Kodak squeezed as Microsoft and AOL battle for digital photo business

AOL Time Warner and Microsoft are battling to offer computer photo-processing services as digital photography moves into the mainstream.

AOL Time Warner and Microsoft are battling to offer computer photo-processing services as digital photography moves into the mainstream.

The companies have announced competing digital photo services, and AOL partner Eastman Kodak has complained that Microsoft has sidelined its photo software in the latest version of its dominant computer operating system.

Kodak spokesman Anthony Sanzio claims Microsoft is positioning itself as the 'gatekeeper', saying it's trying to cash in on the fact that consumers have virtually no choice on their operating system.

In New York, Microsoft has demonstrated the new digital camera capabilities included in its forthcoming Windows XP operating system software, scheduled for release on October 25.

Windows XP offers digital photographers "end-to-end" processing options, from simple transfer of camera images to the computer's hard drive, to posting them on the web or sending them to a photofinishing service - with preference to a Microsoft-affiliated vendor.

Meanwhile, AOL and Kodak have announced the expansion of a competing photo-sharing and printing arrangement called You've Got Pictures, which allows camera users to store digital photos online and order prints - from Kodak.

It offers free online storage for pictures and an option to process film negatives as paper prints and digital images for about $8.99 per roll.

AOL and Microsoft compete fiercely on several fronts, from instant messaging and digital music and video player software to monthly internet access subscriptions.

The two service providers rank number one and two, with AOL counting 30 million subscribers to the 6.5 million users of Microsoft's MSN internet service.

Microsoft product manager Shawn Sanford says the company has so far refused to 'sign', or recognise, Kodak's software because it "didn't meet the compatibility standards of Windows XP".

Mr Sanzio says Kodak is negotiating a photofinishing agreement with Microsoft, which will involve an initial payment and a cut of each sale.

He acknowledges that Kodak had agreed to a similar revenue-sharing arrangement with AOL in order to get access to the company's customers. But he says the arrangement differs from the Microsoft dispute because of the software giant's domination of the computer operating system market, stating: "Microsoft has been declared a monopoly by the US Government. AOL has not."

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