• The New York Times, Friday, May 2, 2008 10:15 AM

Steven J. Sasson, an electrical engineer, invented the first digital camera at Eastman Kodak in the 1970s. Management's reaction, he recalls, was: "That's cute -- but don't tell anyone about it." Since then, Kodak--which once considered itself the Bell Labs of chemistry--has embraced the digital world. "The shift in research focus has been just tremendous," says John D. Ward, a lecturer at the Rochester Institute of Technology.

Kodak is by no means thriving. Digital products are nowhere near filling the profit vacuum left by evaporating sales of film. Its work force is about a fifth of the size it was two decades ago, it continues to lose money, and its share price remains depressed. But, finally, digital products are flowing from the labs.

This month, Kodak will introduce Stream, a continuous inkjet printer that can churn out customized items like bill inserts at extremely high speeds. It is working on ways to capture and project three-dimensional movies. And, of course, it continues to prompt consumers to take pictures with Kodak cameras, store them at Kodak sites online, display them in Kodak digital picture frames and print them on Kodak printers that use Kodak inks and papers.

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