Kodak's Photo Op

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In the digital age, Carp believes, Kodak will make most of its profits after, not before, a picture is taken, helping customers store and print their digital images in all sorts of new ways and charging a premium for the service. That means everything: adding borders or frames, turning color into black-and-white, eliminating red eye and fashioning posters, homemade greeting cards, glossy album pages, calendars, T shirts and maybe even wallpaper.

Unlike Fuji, which views the Net as just another outlet for its retailers, Kodak is making a concerted effort to grab online photo consumers. To Kodak's eye, info imaging, as it has dubbed the digital space, remains more of an opportunity than threat, representing a vast market worth $225 billion, catering to everyone from real estate brokers to doctors who want to incorporate digital photos into their work. "Images," says Patricia Russo, a former Lucent executive who has just joined Kodak as its president, "are the most powerful form of communication."

Still, retooling Kodak won't be a snap. Consumers can be more selective with digital cameras, previewing their shots and paying for only the prints they really like. And for the moment, at least, they seem content to leave many of them as pixels. "There's a digital void right now," says Howard Lee, CEO of Photoworks, one of the leading online photo processors. "Many people are using their digital cameras but not printing much out." If that doesn't change, Kodak may soon end up like so many of its devoted customers years after a great vacation, combing through a scrapbook and longing for the good old days.