Shutterfly Heats Up Photo Competition With New Service

In a snapshot of how competitive the battle has become to capture users' digital photography endeavors -- and the dollars that could follow -- Shutterfly has said it would begin offering its members free Web pages where they can store and share their images.

Shutterfly Collections, as the service is known, enables users to create their own Web addresses where they can store digital pictures and invite friends, relatives and others to view them. The company had previously offered a single photo album, but now will let users create two personalized Web URLs where they can store and share an unlimited number of virtual photo albums.

Shutterfly customers can choose to control access by setting password requirements to enable viewing of some photographs. They can also enable others to add photographs or comments to their online albums.

Cheaper Storage Cited

"Our customers tell us that sharing photos has become as much a part of their regular communication with family and friends as phone calls and e-mails," Shutterfly CEO Jeffrey Housenbold said.

The service also blurs the line between photo sharing and other forms of communication. The company said users will soon be able to create "buddy lists" of people who are notified automatically when photos are updated and can e-mail invitations to view albums through the Web site.

Analysts said the service is another reminder of the dramatically lower cost of data storage. That same trend has helped usher in the era of massive free Web e-mail inboxes and other services from portals such as AOL and Yahoo (Nasdaq: YHOO) , including such things as online blogs and journals and a host of photo sharing services. Yahoo, for instance, has unveiled a service that e-mails thumbnail images and stores larger photos on Yahoo's Web servers, where they're accessed when an e-mail recipient clicks on the smaller image.

Others in the digital photo management and sharing game include Kodak's Ofoto and Snapfish, which was bought by Hewlett-Packard (NYSE: HPQ) earlier this year. All of the sites offer similar services, including the ability to have prints of digital photos made. Google (Nasdaq: GOOG) purchased software maker Picasa and has offered free downloads of that photo-management tool.

Bricks and Clicks

The portals in particular are eager to add on photo service for the stickiness they create: users will likely visit a site that has their photos stored more often and are more likely to use other services if they're offered, especially when they complement the photo service, such as e-mail and instant messaging tools that make it easier to share and swap images.

Meanwhile, traditional photo outlets are trying to lure digital picture takers to use their services, with point-of-sale photo printing services now expanded to accommodate digital media.

Forrester Research analyst Paul Jackson said a range of digital photo services will be needed to accommodate the range of varying technical abilities among users. Some will gravitate toward in-store services, while others will feel comfortable with Web printing services and still others will feel comfortable leaving their photos in digital form only.

"Digital cameras aren't just replacements for old analog ones," Jackson said. "Owning one alters consumer attitudes to taking, storing, and printing photos. Consumers will gravitate to new flexible services for digital photos."