The rapid expansion of digital printing by consumers eager to use on-site Kodak Picture Maker kiosks for instant printing is putting a major crunch on the supply of 4x6 size dye-sub paper and forcing some retailers to shut down machines.
Wal-Mart, for one, is hanging "Out Of Paper" signs on Picture Makers and holding onto its limited paper supplies for later in the year with a philosophy that it's better to deal with irate customers in September and October than in December.
According to a Kodak spokesperson, the shortage is not in the paper stock itself, which is made in Rochester, but the ribbon that contains the inks that transfer the image to the paper. The ribbon is made at a Kodak facility in Colorado and, according to the spokesperson, the plant is running at full capacity but unable to keep up with the demand.
Plans to expand the production capacity are in place but it will not be up and running until mid-2005, the spokesperson said.
Only the supply of paper for 4x6 prints is affected. Stock of 8-inch paper is in ample supply. It is believed there are only about five producers of dye-sub papers and Kodak calls itself the world's largest.
"We are pleased that consumers are responding so positively to the Picture Maker. We are working to deal with the shortage on an account by account basis for their needs for the balance of the year," the Kodak spokesperson said.
Kodak acknowledged that due to the shortage it would be shipping new Picture Makers only to existing accounts that need units for expansion stores. "We will not ship Picture Makers to new accounts at this time."
There are about 25,000 Picture Makers installed in the U.S. and it is estimated that over half of them have on-board printing capability of the popular 4x6 print.
Pixel Magic, with about 5,000 installations, also uses thermal dye-sub paper. David Oles, chief technical officer for the firm, said that Pixel has been able to keep up with the increasing demand. They are supplied by Dai Nippon Printing, a major investor in Pixel Magic.
Sony makes its own thermal paper for the Picture Maker. Dave Johnson, senior marketing manager, said that supply has been able to keep up with an increasing demand.
Fuji has about 5,000 Printpix machines in the field but these systems use its own proprietary thermal autochrome paper which has the inks imbedded in the paper rather than on a ribbon. Nick Riviezzo, product manager, said that while demand is running ahead of last year, paper supply is not a problem.
Fuji becomes a beneficiary of the Kodak paper shortage. Wal-Mart, for example, offers consumers the use of a Kodak Picture Maker, for an instant dye-sub print, or a Fuji Aladdin kiosk, which will transfer digital images directly to the Fuji Frontier minilab for output to photo paper. A Wal-Mart source said that during the Kodak paper problem, customers are being directed to the Aladdin.
A spokesman for Walgreens said, "We are not being affected by the shortage of Kodak paper." Walgreens, also, has the Fuji Aladdin as an alternate in many of its stores.
CVS, a major Kodak partner, did not respond to requests for comment on the paper shortage.