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.”

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