Posted on: Tuesday, March 22, 2005

HP snaps up photo-service firm

By Rachel Konrad
Associated Press

SAN FRANCISCO — Hewlett-Packard Co. plans to acquire online photo services startup Snapfish, the computer maker announced yesterday.

Palo Alto-based HP hopes to boost sales of its popular photo printers and ink by targeting the San Francisco-based company's 13 million members.

Snapfish's Web site contains roughly 350 million photos, which users can organize into digital albums, share with other members, turn into calendars or mouse pads, and have printed for as little as 15 cents per photo.

The companies would not disclose terms of the acquisition, which is expected to close in April.

Snapfish is an independent unit of District Photo Inc., which started as a black-and-white photo lab in Washington, D.C., in 1949. District Photo is the world's largest mail-order film processor, with labs in the United States, United Kingdom and Canada.

HP is the latest technology powerhouse to move more aggressively into the lucrative niche of online photos. Americans will purchase roughly 20.5 million digital cameras this year, up more than 70 percent from last year, according to the trade group Photo Marketing Association.

On Friday, Internet portal Yahoo Inc. signed a deal to buy Canadian photo-sharing startup Flickr Inc., which lets people upload digital photos from computers and camera phones, publish photos in their blogs, share digital photo albums with anyone else who uses the service and alert other users whenever they upload a new photo or album.

Last summer, Google purchased digital photo software company Picasa, which helps users edit and circulate large numbers of photos.

Larry Lesley, senior vice president for HP's Consumer Imaging and Printing division, said the computer maker plans to ask all 1.5 million HPphoto.com customers if they'd like to migrate to Snapfish when the deal closes next month. Then Snapfish's 80 employees will work with HP to produce new products and services — including promotions that help people who don't have fancy photo printers print images from their digital cameras.

"This is absolutely a natural extension of our digital photography strategy," Lesley said yesterday. "It's not just about printing 4-by-6 photos. We're talking about creating things with images you couldn't possibly do at home or at retail — personalized neck ties, baby blankets, all kinds of things."