Although Kodak developed a digital camera in 1975, the first of its kind, the product was dropped for fear it would threaten Kodak's photographic film business.[33][34] In the 1990s, Kodak planned a decade-long journey to move to digital technology. CEO George M. C. Fisher reached out[clarification needed] to Microsoft and other new consumer merchandisers. Apple's pioneering QuickTake consumer digital cameras, introduced in 1994, had the Apple label but were produced by Kodak. The DC-20 and DC-25 launched in 1996. Overall, though, there was little implementation of the new digital strategy. Kodak's core business faced no pressure from competing technologies, and as Kodak executives could not fathom a world without traditional film there was little incentive to deviate from that course. Consumers gradually switched to the digital offering from companies such as Sony. In 2001 film sales dropped, which was attributed by Kodak to the financial shocks caused by the September 11 attacks. Executives hoped that Kodak might be able to slow the shift to digital through aggressive marketing.[35]

Under Daniel Carp, Fisher's successor as CEO, Kodak made its move in the digital camera market, with its EasyShare family of digital cameras. Kodak spent tremendous resources studying customer behavior, finding out that women in particular loved taking digital photos but were frustrated in moving them to their computers. This key unmet consumer need became a major opportunity. Once Kodak got its product development machine started, it released a wide range of products which made it easy to share photos via PCs. One of their key innovations was a printer dock, where consumers could insert their cameras into this compact device, press a button, and watch their photos roll out. By 2005, Kodak ranked No. 1 in the U.S. in digital camera sales that surged 40% to $5.7 billion.[35]

Despite the high growth, Kodak failed to anticipate how fast digital cameras became commodities, with low profit margins, as more companies entered the market in the mid-2000s.[36] In 2001 Kodak held the No. 2 spot in U.S. digital camera sales (behind Sony) but it lost $60 on every camera sold, while there was also a dispute between employees from its digital and film divisions.[37] The film business, where Kodak enjoyed high profit margins, fell 18% in 2005. The combination of these two factors resulted in disappointing profits overall.[35] Its digital cameras soon became undercut by Asian competitors that could produce their offerings more cheaply. Kodak had a 27 percent market-leading share in 1999, that dwindled to 15 percent by 2003.[37] In 2007 Kodak was No. 4 in U.S. digital camera sales with a 9.6 percent share, and by 2010 it held 7 percent in seventh place behind Canon, Sony, Nikon, and others, according to research firm IDC.[38] Also an ever-smaller percentage of digital pictures were being taken on dedicated digital cameras, being gradually displaced in the late 2000s by cameras on cellphones, smartphones, and tablets.

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