Hewlett-Packard Co. said Monday that it was acquiring Internet photo service Snapfish to expand into the growing market for online picture printing.
HP, which makes most of its profit from computer printers and ink, hopes people will still print at home but turn to Snapfish to order neckties, dog bowls, baby blankets or even boxer shorts adorned with their home photos.
“We know there’s a huge value to instant-gratification printing in the home,” said Larry Lesley, HP’s senior vice president for consumer imaging and printing. “But we respect and value customer choice. Coming back from a trip with a camera card full of pictures, you may want someone else to do the heavy lifting for you.”
Terms of the deal, which is expected to close within 30 days, were not disclosed.
Ben Nelson, president of closely held Snapfish, would not disclose the company’s revenue. But he said all of San Francisco-based Snapfish’s 80 employees -- including himself -- would be absorbed by Palo Alto-based HP.
Snapfish offers free online photo sharing and photo storage, free editing tools and software, online print ordering and photo products. The growing popularity of ordering prints and other photo products online is putting a damper on printer sales, and Lesley said HP wanted to be part of that newer, growing market segment.
Printing a 4-by-6-inch photo with HP’s printing equipment at home costs about 24 cents. Snapfish offers the same-size print for as little as 15 cents.
“It could eat into HP’s imaging and printing profits, but Snapfish was out there already, as were competitors,” said analyst Michael Cohen, noting rivals such as PhotoWorks, Shutterfly and Eastman Kodak Co.'s Ofoto.
Snapfish is “well done, and very well run,” said Cohen, director of research for Pacific American Securities, who has ordered Snapfish products. “Since HP is centering a sizable portion of its business around digital photography, expanding from equipment into services could see some synergy.”
Nelson said 50% of U.S. households that did digital photography had at least one HP product. The company also sells cameras and printers in 160 countries.
“To take that scale and bring the Snapfish experience to customers across the world is something only HP can do, and something none of our competitors can imagine doing themselves,” Nelson said.
HP’s announcement comes after Sunnyvale, Calif.-based Yahoo Inc. said it had agreed Friday to acquire Canadian firm Flickr Inc., which lets people share digital pictures with selected private groups or with the public. Terms were not disclosed.