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LOCAL FIRM EMBRACES DIGITAL IMAGING

You might think Kodak's moment was about to end.

No-film digital cameras are spilling into the mass consumer market, putting Eastman Kodak Co. -- and the hundreds of small companies that process its film -- in the path of a technology revolution.

But Paul E. Crawford, co-owner of two Color Tech processing labs in the region, doesn't seem especially worried. In fact, he's building a third location in Orchard Park.

"Of course, it was a concern," he said. "You saw what digital technology did to other industries -- it revolutionized some, and put others out of business."

The advent of consumer-priced digital photography equipment provides a look at how small businesses will cope with big changes in technology. Film-free cameras priced at $500 or less are starting to catch fire, analysts say, while color printers capable of producing photos are already a consumer staple at around $300. Photographers can "crop" or alter the borders of their own shots with a personal computer and print them on a home printer -- replacing the chores performed at processing labs.

U.S. retailers sold 400,000 digital cameras in 1996, according to the Photo Marketing Association International in Jackson, Mich. That's a small slice of the 15 million-unit market for non-disposable cameras, but it's a rapidly growing one. Digital jumped from less than 3 percent of retailers' sales in 1994 to an estimated 10 percent last year, the association said. By the year 2000, sales of digital cameras are expected to reach 2.8 million units.

"The Internet and the use of images in e-mail and the World Wide Web have exploded onto the scene with a ferocity only a few dared to predict," a market report by the association said. Digital cameras can load images directly into a home computer for sending over the Internet.

And as with other digital technologies, the new photography can expect a boost from rapidly declining prices and a succession of increasingly powerful products.

Into this market jumps Crawford. Rather than be overtaken by the new technology, he aims to profit from it by offering services to digital shutterbugs that they can't get at home -- yet. His Orchard Park store on Southwestern Boulevard is the first Kodak Image Center Solutions location in Upstate New York.

Although digital photography can cut out specialists, the image centers are aiming for a role by providing services such as do-it-yourself print machines that provide a faster, higher-resolution print than home equipment. And there's a plan for a network of the centers to transmit digital images to each other, letting people send photos to friends and family who don't have Internet access.

"My feeling is that the two (film and digital) will complement each other, not one eliminating the other," Crawford says.

There are 45 of the image centers going up around the U.S., Kodak regional merchandising director David B. Patt said. In addition to the new Orchard Park store, one of Color Tech's existing locations in Amherst will convert to the Kodak branded outlet.

Experts say it helps to have the resources of a big company in your corner when coping with new technology.

"Any time technology changes drastically, it may drive the old people out," said Gerald Rosenfelder, associate professor of marketing and management at Canisius College. "Or if they're astute, they may be able to switch."

Dupont Co., which produces film for industrial and medical imaging, realized 10 years ago that the technology was being overtaken by digital imaging. Its solution, Rosenfelder said, was to buy a company that would profit from the trend. Now, the two technologies are being used side-by-side, as radiologists and doctors gradually adapt to digitally processed images.

Similarly, film developers that want to get a piece of the new market will have to invest in computer equipment and acquire the new skills to operate it, said Rosenfelder, who studies industrial adaptation.

Retailers aiming at the digital market must have a computer-oriented staff that can speak the same language as customers, according to the photo marketing association's report. They should also keep low inventory, expecting products to become obsolete quickly, and not count on profits right away.

For Crawford, Kodak's help comes with some strings attached. In return for using the brand name on his shop and help setting up the equipment, he agrees not to buy film on the "gray market" in New York, where Kodak products marketed oversees are sold for less than official U.S. prices. He also agrees to participate in special marketing programs and guarantees a place for certain Kodak products on his shelves. But then, he's had an alliance with the Rochester company as a processing lab already, using its developing supplies exclusively.

The trick will be to stay ahead of the technological curve, as imitators enter the market and products for the home become increasingly powerful. Discount stores are already beginning to install self-service photo printing machines, and Kodak archrival Fuji is making its own inroads into the digital market, Crawford said.

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