EPSON PHOTOFINISHING NICHE DEVELOPS

[Anonymous]

Photofinishing niche develops rapidly
Despite being a self-described technophobe, Peggy Larez used a computer to design a hardback book of photos of her 14-year-old son, who is hospitalized while awaiting a heart transplant.
“The books are really, really nice. They’re beautiful,” said Larez, who plans to give one to her mother. “It’s the best present, and everybody likes books. And, oh my gosh, it was so fun.”
To create her book, Larez used Seiko Epson Corp.’s StoryTeller kit–one of a number of products to help shutterbugs buried in digital photos. With sales of digital cameras surpassing those using traditional film, printermakers Epson and Hewlett-Packard Co. are fighting filmmakers such as Kodak Corp. and Fuji Corp. for business in a rapidly growing niche.
“People swimming in digital photos creates a whole new category need for photo management,” said Jill Aldort of InfoTrends CAP Ventures, a market research firm specializing in digital imaging.
The U.S. market for online photofinishing and photo merchandise more than quadrupled between 2002 and 2005, to $307 million, according to preliminary figures from InfoTrends. That’s still less than half the estimated $885 million taken in this year by photo retailers such as Wal-Mart Stores Inc., Target Corp. and legions of drugstores and camera shops. And it’s a fraction of the estimated $2 billion that Americans will spend this year on ink and paper to print photos at home.
But it’s growing fast, while paper and ink sales are expected to peak this year then start to decline. Helping the trend toward do-it-yourself photo projects is home computers with faster processors, bigger hard drives and more memory.
Help for home users
Full-service online providers such as EasyShare.com, Snapfish.com and Shutterfly.com allow users to post photo albums and order reprints and calendars, coffee mugs and other photo-emblazoned gifts. Epson’s product allows users to lay out, print and assemble photo books at home, for those who want more control over their creation.
And sophisticated photo-editing software originally intended for professionals, such as Photoshop Creative Suite from Adobe Systems Inc., is available in versions for consumers who want to organize and touch up pictures. Adobe’s Photoshop Elements, Microsoft Corp.’s Digital Imaging Suite, Apple Computer Inc.’s iPhoto and Google Inc.’s Picasa all vie to be the center of the photographic universe. With each, users can order photos online or produce slide shows to view on computers or burn to DVDs.
“Everyone wants to be in photos–hardware, software, cameramakers, phonemakers,” said Snapfish.com Chief Executive Ben Nelson.
Like rivals Shutterfly.com and Ofoto.com, Snapfish was a start-up service offering photo sharing and printing. Snapfish was ranked 127th in the online film-developing market when it launched in April 2000; by the time HP bought it in April 2005, Snapfish had grown to No. 1 in volume of 4-by-6-inch prints, said Nelson, who is now also an HP vice president.
Seeing a way to keep revenue from customers who were defecting away from traditional film cameras, Kodak acquired Ofoto, renaming the service Kodak EasyShare Gallery.
Harnessing the Internet is one approach.
EasyShare.com is the biggest online presence in terms of revenue, followed by Shutterfly and Snapfish, according to InfoTrends. The services don’t disclose separate financial details.
Snapfish has positioned itself as the price leader for 4-by-6-inch prints at 12 cents per photo ordered, or 10 cents prepaid in lots of 1,000. EasyShare and Yahoo Inc. charge 15 cents, and Apple and Shutterfly 19 cents, with Shutterfly offering as low as 15 cents prepaid. Adobe’s Photoshop Elements offers prints through EasyShare, and Google’s Picasa provides hard copies of photos through a number of services including Snapfish and Shutterfly.
With Snapfish, users can order photos and pick up hard copies an hour later at more than 4,000 Walgreens stores. Snapfish also has a partnership with Costco Wholesale Corp.
The service lets users download high-resolution photos from friends’ albums and print them at home for free, and can send photos to cell phones at no cost.
Neither represents a revenue stream for Snapfish or HP, the world’s largest maker of computer printers.
“But we’re getting people used to communicating with images,” said Snapfish’s Nelson. “The more images are shared, the more money HP will make in the long run,” he said, because if people are printing photos, there’s a good chance they’re doing it on an HP printer using HP ink.
With Yahoo, Google and others getting into photo sharing and print ordering, Snapfish and others are branching out to personalized photo-based gifts.
“The online photo-sharing sites are in the middle of a significant transformation,” said Ross Rubin, a consumer technology analyst with NPD Group. “Now major multinational companies have huge imaging ecosystems to leverage in order to drive usage of these digital images.”
EasyShare, Shutterfly, Snapfish, PhotoWorks.com and Sony Corp.’s ImageStation.com are among those offering a variety of gifts such as photo memory books, calendars, cards, coffee mugs, T-shirts, blankets, neckties, dog food bowls and even cookies (for humans), all emblazoned with favorite photos.
Revenue in the U.S. from such merchandise has ballooned from $15 million in 2002 to an estimated $79 million this year, and is expected to grow to $395 million by 2010, according to InfoTrends’ preliminary figures.
Boom in photo books
Photo books in particular are gaining popularity. Most sites provide them through a partner such as MyPublisher.com, which runs its own consumer business, or Pixami.com, which doesn’t.
Apple focuses on reprints and memory books made in the iPhoto organizing and editing program that comes with every Mac computer, eliminating the need to install additional software the other services require to order photos or gifts.
“Let’s face it, the quality of a print on the side of a mug is not the same as high-quality photo vendors,” said Peter Lowe, Apple’s director of marketing for consumer applications. “Not everyone has graphic professionals like Apple does to call on to make your books look great.”
Apple boasts special effects such as extensive layouts, backgrounds and fonts, and effects such as cutting up a photo into a mosaic that other services don’t.
At $30 for a large hardcover 10-page book, Apple, Shutterfly and MyPublisher charge more than Snapfish, whose books start at $19.79.
One Apple user created 800 iPhoto books for all 82 guests of a 60th birthday celebration where participants jetted off to Paris. Another made 20-page booklets as wedding invitations for $3.99 each–extravagant to some, but unique and still cheaper than fancier engraved invitations.
Epson’s StoryTeller is based on a different model, in which everything is done at a computer, without the Internet. A 10-page, 5-by-7-inch kit costs $19.99; an 8-by-10-inch book is $23.95 for 10 pages and $29.99 for 20 pages.
“The whole process took me about 30 minutes,” said Larez, who tried her StoryTeller out at an event Epson held at the Ronald McDonald House at Stanford in Palo Alto, Calif., which houses financially strapped patients.
“It was exciting because I didn’t have any money and anything to give to my mom, and this was the perfect thing to give to her. Memories are the best.”

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January 16, 2006 at 10:09 AM