the 1970s, it didn't have the infrastructure to manufacture digital cameras. When the electronic engineering group in the 1980s and 1990s needed a camera to continue tinkering with digital photography, they would leave the plant, drive down the street, and buy a Canon camera at the local electronics shop, says Todd Gustavson, curator of the technology collection at the George Eastman House. (That's exactly what the company did in 1986 when it produced the first digital single-lens reflex camera. James McGarvey, who was a Kodak engineer, designed the imaging firmware and data storage system for the sensor and connected it to the back of a Canon. They called it the Tactical Camera and it produced 1 megapixel images. The storage system was a black cuboid box the size of two bricks stuck together.)

Regardless of how disruptive electronic imaging became in 1976, it wasn't as good as the company's premier film product. The image was merely 0.01 megapixel.

What struck Sasson during the presentation was that the executives didn't ask about the technology; instead, they focused on general questions about the marketplace.

They wanted to know how soon it could be developed to market as a consumer product.

"I thought they'd say, 'Gee, how'd you get the CCD to work this way? How did you get the storage to work this way? What kind of memory did you use?' We hadn't seen all this stuff pulled together in this form before," Sasson says.

Another more obvious problem was that the Kodak engineer was proposing a product that bypassed the need for film -- the company's lifeblood, a lucrative business that produced 70%-to-80% profit margins for a company that once controlled 90% of the rolled-film market. This was suicide.

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