As a young Kodak employee, Steve Sasson invented the digital camera. Kodak's failure to commercialise it makes it a bittersweet success, writes RICHARD GILLIS

‘THEY GIVE us those nice bright colours. They give us the greens of summers. Makes you think all the world’s a sunny day . . . So Mama don’t take my Kodachrome away,” sang Paul Simon in 1973.

In the autumn of 1975, engineer Steve Sasson prepared a presentation for a select group of research colleagues at Eastman Kodak’s headquarters in Rochester, New York. The results of his work were to be devastating, not just for the future of photography, but for the profits of Eastman Kodak, signalling the beginning of the end of the company’s seemingly impregnable and hugely lucrative monopoly.

The title of Sasson’s presentation was “Film-less Photography” – a “rather foolish title given the audience”, he says now – in which he demonstrated a working model for the first digital camera, an achievement recognised at the Economist Innovation Awards at the Dorchester Hotel in London last week.

Sasson’s first effort was the size of a toaster and captured black-and-white photos on a digital cassette tape at a resolution of 10,000 pixels or, in today’s language, .01 megapixels.

The project was the result of a “30-second conversation” with his supervisor, Gareth Lloyd, who asked: “Could we build a camera using solid-state imagers?”, a new type of electronic sensor known as a charge coupled device, or CCD, that gathers optical information.

An analogue film-less camera had been designed in 1972 by Texas Instruments, so Sasson set about compiling the component parts for his digital version: an analogue-to-digital converter made by Motorola, a Kodak movie-camera lens and CCD chips, which had been brought to market by US company Fairchild Semiconductor in 1973.

By December 1975, Sasson and his chief technician, Jim Schueckler, were ready to reveal their camera and persuaded a lab assistant to pose for them. The image took 23 seconds to record on to the cassette and another 23 seconds to read off a playback unit on to a television. Then, something magical happened: a grainy black-and-white image appeared on the screen.

“The reaction to the first prototype demonstration was very interesting,” says Sasson, with some understatement. “In a windowless conference room in Rochester, New York, we were taking pictures without film and displaying them without printing.”

Not surprisingly, his bosses had lots of questions: why would anybody want to look at the photos on a TV screen? How would you store these images? What would a photo album look like?

“I didn’t have really good answers, to be honest,” he recalls. “I just demonstrated the system and proceeded to work on it.”

Opinion divided within Eastman Kodak as to what to do with their secret new toy. Sasson’s colleagues within the research and development community were thrilled at the innovation but “management was less excited”. When asked when it could be a consumer reality, he made a calculation using Moore’s Law (this refers to the findings of Gordon Moore, founder of Intel, who said in 1958 that the number of transistors that can be put on a computer doubles every two years). Sasson said a commercial camera was possible in 15 to 20 years and guessed that the ultimate resolution would be two megapixels.

“It was a pretty gradual process before we realised that it was actually going to take off,” he says. “After the first demonstrations, I was challenged with major developments in different areas: it had to be colour, the resolution needed to increase to two megapixels, which was 200 times what I was working with, and then come up with a way of storing images in a way that was as reliable as film. We had to create a solid-state storage system, which didn’t exist, and then there was issues of computational memory.”

The last barrier, says Sasson, was the advent and development of very effective image compression techniques.

“We ended up building a prototype camera in 1989 that didn’t look too much different from the DSLRs [digital single lens reflex cameras] that we have today: it had memory cards and megapixel sensors, it was colour and it worked. We never produced it commercially. We never even told anyone about it.”

At this stage, he says, there was “some push back” from within the company, but by then he “realised it could happen”.

Sasson’s story is all the more remarkable given where he was, and his remains a rare example of a disruptive innovation that was nurtured within a company that stood to lose the most from its success, according to Tom Standage, technology editor of the Economist.

The scale of Kodak’s fall is extraordinary. In 1900, George Eastman’s $1 Brownie camera turned photography into a hobby for the masses, and when Kodachrome was launched in 1935, it was the world’s first commercially successful colour film. It cost $5 per roll and had to be sent back to HQ in Rochester, New York, for development. Kodachrome captured the only colour photos of some of the 20th century’s iconic moments, such as the Hindenburg explosion and the conquest of Everest.

By 1973, Eastman Kodak was worth $7 billion, made more than 80 per cent of the film sold in the US, and sold more than 60 per cent of cameras.

The accusation routinely levelled against Kodak is that, given the opportunity to commercialise Sasson’s digital camera, the company stalled, attempting to preserve its core film market, a strategy that led to the US behemoth losing out to rivals, particularly from Japan.

The company’s long-term decline is highlighted by this year’s financial results, in which it posted an operating loss of $255 million, and revealed plans to cut up to 4,500 jobs worldwide, or 18 per cent of its workforce.

For Sasson, such numbers mean his greatest achievement is bittersweet. He remains steadfastly loyal to his lifelong employer.

“As much as other people may have introduced cameras earlier, I submit those cameras probably were not very easy to use, or very good by image-quality standards,” he says. “The mission is the same as George Eastman’s: take this very important art and turn it into something ‘as convenient as the pencil’.”

What’s more, the rate of innovation in the digital space took everyone by surprise, not least himself.

“I’m struck by the incredible growth of technology and I’m a believer in the old saying in the RD community that they overestimate what they can do in five years and underestimate what they can do in 20.”

He cites the growth of mobile-phone cameras as an example.

“The world’s biggest seller of cameras is Nokia. But I didn’t know anything about cell phones in 1975. That’s the most interesting thing about developments like this, particularly when it is so far ahead of when it’s actually going to be commercially available. The world in which it is going to find its eventual application is totally different from what you can think of.

“There are so many other things going on, the rest of the world is inventing along with you. I really didn’t know how it was going to be applied to people’s lives.

“The digital camera, on its own, is pretty cool but think about it without the internet or Wi-Fi connection, or without desktop inkjet printing or personal computers. Without those, its utility would be somewhat reduced. It is very hard to imagine progress in all of those fields at once.

“Inventors spend most of their time being wrong,” he says, which is an essential part of the innovation process.

“With any new concept you have to explore its limits. In product development, I’ve always thought you should spend five minutes of every hour talking about how it could work and 55 minutes about how it is going to fail; because, unless you know its limits, you really don’t know how good it is.”

The great innovations, he says, have been nurtured in an environment that tolerates failure, “because if you’re failing, you’re learning, and if you’re learning, you’re growing, and an organisation needs to grow”.