2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.

3. It is well known that Kodak was hurt badly with the
shift from film to digital imaging.

4. But it is often forgotten that the problems
started before the technological shift.

5. The problem was spelled Fujifilm.

6. Fuji had been on the rise for several decades, but
hadn’t really been a big threat in the United States.

7. Up until the mid 1990s, Kodak still had around 80
percent of the US market, despite being more
expensive than Fuji.

8. Towards the second half of the 1990s, this
changed through a coincidence.

9. In 1997, Costco, a big US retailer, dropped Fuji
in favour of Kodak…

10. Fuji suddenly had millions of film rolls that they
needed to get rid of. The company therefore dumped
its prices to 50 percent of what Kodak cost…

11. The rolls were quickly sold and the new price turned
out to be so successful that Fuji kept it…

12. … Causing its market share to increase
with 60 percent very quickly…

13. The price war had started, and Fuji was
now on the attack…

14. For more than a century, Kodak had taken
their home market for granted and suddenly
this was not the case.

15. … The company had relied upon traditional and kind
of cheesy marketing for over the years…

16. The history of American families had basically
been recorded with Kodak film…

18. … And Kodak had
always been kind of
sentimental in its
marketing…

19. … It had worked for a century…

20. … Around the entire world…

21. No wonder Kodak got confused when
Fuji ran ads saying “pictures should be
nostalgic, your film shouldn’t”.

22. Fuji’s slogan was also very forward-looking:
”You can see the future from here”

23. Many Americans now bought the
cheaper green roll…

24. … Instead of the good old yellow box.

25. When they noticed that the result wasn’t worse,
many stayed with Fuji.

26. Fuji was also highly innovative in its way of using
seasonal campaigns, quick-hit programs and
various tricks in order to sell more film.

27. Kodak responded by getting rid of its cheesy image.

28. And eventually
by lowering
prices.

29. And by getting rid of about 19 000 employees in
1997 – probably the largest layoff in American
corporate history.

30. The price
cuts
eventually
stopped
the rapid
decline in
market
share.

31. Now Fuji had nothing to gain from the
war, and both companies now let prices
drift up again gradually.

32. While prices returned for Kodak,
market shares did not.

33. Through something that resembled a
coincidence, Fuji had succeeded in
buying market shares from Kodak.

34. The deal with Costco
had looked like a
winner, but things
turned out differently
for Kodak…

35. The price war with Fuji should be regarded as an
important explanation to why Kodak suffered so
badly later on in the shift to digital imaging.

36. The company had been financially wounded before
the digital revolution and this augmented the
difficulties related to the shift…

37. … Fuji, on the other hand, had gained momentum
and obtained resources that were vital when
developing a competitive digital camera business.

38. Image attributions

39. Sources
cnn.com
Seattle Times

40. Find out more:
www.christiansandstrom.org