Kodak Buys Amazon Partner Ofoto

Eastman Kodak (NYSE: EK) said Monday it will buy Ofoto, an online photography service that has been an Amazon.com partner since last fall.

Kodak spokesman Gerard Meuchner told the E-Commerce Times that Ofoto's connection with Amazon would remain intact. Amazon linked with Ofoto in October and later built its photography store around the offering.

"We intend to work with all existing partners and to further those relationships wherever possible," Meuchner said. "Those partnerships are important to Ofoto."

Terms of the deal were not disclosed. Emeryville, California-based Ofoto is privately held.

Full Throttle

The purchase of Ofoto comes after Rochester, New York-based Kodak has taken a series of more modest steps to enter the online photography world.

In October, Kodak took an equity stake in PhotoAlley and announced that it was partnering with Circuit City for online photo finishing and to enable customers to make photo albums online.

The acquisition of Ofoto also marks one of the few instances in which an established old economy corporation has grabbed the assets of a pure-play dot-com.

"Kodak gives us the resources we need to grow Ofoto beyond where it is today and to make online photography a mass-market service," said Ofoto chief executive officer James Joaquin.

Big Picture

Ofoto, which has been in business for two years, has about 1.2 million registered members, a number that has grown rapidly since Ofoto became a featured partner with Amazon, Meuchner said.

There are no plans for layoffs and Ofoto will be run as an independent unit for the time being, the companies said. Ofoto employs 121 people.

"We anticipate bringing Ofoto's capabilities to our retail customers as soon as possible," said Daniel Palumbo, president of consumer imaging at Kodak.

Palumbo said that the acquisition, while likely to dilute Kodak's earnings in the short-term, will eventually provide "more ways to generate revenue." Ofoto's offerings include digital photo albums and the ability to use photographs to create calendars, cards and other items.

Already Tops

Kodak said that when combined, its range of online offerings, including Kodak.com and its strategic partnerships with CVS.com and America Online -- where it operates the You've Got Pictures feature -- make it the most heavily used photography destination on the Web.

The combined sites drew about 780,000 users per month during the first quarter of 2001, according to recent data from Nielsen//NetRatings.