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Digital Imaging Is Key To Kodak 5-Year Strategy

Kodak, riding the crest of strong first-quarter earnings, revealed its key growth strategy for the next five years in which digital imaging is expected to play a major role.

According to Kodak CEO George Fisher, who was in New York late last month to discuss Kodak’s vision, the camera maker projects growth of 8% to 12% by 2004. Kodak expects its digitization products and services that let consumers go “from pictures to bits and bytes and back again” to become a significant source of growth. Digitization, digital capture and output together could produce annual incremental revenues (relative to 1998) of $3.5 billion to $4 billion, Fisher said.

Last year Kodak’s sales in this sector hit the $200 million mark. Sales during the first quarter of 1999, the company said, were up 90% compared with 1998’s first quarter.

Kodak further predicted sales of digital cameras retailing for less than $500 to reach 13 million units by 2002 and the scanner market to be a $2 billion business by ’04.

Network offerings such as the upcoming “You’ve Got Pictures” service with America Online – which will become available to AOL’s 14 million subscribers – and the already available Kodak PhotoNet Online, developed with Kodak subsidiary PictureVision, will also play a major role in Kodak’s digital imaging strategy.

Kodak Picture CD, jointly developed and marketed with Intel, finished test-marketing in January and launches nationally on June 28.

The Advanced Photo System (APS) market, Kodak said, is also showing healthy signs of growth.

Kodak’s Max and Advantix APS films represented about 45% of total U.S. first-quarter volume sold, up from 40% this time last year and 37% two years ago.

According to Kodak, one of every four cameras purchased in the U.S. and Germany is an APS model, and one out of every three purchased in Britain and France is an APS camera, as is one out of two purchased in Japan.

Regarding Kodak’s cultural transformation, Fisher said his company continues “to embrace the digital business. Our business is pictures, not film. We see digital as our ally rather than a threat.”