DIGITAL CAMERA, INTERNET IN KODAK'S BIG PICTURE

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Eastman Kodak Co. is betting consumers will warm to the idea of using filmless cameras and trading pictures over the Internet.

On the heels of a new $50 million branding campaign-a substantial portion of which is aimed at the youthful "wired generation"-Kodak will introduce software at next month's Comdex show that will allow easy, fast exchange of photos via the Internet.

By fall, the marketer will unveil the first relatively inexpensive digital camera, priced near $350. An ad campaign will support from Ogilvy & Mather, New York, which handles the Digital & Applied Imaging division.

At a news conference last week, Kodak CEO George Fisher said 73% of Kodak customers mail photos to others, half have PCs and 31% have modems.

TEAMING WITH MICROSOFT, H-P

Kodak is teaming with Microsoft Corp., Hewlett-Packard Co. and Live Picture software to produce a faster image file format that will not require expensive computer memory or other equipment. Kodak is linking up with Hewlett-Packard separately on a product that will combine standard pictures with Disney images.

"You have to get into [digital image technology] early in the game; you have to position yourself," said Robert Curran, an analyst at Merrill Lynch & Co. "It's fast growing, though from a small base."

The digital camera would be a breakthrough because technology has kept the price steep and accessible primarily to professionals. One of the cheapest digital cameras has been Apple Computer's Quick Take at $750. Kodak worked with Apple on that.

Mr. Fisher tried to quell concerns that Kodak is walking away from traditional imaging.

`SUPPLEMENTING' TRADITIONAL FILM

"Despite fears that digital imaging will cannibalize traditional film, such things as the digital print stations are supplementing rather than supplanting," he said.

Mr. Fisher also touted Kodak's nearly $1 billion budget for research and development, some of which will be funneled to its ad agencies (AA, April 29).

"Our four agencies [O&M, J. Walter Thompson Co., Saatchi & Saatchi Business Communications and UniWorld Group] would each get at least a couple million," said Kodak Senior VP-Chief Marketing Officer Carl Gustin. "If you think about it, about the only time R&D is done is for new-business pitches. This is like new-business pitches all the time.

"Most clients aren't willing to experiment, so this [money] will be to go experiment and for them to come back to us with their failures and successes. There are rules, of course; they will have to check with us quarterly."

Though Mr. Gustin cited new genres of music, film and editing, much of the experimentation is to go to new media.

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