Rival PhotoAccess.com went live last week, planning to offer "the most convenient, cost-effective way to obtain film-quality prints via the Internet," or much the same service as Shutterfly. Not to be outdone, Excite@Home and Cisco Systems are working on a stealth project called Sky Talk with undisclosed plans to revolutionize the digital photography market.
With digital cameras ever improving and costs dropping below $500, the density of start-ups looking to tap the $9 billion-a-year amateur photo market seems to be approaching the pixel count of a decent digital print--about a million a shot. Clark and his rivals are betting that consumers will abandon the local one-hour photo store without giving up on traditional prints or turning to high-quality desktop printers.
"Digital camera use is skyrocketing," Clark, co-founder of Silicon Graphics, Netscape Communications and Healtheon, said in a statement. "I anticipate that Shutterfly.com will revolutionize the digital photography market by combining the convenience and lower costs of digital imaging with the high quality and longevity of traditional film."
According to research firm IDC, digital camera use is set to take off, growing from sales of about 4.7 million unit this year to 22 million units by 2003. Not surprisingly, the old guard doesn't quite believe the digital photo revolution will come into focus so quickly.
While Kodak has been a leader on the digital photography front, one of its executives last week said that digital technology isn't yet good enough to replace traditional photography. Today's digital imaging does not offer sufficient benefits to unseat photographic methods used for more than a century, whether achieved through digital cameras linked to PCs or traditional photographs processed and stored in a digital format, Carl Gustin, the company's chief marketing officer, told News.com in an interview.
"To make a new model work, the old model has to be broken," Gustin said last week. "Today, digital imaging doesn't offer anything [better] besides sharing."
Shutterfly thinks somewhat more highly of its technology. According to CEO Jayne Spiegelman, Shutterfly developed its own software to speed uploads of sizable photo files to its Web site for processing at the company's custom-designed digital printing facilities. Once on the site, customers can manipulate photos and order multiple prints, in various sizes, for shipment to multiple addresses, either as regular photos or greeting cards.
In advance of the launch, the company unveiled samples of its proprietary digital printing technology, a process it says greatly enhances the quality of digital prints, for example, by removing red eye. The process was developed by Shutterfly co-founder Dan Baum, a former SGI employee who had worked with Clark in the past.
Spiegelman acknowledged some steep start-up costs, but indicated the company's backers, which include Mohr Davidow Ventures, are committed to creating a company geared exclusively to the digital print market.
While Shutterfly is quick to emphasize its new technology, the company appears to have hedged its bets. Spiegelman's background is in marketing, with experience at big consumer retail chains, including Circuit City and Macy's. And it can help to have someone like Clark at the helm, if just for the visibility.
Shutterfly's competition includes mature companies as well as start-ups like itself.
Hewlett-Packard has an online photo album service, Cartogra, which allows friends and family to share pictures over the Web. And notwithstanding Gustin's comments, Kodak is working with America Online on a service called You've Got Pictures, which allows customers to post pictures on the Web when their film is processed at a photo lab. It has also launched a service called PhotoNet Online through subsidiary PictureVision.
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