The decision Tuesday also came as the firm decided to end its efforts with Advanced Photo System cameras, a much-ballyhooed format launched in 1996 to rekindle interest in consumer photography.
"I think it's a remarkable announcement that the company synonymous with film and film cameras is saying 'out with the old in with the new and we're going to shift all of our resources into digital,'" said CBS News Technology Consultant Larry Magid.
Though Kodak, the world's biggest photography company, expects to phase out 35mm reloadable cameras in North America and Western Europe, it plans to expand manufacturing in Asia, Latin America and Eastern Europe, where the 35mm market is still growing at a double-digit clip.
Sales of 35mm cameras in the U.S. market, in which Kodak is a minor player, fell below 8 million last year, down more than 20 percent from 2002.
Filmless digital cameras, which record snapshots on computer chips, have begun outselling traditional film cameras for the first time in the United States.
Last year, 12.5 million digital cameras were sold versus 12.1 million film cameras, the Photo Marketing Association said. The association projects that 15.7 million digital cameras and 10.6 million film cameras will be sold this year.
As for APS cameras, Kodak said it will stop manufacturing the devices by the end of 2004, citing declining demand and poor financial returns. The company will continue to make and upgrade APS film and one-time-use cameras.
Codeveloped by Kodak, Canon, Fuji, Minolta and Nikon, APS cameras produce pictures in a variety of sizes on the same roll of 24mm film. They feature a drop-in cartridge to eliminate loading errors and a magnetic stripe on the film for ordering extra copies.
In February 1996, the photo giants heralded the system as the biggest breakthrough in consumer photography since 35mm technology emerged in 1926. It quickly fell far short of expectations.
Worldwide sales of APS cameras have been stuck at around 2.5 million units a year, with Kodak's Advantix models accounting for about half of those, said Kodak spokesman Charles Smith.
"Certainly the future is in digital, so Kodak has decided that it wants to jump on the future bandwagon and not simply hold onto the past," said Magid.
"Film cameras, film and supplies have been Kodak's bread and butter for many decades, but here it's the 21st Century, and digital is what consumers want," he added.