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Archive for Monday, January 15, 2001

Some envision bright future for online darkrooms

January 15, 2001

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— Ron Hurst doesn't own a digital camera. But he plans to use a computer to process, view and perhaps even touch up all the family photos he took over the holidays.

Even as he continued to rely on old-fashioned film over the past year, Hurst was able to improve his pictures courtesy of a digital photography Web site.

"I love it. It's like having your own digital darkroom," said Hurst, 53, of Vallejo, Calif. "For an old guy like me, this was a great vehicle to break into the digital age."

Sites like Shutterfly.com, Snapfish.com and Ofoto.com convert traditional film into a digital format for little or no charge. Hurst uses Shutterfly, mailing his negatives to the Redwood City, Calif.-based company in a postage-paid pouch.

The sites notify photographers when their images are posted online, where the shutterbugs can crop or clean them up. It's a good way, for example, to remove that annoying red-eye effect.

The pictures can be sorted into online photo albums, which site operators say can't be viewed by uninvited guests, and most sites also offer e-mailing services to pass along the digital images.

"We can make even lousy pictures look good," boasts Jayne Spiegelman, Shutterfly's CEO. "People who try our service usually become evangelical about it."

The sites also give photographers, as well as their family and friends, the option of selectively ordering prints instead of paying for an entire roll of prints.

Initially, most also offer free prints and processing to lure new customers.

Snapfish, for instance, will develop up to 24 rolls of film annually for a $1.69 shipping and handling charge per roll. After introductory promotions, the cost at Shutterfly and Ofoto range from 49 cents per 4-inch-by-6-inch print to $2.99 per 8-inch-by-10-inch print.

"The end game is to get all the people still using film to go online and then have them eventually migrate over to digital cameras," said Raj Kapoor, CEO of San Francisco-based Snapfish.








This month shapes up as a prime time for digital photography sites to win converts, because digital cameras landed under a lot of Christmas trees last month.

Digital camera sales nationwide rose 26 percent in December from the year before, said CS First Boston photo industry analyst Gibboney Huske not as much as the industry hoped, but a decent gain.

About 7 million digital cameras were shipped in 2000, according to IDC, a Framingham, Mass., research firm. IDC expects digital camera sales to rise 40 percent annually during the next four years.

"Digital cameras are like an oncoming tidal wave and we are going to float with the rising tide," said James Joaquin, CEO of Berkeley-based Ofoto.

Still, analysts aren't convinced the digital photography sites are going to survive to capitalize on the trend.

"It's a neat idea, but I'm not real optimistic about their prospects," said Chris Chute, an IDC analyst. "There is going to be some tough competition and a lot of these sites have pretty kooky business models."

They also have some well-known financial backers.

Jim Clark, the co-founder of Netscape, is chairman of Shutterfly and contributed a chunk of the $25 million in the company's venture capital. James Barksdale, Netscape's former CEO, invested part of the $16 million behind Ofoto.

Besides Shutterfly, Snapfish and Ofoto, other high-profile sites include Photopoint.com, Ememories.com and Zing.com. The sites are privately held and don't disclose financial information.

Posting digital pictures is already immensely popular. About 15 million people have displayed pictures online, according to InfoTrends, a Boston research firm.

Relatively few people, though, are spending money to have their pictures developed and printed by the Web sites.

Online photo printing was a $13 million business in 2000, Huske estimated. That's a mere speck in the overall $40 billion photofinishing industry.

Perhaps the biggest obstacle facing digital photography sites is the absence of high-speed Internet access in most U.S. homes. Using common dial-up modems, transferring or "uploading," the images taken by a digital camera to a Web site can be time-consuming.

Until faster Internet connections are widely available in homes, analysts reason, most consumers won't take the time or make the effort to transfer their digital pictures to the leading Web sites.

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