Eastman Kodak Co. plans to make its sharpest diversification yet from the photography industry and enter the already crowded telecommunications field by offering long-distance voice and data communications services to other companies.
But analysts warned that Kodak will face a large amount of competition from other companies with the same idea, not to mention such telecommunications specialists as MCI Inc. and American Telephone & Telegraph Co. They added, however, that Kodak does not have much to lose in the venture, because all it will be offering is excess capacity in its own communications network.
"They've got the system already, so why not make a buck off it?" asked Steven G. Chrust, a communications industry analyst at Sanford C. Bernstein & Co. He noted that several other companies have offered similar services for the same reason.
Kodak said it is setting up a new division, Eastman Communications, to offer nationwide telecommunications services at competitive prices, beginning in 17 major markets before the end of the year. Those markets include Arlington, Va., New York, Chicago, Los Angeles and Kodak's home base in Rochester, N.Y. The company will make the service available only for business and commercial users; it does not plan to go into the residential long-distance business.
Calls will be routed through AT&T circuits, but Kodak believes it can provide value to customers through computer software it has developed to route calls efficiently and transmit data quickly. The company said it does not now plan to make a major hardware investment for the new business.
"The key thing is the abilities we have developed and have here in-house that we think are of value to other major companies," said Lester G. Miller, general manager of Eastman Communications.
Kodak has had its own telecommunications network for more than a decade. Miller said it was set up because of dissatisfaction with what was available on the market for long-distance-communication switching and control.
He said he believes that Kodak is more in touch with the market and corporate customer needs than many of its new competitors because it is primarily a long-distance customer.
"Obviously, there are some very heavy hitters in this industry, but we think that the telecommunications industry is very misunderstood by many of the people who are in it today," Miller said.
Kodak's system now handles about 7 million long-distance calls and moves 1 million data files a year among 225 locations worldwide. Analysts said that volume is a drop in the bucket next to the 16-billion-plus long-distance calls made daily in the United States.
But a Kodak spokesman said the company expects the business to be a "sizable" one for the company. Miller said he expects most of the growth to come in the data-transmission field, where one "extremely formidable competitor" is International Business Machines Corp.
The foray into telecommunications is a departure for Kodak, which has not strayed far from its photographic base in its more than 100 years of existence.
The few diversification steps it has taken -- into chemicals, plastics and copiers -- have been offshoots of the photography business in one way or another.
But Kodak has run into rough water lately, left behind in many areas of the photographic market by Japanese and European camera makers and outflanked in the growing industrial and medical instant-photo market by Polaroid Corp., causing some analysts in recent months to sour on the company's prospects.
Kodak has been aggressively recruiting electronics engineers and developing new high-tech products recently in an effort to push itself away from pure photography and into new, lucrative fields.