[citation][nom]ddpruitt[/nom]It was anything but sudden. When was the last time you remember seeing a Kodak digital camera? Exactly.Kodak, like Polaroid, didn't change with the times and stuck with an antiquated business. That was there downfall.[/citation]
Kodak was actually the
first photo company to change with the times. Kodak made the first digital camera in 1975. By the early 1990s they had a line of >1 MP DSLRs (modified Canon and Nikon bodies with a Kodak sensor) costing $13k-$30k which they marketed to press photographers.
http://en.wikipedia.org/wiki/Kodak_DCS
To give you an idea how far ahead they were, in 1994 my lab bought an Apple Quicktake 100. That was 0.3 MP. It nearly 5 years before consumer digital cameras hit 1 MP, a mark Kodak had already surpassed in 1991. And the first non-Kodak DSLR was the Canon 30D in 2000.
Most of the early work on digital camera sensors and imaging technology was entirely Kodak's doing. Their problem was that after a certain point, it's dirt cheap and simple to make a sensor. It's not like a CPU where you have to design each transistor. With a sensor you design one pixel, and repeat it a several million times.
Consequently, the companies which dominate the digital camera market today are ones with strong backgrounds in optics and bodies. Those are still hard to make (or rather, make well), and that's where the money is at. Unlike film, which was a consumable; you only need to buy one digital sensor per camera. That doomed Kodak since they didn't make bodies (unless you count their disposables or cheap disc or 110 cameras).