March 21, 2005 4:57 PM PST

HP to acquire Snapfish photo service

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Aiming to boost its presence in the digital-photography market, Hewlett-Packard said Monday that it plans to buy online photo service Snapfish.

HP said it has signed a definitive agreement to acquire the privately held company and that it expects the deal to close next month. The company did not announce financial details.

HP senior vice president Larry Lesley said HP has focused on products that allow customers to manage images in the home, but sees a need to do more to move images throughout the home and beyond.

The move represents a shift in thinking for HP, which has historically focused on touting its printers as the best way to make copies of digital images.

"Some of those customers want someone else to do the printing for them," Lesley said in an interview.

HP is also acknowledging that printing at home is unlikely to be the cheapest printing option, particularly for small prints. HP recently introduced supplies it said would allow standard prints to be made at home for 24 cents apiece; Snapfish offers such prints as low as 15 cents each.

"There will always be a premium for the convenience of printing in the home," he said.

The deal comes a day after Yahoo confirmed it was buying photo-sharing site Flickr.

HP has been trying to increase its presence in the photo market, offering a beefed-up line of cameras to go along with its ever-growing array of photo printers.

San Francisco-based Snapfish has 13 million registered members and about 90 employees, an HP representative said. Its president, Ben Nelson, will head up a new division within HP, the company said.

Nelson said that 40 percent of Snapfish customers already print some images at home and added that HP's brand and large customer base will help Snapfish expand on the consumer front.

HP plans, for customers who approve it, to move those using its current service over to Snapfish. That service has 1.5 million customers, who mostly use the service to store their photos. Snapfish rival Shutterfly is the default printing option from within

Snapfish also hopes to grow its business as a company that provides photo services for other businesses. The company currently does work for Circuit City, Cingular Wireless, Comcast and Cablevision, Nelson said.

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It is quite obvious I have no understanding of American marketplace. Why would I want to pay for a service like Snapfish to store my digital photos? I can just burn them on my DVD-Rs and make multiple copies, with a good indexing software to retrieve the photos.

It is quite obvious people have lots of disposable income to pay for this kind of service. I'm currently unemployed, so I now realize what I can and cannot live with. So when I saw that Snapfish had 1.5 million customers storing their digital photos off-line (and paying for the privledge), all I can say is "Wow".

Posted by treet007 (123 comments )
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