Will A New Film Click?

Kodak, Fuji, and other photo giants are betting that it will

The Instamatic. The 110. The Disc Camera. Every decade or so since the early 1960s, the photography industry has introduced a new film format designed to make cameras more portable and picture-taking simpler. And each time, after an initial flurry of enthusiasm, the snapshot-shooting public has returned to the higher quality of 35mm photography. In the absence of true innovation, conventional photo sales have slowed to a decidedly geriatric pace.

On Feb. 1, a consortium of five powerful companies will try once more, unveiling a new film and camera system that many believe could finally inject some life into the picture business. The Advanced Photo System (APS), which hits stores on Apr. 22, promises to combine the drop-in convenience of the Instamatic with near-35mm quality, while adding a host of new features.

"STREET SAMURAI." APS was dreamed up in the late 1980s by Eastman Kodak Co. executives worried by tepid industry growth trends. Recognizing that a new format would need industrywide backing, Kodak recruited camera makers Canon, Minolta, and Nikon--even archrival Fuji Photo Film Co.--to cooperate on research and development. "It was a real challenge to get our people to view Fuji as an ally while simultaneously viewing them as a samurai on the street," recalls Peter M. Palermo Jr., a now retired Kodak executive who piloted the project in its early years.

Mutual tolerance appears to have paid off. Among the consortium's technical advances is a new, far thinner polyethylene napthalate backing, the plastic to which silver-halide emulsion is applied. That, and an image size 43% smaller than 35mm, makes APS cartridges much more compact, cutting camera size by 10% to 30%. Also, the APS cartridge has no leader; just drop it in and it automatically winds, virtually eliminating loading problems.

At the heart of the new system is a magnetic coating that enables the film, camera, and photofinishing equipment to communicate. As the camera shutter fires, information about lighting conditions, f-stop, and shutter speed are recorded on magnetic strips at the frame's edge. A new generation of smart photofinishing gear reads that data, automatically adjusting an underexposed frame, for example.

To simplify reprints, each developed APS roll will come with an index print, a sheet with thumbnail-size pictures of each frame. Consumers won't see negatives at all: The film will be rewound in its original cartridge. "The system is remarkably consumer-friendly," says Wayne Freedman, vice-president of marketing at Wolf Photo Inc., an Atlanta-based chain. "It's the biggest thing to happen in our business since the one-hour minilab. The unanswered question is: How will consumers respond?"

LASTING GROWTH? Indeed. No one doubts that APS will prove a hit. "Over time, we expect this will become the primary format in the market," says William J. Janawitz, Kodak's general manager in charge of the project. Kodak research suggests that 9 out of 10 consumers would like to have APS-like features if they were going to buy a new camera--even though the new products initially are likely to cost at least 10% to 20% more.


But will the system ignite lasting growth? "It will displace 35mm eventually, but I don't think it will change people's consumption pattern," says Prudential Securities analyst B. Alex Henderson. Privately, some Kodak executives share Henderson's fear that APS could primarily cannibalize 35mm sales. If so, the industry will have lost on an enormous bet. Kodak alone has committed $300 million to build new APS manufacturing capacity, after spending hundreds of millions on research.

Even if overall demand fails to increase, though, the new technology likely will knock out some marginal competitors that have flourished by producing private-label film and inexpensive Asian-made cameras. The big players who have invested in R&D will have a true edge for the first time in years--and their profit margins should fatten accordingly. That's more than Kodak could ever say of its Disc Camera.

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