Dell and Kodak Pose for Package Deal

Dell Computer Corp. said Tuesday it will sell Eastman Kodak Co.’s digital cameras with some of its personal computers in a bid to lure the growing number of Americans sending holiday cards and photos over the Internet.

The marketing agreement between the world’s largest direct distributor of computers and the largest photo company in the United States provides a snapshot of the growing demand for digital cameras, the latest hot “gadget” that allows immediate access to pictures via a personal computer or printer.

It also marks further efforts by Kodak to boost sales of its digital camera at a time when computer sales are reaching record levels.

Just last week, the Rochester, N.Y.-based company slashed prices on its digital cameras to get ready for the holiday season and make a bigger name for itself in the fast-growing digital camera arena.

Austin, Texas-based Dell said it will sell the Kodak DC210 Plus digital zoom camera with its Dimension line of PCs for an optional $499 upgrade.

Dell will offer a three-year limited warranty for the Kodak camera, as opposed to the one-year warranty a customer would get by buying the camera separately.

Dell will offer a computer and camera for $2,786, including a 400-megahertz Intel Pentium II processor, 17-inch monitor and color printer. The lowest-priced model with camera starts at $1,698.

Terms of the marketing agreement, the first such pact for Dell, were not disclosed.

Kodak has a similar agreement with a European computer distributor, Tiny, which bundles its personal computers with a Kodak camera for retail sale.

“We see this bundling as one more way of opening channels,” said Lori Broache, a marketing vice president at Kodak. “What we see happening is digital cameras becoming more broadly available to consumers.”

While digital camera makers are stepping up their marketing efforts, analysts say it is a niche product, although admittedly a growing niche.

“It will be a more mainstream gift in the PC world versus for the non-PC user,” International Data Corp. senior analyst Ron Glaz said.

As the number of PC users grows, analysts said digital cameras may become more popular. Research firms MarketMaps and Centris said Monday that consumers are expected to buy 5 million PCs over the holiday season.

Separately, Kodak said it is cutting jobs in its copier division because of weak sales to its major customer, British office equipment supplier Danka Business Systems.

A company spokesman would say only that the cuts would number in the “low hundreds.”

Dell stock rose $1.31 to close at $70.31 on the Nasdaq, while Kodak’s shares fell 63 cents to finish at $78.56 on the New York Stock Exchange.