RealTime IT News

HP Hooks Online Photo Site Snapfish

HP said it plans to acquire Snapfish, an online photo service, for an undisclosed amount.

San Francisco-based Snapfish is an independent business unit of District Photo, a massive mail-order film processor with operations in the United States, U.K. and Canada.. The company boasts more than 13 million registered members and is growing at a rate of more than 500,000 members per month.

Executives said the acquisition is subject to shareholder and regulatory approval, but the deal should wrap up next month.

"Bringing Snapfish into HP's digital photography portfolio is a strategic move for both companies," Larry Lesley, senior vice president at HP, said in a statement. "By offering a superior online photo service through Snapfish, we will be able to offer the home photographer greater choice when deciding exactly how, when and where they share, store and print their photos."

In addition to its free online photo sharing, Snapfish's service includes photo storage and management, free editing tools and software, online print ordering, wireless imaging services for camera phone and color handset users, and more than 70 personalized photo products, such as calendars and mouse pads. The basic service includes a full set of prints on Kodak paper, plus online sharing and storage, for $2.99 per roll.

Snapfish hosts infrastructure services for retailers, Internet service providers and wireless carriers, allowing them to offer the same products and services to their own customers. For example, Snapfish is the default imaging service to all of Cingular's mMode camera phone users; its MyPhoto Album includes free unlimited storage and camera phone image printing from both the phone and PC. Snapfish has contracts with ISPs like Juno, NetZero and Comcast, as well as electronics retailers such as Circuit City .

Palo Alto, Calif.-based HP, which has been hinting at such an acquisition since its analyst meeting in fall 2003, said Snapfish will help build out its $300 million "You +h HP" campaign, which includes cameras, printers, PCs, ink and paper.

HP's acquisition brings it in direct competition with Kodak's Ofoto, Shutterfly and Yahoo . The latter announced the acquisition of Flickr, a service that lets customers organize photo albums and attach photos to blogs, on Monday.

"It clearly demonstrates that even the leaders in digital photography are having to deal with the online photo component," JupiterResearch analyst Michael Gartenberg told internetnews.com. Jupitermedia owns both JupiterResearch and internetnews.com.

Gartenberg said that if HP hopes to profit from services besides cropping photos or reducing red-eye, it will have its work cut out for it. Consumers are hesitant about paying for services long-term, and very few do anything more than print photos, Gartenberg said.

"Most print them or e-mail to friends," he said. "HP will have to get more of their clients accustomed to doing these types of services if this is going to take off."