DIGITAL PHOTO BUSINESS IS COMING INTO BETTER FOCUS

DAN ALAIMO

ATLANTA -- Digital imaging was a key trend spotted during the Electronic Entertainment Expo here, and it may soon be seen in supermarkets.

For example, Intel Corp.'s digital imaging and video division, based in Chandler, Ariz., has announced that it will work with the Eastman Kodak Co., Rochester, N.Y., on speeding the use of electronic pictures by consumers. One digital camera with companion software displayed at the show had a suggested retail price of $179, significantly lower than the $1,000 price points of the initial wave of cameras.

Supermarkets can look forward to new processing options and the sale of related products, like paper and printer cartridges, said Len Wegner, marketing manager of the Intel division. "Digital imaging is not a replacement for film. It is complementary," he told SN in an exclusive interview during the E3 Expo, May 27 to 29.

"Digital imaging is going to expand retailers' capabilities to offer new services -- it takes film to the next level. There is plenty of room for retailers to add value."

Retailers who get into the new photo segment first will establish themselves as destinations as consumers adopt the computer-based technologies. "We're convinced this is a mainstream business and it is going to be channel agnostic," said Wegner.

Digital imaging, he noted, can be used for still photos, home video production, business applications and home entertainment. Versatile and easy to use, the technology will quickly gain momentum as prices come down, he said.

"It's not an 'if,' it's a 'when.' It's nonexistent in the supermarket today, but in the future, all bets are off."

On view at the show, a CD-ROM game called "Cosmopolitan Virtual Makeover" is reportedly generating strong sales in some 1,600 supermarkets across the country, despite a $39.99 suggested retail price, said Sean Ryan, general manager of the product line from SegaSoft, Redwood City, Calif. The software is distributed to supermarkets through Major Connections, Dallas, he said.

The product allows people to scan their own pictures, or input them from digital cameras, and alter them with different hairstyles, hair colors, eyebrow shapes and makeup. In supermarkets, the title has the potential to be cross-merchandised with cosmetics, Ryan noted. At the E3 Expo, SegaSoft also demonstrated a new version of the software, "Essence Virtual Makeover," that targets African-American consumers.

Another new digital-image product shown at the E3 Expo that may see life as a video-department rental item is a Game Boy camera add-on from Nintendo of America, Redmond, Wash. The product was released June 1 with a suggested retail of $49.95. It allows users to take pictures of themselves, play games incorporating those digital images and print out the results with a special portable printer.

"Transforming the Game Boy into a pocket-size digital camera and studio puts cutting-edge technology directly into the hands of kids of all ages," said Peter Main, Nintendo's executive vice president, sales and marketing. A color version of the 10-year-old Game Boy product will be released later this year, he added.