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H-P teams with Kodak
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February 3, 2000: 2:03 p.m. ET
Joint venture aimed at expanding market for digital imaging services
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NEW YORK (CNNfn) - Eastman Kodak Co. and Hewlett-Packard on Thursday teamed up in a joint venture that executives said could lead to as much as a $1 billion in revenue within five years.
Kodak (EK: Research, Estimates), the leading U.S. photographic film maker, and H-P (HWP: Research, Estimates), the leading supplier of computer printers, said they would combine their respective strengths to develop and manufacture low-cost digital photo finishing equipment, which would be available to consumers at a wide range of retail locations.
"We're talking about digital photo finishing mini- and micro-lab units," Carly Fiorina, H-P's chief executive, told CNNfn Thursday.
"That is, units that are very small in footprint that are lower cost than traditional photo finishing," Fiorina added. "Therefore, they can be made available to consumers in a whole host of outlets all around the world, opening up some new and non-traditional ways of making the joys of digital imaging available to consumer all around the world."
Each company will own 50 percent of the joint venture. The companies announced the venture during an industry conference in Las Vegas. The venture is expected to begin introducing products in 2001; by 2005, executives expect it to generate revenue between $500 million and $1 billion.
Consumers will be able to access the photo printers from their home computers through the Internet. By providing the lower-cost photo finishing units to a broad base of locations, the companies hope to expand the total market for photo finishing services for both digital images as well as traditional film photos.
Because of the new capabilities the joint venture will open up, executives said they expect it to lead to the development of a whole new business category - digital inkjet photo finishing.
"They can send them to retailers online. They can drop their flash memory off. They get their films scanned. And by doing that, they can get it in more places faster and at a very competitive cost, and that will grow the whole pictures business," said Daniel Carp, Kodak's chief executive.
"The picture business today is quite hot," Carp said. "Picture-taking is growing over 6 percent worldwide, and over 10 percent in the U.S. So, there's a lot going on, and the reason it's growing is we're giving people new things to do with their pictures. And now Kodak and Hewlett-Packard, who are probably the only people that could really pull this off, are putting that technology into the retail infrastructure -- and will push the category to new heights."
For its part, Kodak expands its already strong position in the photo finishing market, and gets an additional platform from which to market its digital cameras. Meanwhile, H-P gains a big-name partner to further extend its digital imaging business, which the company has been trying to kick-start for several quarters.
Fiorina, who took over as H-P's CEO last summer, called the revenue estimate for the joint venture "conservative," and said it has a lot of upside potential moving ahead. [252K WAV or 252K AIFF]
Shares of both companies, each of which is listed on the New York Stock Exchange, ticked up sharply amid a broader decline in blue chips Thursday morning. Hewlett-Packard added 4-5/16 to 114-7/8, while Kodak shares were trading 2-3/16 higher at 63-11/16. 
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