Eastman Kodak has made an equity investment in Snapfish, an online photo-processing company.

Kodak also launched a new Internet photo-finishing service - PrintAtKodak, and revealed a vendor-supplier relationship with another start-up, Shutterfly, in which Kodak will process high-quality prints for the Internet company, reports The Industry Standard.

"Kodak is getting smart about figuring out how to be Switzerland and work with as many online photography companies as possible," says James Joaquin, the president and CEO of Ofoto, a competitor of Shutterfly and Snapfish. Ofoto uses Kodak digital paper, and the prints its customers receive have "Kodak professional digital paper" stamped on the back.

The choice As large corporations move online, they often choose one of two options: Swallow a start-up and take advantage of its experienced staff and established services, or go it alone. Kodak is adopting a hybrid approach, both competing and collaborating with Internet companies.

Brian Marks, VP of digital and applied imaging at Kodak , says: "The biggest challenge that this service faces is awareness and trial." Users, he points out, aren't necessarily familiar with Snapfish or Shutterfly - but they know Kodak. Kodak plans to leverage its brand awareness in its online ventures.

The Snapfish deal represents Kodak's effort to work with an online photo processor. Kodak has taken a minority stake in the company, though both participants refuse to disclose more details about the investment. Snapfish raised more than $40 million before the Kodak investment. Snapfish CEO and co-founder Raj Kapoor qualified Kodak's addition as a "pretty significant amount".

"In some areas, we compete with Kodak," confesses Kapoor, referring in part to a Kodak-AOL deal whereby AOL users can get their Kodak pictures online.

The online photo space is filling up, most sites have yet to differentiate themselves from one another. Many, such as Ofoto and Snapfish will process film for free and then charge customers for prints they can pick off of an online "gallery" of their photos.