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By 2000, over 140 Photo CD processing labs in the USA were active, with many more outside the USA. However, by the late 1990s, Photo CD was being eclipsed by alternate formats, mainly based on the industry standard JPEG format. In the consumer segment, the Photo CD format’s relatively inefficient compression scheme meant that Photo CD files were significantly larger than a JPEG files of similar quality, and thus less convenient for transmission across the internet, etc. For example, a 16Base Photo CD image of 5.5 Mb can be encoded as a JPEG image of 2.1 Mb at 80% quality, visually indistinguishable from the original. When the Photo CD format was designed in the early 1990s, a design goal was to allow low cost playback-to-TV devices. At that time the available technology precluded 2-dimensional compression schemes such as JPEG, but by the late 1990, advances in microprocessor technology had moved JPEG/PNG compression to well within the range of even very low cost consumer electronics.
An oddity of this encoding scheme is that it allows Photo CD images to represent colors which are above 100%, "whiter than white". At the time of Photo CD's introduction, this allowed the display of images on the analog televisions of the day to show brighter, more vivid colors than would otherwise be the case. This was acceptable as the analog televisions of the day were designed to be driven beyond their 100% level without abruptly clipping. However, this aspect of Photo CD encoding is not compatible with modern image formats, and is the cause of the well documented "Blown Highlights" problem when converting Photo CD images to more modern formats. All modern formats enforce hard clipping at 100%, resulting in highlight clipping in converted images unless some form of Photo CD specific luminance and chrominance mapping is performed.
The preshaped RGB values are then converted to a luminance and two chrominance components via a CCIR 601-1 conformant transform matrix:
In the professional and advanced amateur segments, Photo CD had been eclipsed by low cost desktop scanners such as those from Nikon and Minolta in the mid range, and by drum scanners such as those from Imacon at the very high end. While the pixel resolution of Photo CD was still comparable or better than the alternatives, Photo CD suffered from a number of other disadvantages. Firstly, the Photo CD color space, designed for TV display, is smaller than what can be achieved by even a low cost desktop scanner. Secondly, the color rendition of Photo CD images changed over time and with different scanner versions; 4050 scanners had different color rendition to earlier versions.. Thirdly, the dynamic range of scans was lower than for desktop scanners. Test at the time indicated that the dmax rating (a measure of maximum density obtainable) of Photo CD was 2.8-3.0, while commonly available desktop scanners were reaching 4.2, a substantial difference. As a result of this, and Photo CD’s problems with color rendering, by 2004 the professional segment of the user community had generally turned against Photo CD.
Despite Kodak not releasing the specifications for the Photo CD format, it has been reverse engineered, so allowing images to be converted to more modern formats. The original reverse engineering work was performed by Hadmut Danisch of the University of Karlsruhe, who deciphered the format by studying hex dumps of Photo CD files, and subsequently wrote hpcdtoppm, which converts Photo CD Images to PPM format, in the early 1990s. During the early 1990s, hpcdtoppm was extensively distributed as part of various Linux distributions, but has since been almost entirely abandoned due to concerns about hpcdtoppm’s restrictive license conditions and lack of color management. However, Hadmut Danisch’s reverse engineering work has been used to create a number of other open source implementations of Photo CD decoders such as ImageMagick. In 2009, pcdtojpeg was created under the GPL open source licence. Also acknowledged by the author to be based on Hadmut Danisch’s reverse engineering work, pcdtojpeg allows Photo CD metadata to be decoded, is color managed, and can decode all known variants of Photo CD files. Currently hpcdtoppm and pcdtojpeg together form the core of information available in the public domain on the technical details of the Photo CD format.

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