Kodak to Buy Film-to-CD System

Eastman Kodak Co. said Monday that it was acquiring rapid film processing technology to enable its retail-based photo kiosks to convert a roll of film into a digital CD in seven minutes.

In a move aimed at plugging a gap between photography’s old and new ways of capturing images, Kodak is buying the assets of Applied Science Fiction Inc. of Austin, Texas, including a patented system called Digital Processing and Image Capture.

Kodak said it would install the system in its 18,000 U.S. kiosks, which mainly are in pharmacies, supermarkets and photo specialty stores. It declined to specify a target date or divulge plans for its 22,000 kiosks abroad.

The terms of the deal, which is subject to regulatory approval, were not disclosed. But an industry source said Kodak was paying less than $50 million.

The world’s biggest photography company is seeking ways to shore up its traditional film and photofinishing business, a cash cow for much of the 20th century that is being eroded steadily by the rise of digital photography.

Kodak is anticipating a roughly 5% drop in U.S. film sales this year. At the same time, it is pouring hundreds of millions of dollars a year into digital research to keep pace with a raft of competitors from the computer arena.

Customers usually have to wait hours or days to convert film to digital images because the film has to be scanned and printed after being developed.

The new technology rapidly speeds the process by cutting out the developing and scanning steps. It enables customers to preview and select their pictures as well as crop and zoom and to alter the color, brightness and composition.

“Our goal is to give consumers greater flexibility, capability and access to their pictures taken with photographic film or digital cameras,” said Dan Palumbo, president of Kodak’s consumer imaging division.

“We are putting all of that power, including innovative film processing, in the hands of consumers. All of our research tells us that’s exactly what consumers want.”

Applied Science Fiction, which was set up in 1995, said it has successfully tested the technology at retail outlets in the U.S. and Germany. More than 150 patents will make it difficult for competitors to match it, it said.

Shares of Rochester, N.Y.-based Kodak rose 13 cents to $30.40 on the New York Stock Exchange.