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The company says its KAC-05020 Image Sensor is the world's first 1.4 micron, 5-megapixel device that allows the capture of high quality images in small cameras, with quality that equals what is available from current devices using larger, 1.75 micron pixel designs.

"It will help manufacturers reduce their costs...because of the size - you can put more chips onto one wafer, for the same amount of money," says Fas Mosleh, CMOS sensors marketing director at Kodak.

"This is the kind of technology that can help upgrade all camera phones to a real camera."

The announcement is the latest from Kodak's growing patent licensing arm, which has become a critical contributor to its profitability as the company emerges from an expensive transition into a producer of digital imaging and printing systems.

Kodak expects to earn up to $350 million a year from royalties and related revenue through 2011.

"It could be very well happening

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that one of those years will be a lot larger than that," says Antonio Perez, Kodak's chief executive.

"It may be another year, a lot smaller than that. We see significant legs to our program."

Industry analysts have looked skeptically at Kodak's rosy outlook, noting that few details have been delivered on its patent plans, and that incremental licensing contracts are hard to count on in the long term.

Still, Kodak has introduced some products from its patent portfolio, including its own consumer inkjet printers, which it says creates longer lasting pictures.

In addition, last year it unveiled camera sensor technology that significantly increases sensitivity to light, allowing users to potentially take pictures in dark conditions.

Key to the performance of this new sensor is the "Kodak Truesense CMOS Pixel", a reworking of the fundamental design and architecture of traditional CMOS pixels, the company says. A CMOS (complementary metal oxide semiconductor) sensor is less expensive to manufacture, while consuming less energy and performing more functions on a single chip.

Manufacturing customers interested in the design will likely get a chance to sample it in the second quarter of this year, but devices with the technology are not likely to hit store shelves until 2009, Kodak says.

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