I'm not sure they even made the wrong decision, take a look at Kodak who were pioneers in early digital photography. You could argue that it was a distraction for them and they should have concentrated on milking film as long as possible.
Consider, Google paid 1 billion for YouTube, that's relatively speaking chump change. Microsoft could have just bought Nintendo vs Dumping 10's of billions on X-Box. Remember, buying means you get revenue from day one to offset that initial investment where R&D takes years and might not pay off. Of course you need to time this when the competitors are still affordable.
The iPod and going from Apple-the-PC-company to Apple-the-gizmo-company could be considered one, but I think it's giving Jobs too much credit to claim he started development on an MP3 player because he knew in advance how wildly successful it and the products it spawned would be.
Shareholder to Kodak: Screw that. We need to make earnings next quarter or I'm selling. Don't miss your earnings by even $0.01/share or you're toast.
Which has also been a razor-thin margin commodity business. Fujifilm does provide some insights into how Kodak could have moved forward but they struggled too and were a smaller company.
The high-end camera makers have done OK in digital photography (although there's been churn in that space as well) but Kodak had long ceded that market to the Japanese by the time digital photography was much more than a glimmer.
The print consumables market was also pretty good for a while but that ended up being relatively ephemeral.
Even with the advantage of 20-20 hindsight, Kodak was in a tough position to directly leverage either their existing tech or their channels.