Ofoto executives will report to Willy Shih, president of Kodak's Digital and Applied Imaging unit. David Kathman, a stock analyst at Morningstar, said the deal is keeping with Kodak's strategy of the past couple years. They've made a real push to catch up. Kathman noted that while Kodak's revenues still come primarily from film sales, which have slipped with the economy, Kodak aims to derive considerably more of its business from digital-related efforts in the coming years. The number of users at Ofoto, coupled with Kodak's existing relationship with AOL, will go a long way toward securing mindshare, he said.
Online photography is still such a new thing.
While getting users to the site is one hurdle, another is getting people to buy digital cameras. Kodak said the numbers make it the most trafficked photo destination on the Web. The other big name in the online photo space is privately held Shutterfly , which plans on reaching profitability within a year. Shutterfly, which laid off 25 percent of its staff earlier this year, hired a new chief executive officer, Andy Wood, in April. Early on, Shutterfly invested in a highly scalable infrastructure to provide in-house image storage and accommodate projected print volumes over the next few years.