Reframing Digital Entertainment

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"I see the frame becoming a social experience, a window into the world of friends and family," says Georg Petschnigg, senior program manager at Next Media Group at Microsoft Research.

A wide array of tech players hopes to tap digital frame demand. Besides Kodak, there's Philips Electronics, and display maker ViewSonic, along with some 50 startups with names like Smartparts and PhotoVu, in the U.S. alone. After exiting the market around 2004, Kodak came back last April with frames selling for $70 to $250. Sales have been brisk since. "Although digital frames have been around for a while, the market has just reached a tipping point," says Keith Morris, vice-president for marketing at Ubicom, which supplies chips to makers of network routers and digital photo frames. "We see it as a market that could get as big as a router market very fast."

Increased ease of use is playing a big role in that. Whirlpool (WHR) has recently begun incorporating special connectors into its fridges that allow digital photo frames to be easily incorporated into the appliances' doors. Newly minted digital frame maker D-Link, better known for its Wi-Fi routers, has developed a way to simplify installation: Users will be able to register the new D-Link frame, coming out in the next few months, online. That will enable the frame's software to update itself automatically. "Our goal is to take all that complexity out," says Joe.

Reaching Consumers

Another reason for this sales explosion: Digital photo frames enjoy much wider distribution than nearly every other type of consumer electronics. The devices are found everywhere—from mass merchants like Target (TGT) to home decor stores and gift shops to consumer-electronics retailers. "It's a category that crosses a lot of retail lines," says Stephen Baker, an analyst at consultancy NPD Group. And that distribution could widen further: While, historically, Americans have mostly bought the frames as gifts, consumers are starting to buy wireless frames for their own use, says Kodak's Rieger.

It's not just the possibility of high hardware sales that's attracting industry players: There's also the potential to make money off serving ads and providing Web services to digital photo frames. FrameChannel.com, a free service which will eventually require its subscribers to view ads on their frames, should generate $7 to $8 in ad revenue per user per year, Phillips estimates. "It's really about a race for the eyeballs," says Ubicom's Morris. "Photo frames are just another way to reach consumers."

Check out the BusinessWeek.com slide show for a roundup of some of the newest digital frames.

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.