As Kodak prepares to file for bankruptcy, it has become routine for commentators to state that Kodak crashed and burned because it failed to foresee or take advantage of the transition from film to digital photography. However, this is simply not true.
Kodak was always ahead of the curve on digital imaging, pioneering the science and being the first to market with digital cameras. One of the first digital cameras ever mass marketed, the Apple QuickTake 100 released in 1994, was designed and manufactured by Kodak and sold under the Apple brand in the US and Kodak's own brand elsewhere. Kodak also actually released the first-ever digital SLR camera, the Kodak DCS, way back in 1990, long before Nikon and Canon.
In the late 1990s and early 2000s, Kodak was highly successful in the US digital camera market with its "EasyShare" line of cameras. These cameras consistently rated highly for low price, ease-of-use, and customer satisfaction. For several years, Kodak was the number one seller of digital cameras in the United States.
What really killed Kodak was the arrival of camera-equipped cellphones, which drastically undermined both its film and digital camera businesses. Even if Kodak had totally foreseen this development, it is hard to see what they could have done differently, as making a transition to manufacturing cellphones would have been difficult for a film company, and thanks to intense competition, cellphones have become a heavily commoditized, extremely low-margin product that you wouldn't exactly want to be transitioning to anyway (witness what is currently happening to venerable North American phone manufacturers like RIM and Motorola).
It's tempting to blame the victim when a company fails, and usually there is plenty of blame to go around, but sometimes, times just change and some perfectly good companies fail, and I think that's what happened in this case.