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Kodak & Counter Positioning

Jun 21, 2026 · 3 min read

Counter positioning is when a small newcomer wins by adopting a new, better business model that the big established leader cannot copy, because copying it would blow up the leader’s own profitable business.

I have heard so many people talk about why Kodak, the camera company, died. In short, the explanation is that they invented the digital camera in 1980, but they had a strong, money-printing film camera business that they didn’t want to pivot from. Other players like Nikon, Sony, Fujifilm, and Canon developed really good digital cameras with better picture quality than standard film cameras. Also, digital cameras didn’t require the expensive film, which was a huge revenue driver for Kodak. So, fewer sales and less revenue from traditional film cameras led to the company dying. This is a classic example of counter positioning in Business Power.

Kodak was one of the greatest companies of its time, deploying some of the smartest people on earth. Why couldn’t it invest in some of its bets and win on both fronts (digital and film)? My research showed that Kodak did invest heavily into digital cameras — so much so that in 2005, Kodak was the market leader in US digital camera sales.

So, why did Kodak die?

  1. Reliance on a low-margin business: Kodak operated in both the digital and film camera markets. This was a commodity market where everyone was operating on razor-thin margins. To hold market share, Kodak took losses of around $60 on every camera it sold. In 2007, when the iPhone was launched, this market was killed. Nikon, Sony, and others had higher-end SLR (Single Lens Reflex) cameras where smartphones couldn’t follow. In 2011, Kodak’s film business generated about $34 million in operating income while its digital camera division lost about $349 million — ten times as much.

  2. Killing a profitable, high-margin product: It sold its profitable Health Imaging division in 2007 to fund its failing consumer camera business, right as aging demographics were driving medical imaging demand. Leadership had decided Kodak’s future was consumer imaging and printing photos, so medical imaging — however profitable — was branded “not who we are” and sold off as a distraction.

In a true counter-positioning story, the value transfers from the incumbent to a challenger who is getting rich on the superior model. Vanguard won. Netflix won. So ask: who is the thriving challenger that built a superior digital camera business model and dethroned Kodak? There isn’t one. Canon, Sony, and Nikon had to retreat to high-end SLRs to make money, and the compact camera category they “won” was then wiped out by phones too. The value did not transfer to a winner. It evaporated. That is the signature of disruption and a collapsing profit pool, not counter positioning.