*NEWS*DIGITAL-PHOTO DEVELOPING WARS

[Anonymous]

Digital-photo developing wars
Many companies are lowering
prices
As the
heavyweights slug it out, digital-camera owners are the big winners. They are in
many cases finding that it is less expensive to print digitally captured images
than those taken with film

<>A price war has broken ouT in digital-photo printing.
Wal-Mart Stores Inc., Costco Inc. and other retailers are cutting prices on
digital-photo prints in an effort to win consumers who are switching to digital
cameras from traditional film.

The companies that make home printers also are stepping up their bid to grab
more of this business. Hewlett-Packard Co., which has sold many consumers on the
convenience of making digital images at home, says it will effectively cut the
per-print costs by 17 percent for people who own H-P printers and buy its paper
and ink.

The price cuts come at a critical time for retailers and printer makers. With
the shift from film to digital picking up steam, the next two years are seen by
many experts as crucial in forming consumer habits.

As the heavyweights slug it out, digital-camera owners are the big winners.
They are in many cases finding that it is less expensive to print digitally
captured images than those taken with film.

Two weeks ago, Wal-Mart cut prices on standard 4-by-6-inch prints made from
stored digital images to 19 cents from 24 cents. Wal-Mart, the nation’s largest
photo finisher, charges 29 cents apiece for prints from film.

For customers who don’t mind transferring the images from their computers to
Wal-Mart.com’s Web site, the per-print price has dropped to 17 cents. (The
prints are ready for pickup at the store in two days.) Wal-Mart’s wholesale-club
affiliate, Sam’s Club, charges even less for a similar service: 15 cents, down
from 16 cents before the recent round of cuts.

To undercut Wal-Mart, wholesale-club leader Costco said last week it will
lower its rates on one-hour processing to 17 cents from 19 cents. Meanwhile,
drugstore giant Walgreen’s Inc. is running a digital-print special at 20 cents a
piece for 50 prints in some markets, compared with the 29 cents it normally
charges for digital or film prints.

The other players in this battle are the online photo sites such as
Shutterfly.com and Ofoto, which is owned by Eastman Kodak Co. These sites
accounted for a combined 8 percent of all prints made last year.

Photo finishers are hoping that the lower prices will induce consumers to
print more of their digital pictures. Consumers spent an estimated $8.2 billion
for prints last year, including those made at retail outlets and at home,
according to Photo Marketing Association International, a trade group. But that
is a fraction of the potential market: Only about 20 percent to 30 percent of
digital pictures taken are developed.< style="color: rgb(0, 0, 255);">Of course, there’s another possible answer to this debate over where people
will print their digital pictures in the future. Frank Baillergeon, an industry
consultant from Eagle, Idaho, says photo finishers are engaging in “a lot of
wishful thinking.”Long term, home printing is likely to decline to 15 percent of all prints,
says Gael Lundeen, general manager photo-finishing and Web services for Fuji
Photo Film USA Inc., the leader in the minilab business with customers including
Wal-Mart. “The third wave of digital photographers is coming in, and they find
digital printing at home is very expensive and very inconvenient,” Lundeen
says.Most consumers, he says, appear to be perfectly content to keep most of their
images in their PCs. “The evidence seems to be that the future for printing is
smaller than anyone had imagined,” he says.Retailers and home-printer makers say the future of digital printing is
leaning in their favor. Pierre Schaeffer, Kodak’s consumer imaging marketing
manager, says some consumers may accept the higher cost of home printing to, for
instance, easily print pictures at a party for guests to take. But if they have
a camera full of hundreds of pictures from vacation, they would prefer to take
them to a low-cost retailer, he argues.

<>

[Author]

March 22, 2005 at 9:32 AM