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Snapfish's Big Pond

By Arik Hesseldahl Hewlett Packard's Snapfish online photo services unit will announce today that it is deepening its relationship with the Walgreen's (WAG) drugstore chain by offering a service that will allow Snapfish users to pick up photograph prints at any Walgreen's store within an hour after they're ordered.

The service will be launched at Walgreen's stores in New York, Boston, and San Francisco but will roll out to some 4,000 locations in the chain before the end of September. The move follows a July decision by Walgreen's, the $37 billion retail pharmacy giant, to have Snapfish run its online photo services.

RIVALS' PARALLEL STRUCTURES. The service includes a new feature, initially offered for free, that will allow users to send photos easily from their Snapfish collections to as many as 10 mobile phones at once.

HP (HPQ) acquired Snapfish in March only a day after Yahoo! (YHOO) announced it would acquire photo-publishing startup Flickr (see BW Online, 5/26/05, "Picture This: A Successful HP Acquisition?"). Since the March deal, Snapfish's membership has grown to about 15 million. It debuted in 1999.

Snapfish's move to extend its reach with Walgreen's creates a structure parallel to Eastman Kodak's (EK) EasyShare Gallery service, which also offers online storage of digital photos and has an in-store pickup agreement with a drugstore chain, CVS (CVS).

MORE CONVENIENT. Despite the alliances between such large companies, experts say the retail photo-pickup business is surprisingly small. Jill Aldort, analyst with InfoTrends/CapVentures, reckons the online-to-retail photo-printing business was worth only $157 million in 2004.

Of some 42 billion digital images captured by cameras and camera phones, more than 10 billion were printed last year, Aldort estimates. Of that, 60% were printed at home, but 26% were printed at retail locations like CVS, Walgreens, and Wal-Mart (WMT). Only about 7% were delivered by mail, while 7% were printed at work.

Printing at home is more convenient than going to a store, Aldort says, but it may not be the best bet when you want a lot of photos -- let alone want them fast. That's why there's growth potential for services like Snapfish, EasyShare Gallery, and Flickr. "When it's a batch of vacation photos, it's more difficult to manage the print job at home," she says.

"Plus, the retail experience allows people to use their digital cameras in much the same way they use film cameras," she continues. Even when it comes to the most up-to-date technology, the lure of the familiar may be hard to beat.

Hesseldahl is a reporter for BusinessWeek Online in New York

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