Kodak, Intel Define Strategy To Bridge Pictures With Digital Imaging

New Product, Test Markets Announced, Additional Efforts Underway

NEW YORK, Sept. 28, 1998-Eastman Kodak Company and Intel Corporation today unveiled details of their plan to bridge traditional photography with digital imaging, introducing their first product centered on film "digitization."

At today's industry event, the two companies:

• Demonstrated Kodak Picture CD;
• Announced a four-month market test for the innovative CD-ROM;
• Detailed a film digitization strategy based on Intel® Architecture-based equipment solutions, including upgrading all Qualex photofinishing labs;
• Described how people who don't use computers can enjoy digital imaging through Kodak kiosks and "power stations" with plans underway to incorporate Intel processors;
• Outlined other potential jointly developed products, including digital cameras, and additional technologies that could define a range of innovative applications; and
• Highlighted a collaborative marketing campaign where the companies will invest up to $150 million over three years.

"Kodak has always viewed digitization and digital imaging as significant growth opportunities," said George M.C. Fisher, chairman and chief executive officer, Kodak. "Products such as those we are developing with Intel will fuel our growth by providing consumers with exciting new ways to use their pictures."

"The bottom line is that we want images on PCs to become as easy to use and as ubiquitous as text is today," said Craig Barrett, president and chief executive officer, Intel.

"If digital imaging is easy, affordable and fun for consumers, we believe it will spur PC demand and contribute to the ultimate goal of creating new users and new uses for the PC platform," Barrett continued.

The foundation of the two companies' strategy is based on making it simple for consumers to capture, store, enhance, share and print pictures digitally. The strategy begins with film digitization, or converting traditional pictures to digital formats through the standard photographic processing method consumers have used for decades. That piece of the strategy is followed by the companies' product-development initiatives-which will include, and may go beyond, digital cameras-and by their multi-million-dollar collaborative marketing campaign.

Kodak Picture CD
Kodak Picture CD is a CD-ROM that bundles-all on one disk-high-resolution scans of a consumer's pictures and multiple built-in software applications. Just pop the disk into a newer PC's CD-ROM drive and the pictures appear on a computer monitor.

With the built-in software, the product makes it simple, affordable and fun to use pictures with PCs. Each Kodak Picture CD typically holds one roll of film-35 mm or Advanced Photo System. Ordering it is simple: Consumers check a box on the retailer's film-processing envelope when dropping off film for photofinishing.

Consumer market tests of Kodak Picture CD, which began last week in Indianapolis and Salt Lake City, go into full swing October 5 with the onset of local advertising. Kodak and Intel anticipate rolling-out the product nationally in early 1999.

Intel® Architecture-Based Digitization Solutions
Intel and Kodak are preparing the way for Kodak Picture CD by installing new Intel Architecture-based equipment in Kodak's Qualex photofinishing labs, which provide wholesale photofinishing services to thousands of U.S. retailers. The two companies are also offering similar equipment to other wholesale photofinishers and minilabs nationwide.

The Intel Architecture-based solutions will enable photofinishers to produce Kodak Picture CDs and other film digitization products and services, including Kodak Picture Disks and Internet uploads through Kodak PhotoNet Online and through America Online's "You've Got Pictures!" service scheduled to begin around the end of the year.

The equipment being installed at Qualex's labs includes dual Intel® Pentium® II microprocessor-based servers and a series of high-performance workstations, along with new Kodak film scanners and CD writers.

Digital Imaging For Non-Computer Users
As an adjunct to the companies' agreement, plans are underway to incorporate Intel Architecture-based solutions into Kodak's line of Picture Maker kiosks, starting with the recently announced Kodak Power Station accessory.

Kodak Picture Maker-15,000 units located at retail worldwide-lets consumers produce borderless prints and enlargements, create specialty items and add text to their prints for special occasions. The Kodak Power Station, designed to work in conjunction with the kiosks, expands these capabilities.

Beginning in November 1998, Kodak will offer U.S. retailers new software to make Kodak Picture Maker units in the marketplace compatible with Kodak Picture CD. Consequently, consumers who don't own a PC will be able to use the CD with the kiosks.

Complete Digital Solutions
Additionally, Kodak and Intel are collaborating on products and platforms for digital still cameras, using a broad patent cross-licensing agreement.

Engineering teams from both companies are currently working to improve digital camera performance by incorporating Intel's leadership in silicon design and manufacturing and Kodak's expertise in photography and image science. The goal is to create high-performance, low-cost digital cameras based on Intel imaging ingredient solutions such as image processors and CMOS (Complementary Metal Oxide Semiconductor) sensors.

The cross licensing and new digital-imaging technology Kodak and Intel create could be used in industries ranging from consumer electronics to banking.

Fisher offered examples: "Imagine if your palm PC could scan a credit card," he said, "and could simultaneously take your picture and imprint it on the card for verification at the checkout counter … if you could 'see' everyone in an electronic chat room, easily and inexpensively ... if you could attach a set of 'smart eyeballs' to consumer products, and turn them into machines that see. These are the kinds of 'killer apps' our emerging joint technologies could help define as we move forward."

Collaborative Marketing The companies' up-to-$150-million-investment in joint marketing over the next three years will include consumer and retailer advertising, promotion and educational activities. Initial efforts, including those being tested in Indianapolis and Salt Lake City, will focus on supporting Kodak Picture CD. They will consist of integrated Kodak and Intel campaigns, including television, radio, print and outdoor media and online advertising.

At the New York event, each company previewed a 30-second television ad, which promoted the other's product and brand while focusing on educating consumers about the simplicity and benefits of digital pictures. Developed from a joint creative strategy, both campaigns are scheduled to break in the two test markets in October.

The companies also unveiled a new joint logo with the tagline, "Cool Technology. Warm Moments." They will use this icon to promote their relationship to trade and business audiences. Intel will also be testing a new brand for potential use in upcoming imaging-related products.

* Other names and brands may be claimed as the property of others.