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Monday, March 21, 2005

HP + Snapfish = Digital Photography + Online Media

HP plans to acquire Snapfish, an online photo service.Snapfish, a massive mail-order film processor with operations in the United States,U.K. and Canada has more than 13 million registered members and is growing at a rate of more than 500,000 members per month."HP believes by offering a superior online photo service through Snapfish, it 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. 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.
"It clearly demonstrates that even the leaders in digital photography are having to deal with the online photo component," says JupiterResearch analyst Michael Gartenberg. HP needs to expand range of services post this acquisition to see dollars and that needs a lot of strategising and good execution.Consumers do not pay for services long-term,and very few do anything more than print photos."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."

My Take: With this acquisition,a forward integration to its suceessful printing business,HP becomes a powerhouse in the photo business. Strongly believing that their ink jet process is better then the vastly more common, and generally more expensive, Kodak process that currently dominates the personal and professional photography business. HP has made a strategic investment in purchasing one of the leading on-line photo processing companies. By holding the quality and reminaing innovative, improving customer service – HP can become hughely successful – well that was the case in all other LOB’s for HP.

Category : industry consolidation.
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