Abstract
Kodak helped introduce disruptive innovation into its own market by developing
expensive digital cameras. We describe their strategy as one of detached-market
low-end encroachment: early digital cameras sold to affluent tech-savvy males
who represented a market quite detached from the existing film-camera market,
but digitals eventually encroached on the film-camera market starting with
point-and-shoot models and moving upward to higher-end SLRs. An alternate
strategy for Kodak would have been to pursue what we call fringe-market low-end
encroachment: the early digital camera would have instead been a lower-priced,
easier-to-use version targeted toward customers on the lower-end fringe of the
film-camera market, such as budget-strapped moms, and from there it would have
encroached upward on the film camera market. Such an early digital would have
carved out a less attractive new market position for Kodak in terms of price,
but possibly a more attractive position relative to competition. We compare and
contrast the market impact of these two low-end encroachment strategies, and
show how they are related to Christensen’s notion of disruptive innovation. In
doing so we help explain the conundrum of an expensive disruptive innovation. We
relate our results to the finding that “willingness to cannibalize” is a key
factor in an incumbent firm’s growth and survival, and to the “blue ocean
strategy.”