The Wind is Shifting in Internet Photo Space

Seems Snapfish is changing their web photo model to enlist help from 3rd party developers, product manufacturers and imaging creatives. They plan to accomplish this through a new set of APIs coupled with the promise of revenue sharing (here). Of course, Snapfish will still manage all the orders, money and sales commissions… just like Amazon et al. These hungry cottage developers, designers and mail order gift manufacturers will add significant incremental “gloss” and capability to the existing Snapfish franchise. Don’t get me wrong, this is a significant step, one that finally offers motivated and innovative 3rd parties a concrete way to participate in today’s digital photo ecosystem…and it will definitely work…for Snapfish!

Although these APIs will probably start with the Snapfish branded site only, the pressure will immediately come from SnapFish’s mass merchant partners, Walmart and Walgreens, to feed their sites and retail “print to store” networks as well (they already are set up to receive orders from SnapFish.) Interesting move, but it may confuse and potentially upset brand sensitive retail internet merchandisers. Obviously, the next step would be to enable these APIs on Snapfish custom branded photo sites like Walmart and Walgeens, but Snapfish may try to entice partners to move to a Snapfish branded, or co-branded alternative. That way they can unify Walgreens and Walmart users (and images) as well. Way back in 2005, when Snapfish took Walmart from Fuji “at any price”, I predicted this. Rather than Snapfish adding value to the retail brands, networked “pick up in 1 hour” retailers would add value to the Snapfish brand (and by the way, consumables volume to HP.) It will be interesting to see how they play this with partners and whether their retailers remain totally focused on their own internet brand identities. However, in the final analysis, retailer fulfillment networks need production and sales volume and if Snapfish/HP becomes the “only game in town,” they really will have no choice.

But, it isn’t really that simple, and Snapfish will never be the only game in town! Social networks have already won that battle and even today, control the vast majority of all photo sharing done on the web. Facebook alone, the veritable “800 pound gorilla”  in web space, is responsible for something like 65% of all on-line photo sharing!

Facebook quickly capitalized on the knowledge that consumers absolutely love to share pictures. Most users don’t really write that much and this fact has already made personal photo sharing the “killer app” on social networks. Their upload statistics are truly astounding, and even though Facebook images are generally unsuitable for other photographic uses (printing, books, gifts), their storage space has to be growing exponentially. In an overarching photo ecosystem context, Facebook’s technical implementation is flawed…which, at least theoretically, leaves them vulnerable to a competitor offering a compelling case for…”social networked photo sharing done right!”

Obviously Facebook already recognizes this, and their recent acquisition of startup DivvyShot is a clear indication that they are looking for new ways to defend and extend their overwhelming dominance in the social network photo. Watch for them to begin to leverage their web photo franchise into retail territory as well!

Finally, there is a little company in Mountain View that we need to watch as well. While I have already written about Google and Google Buzz, suffice it to say that they have a real stake in this game, and already are sharply focused on a vision for “photo sharing done right!” Not to be left out of the acquisition frenzy, Google recently snapped up PicNik, a web based photo manipulation provider.

Nobody really needs (or wants) two separate and parallel web photo ecosystems…one for soft display social network sharing and the other for production of prints, books and gifts. As far as I am concerned there are really only two horses left in this race. Facebook with 450,000,000 users, a majority of all photo sharing on the internet and literally billions of stored images but with… photo done wrong, and Google, with tons of technology and resources, billions of hits and a vision for social networked photo done right…but with no current community of social network users.

Either one gets it right and the consumer will be the clear winner!

Now as to which one that will be, it’s too soon to tell. Fixing Facebook (and there are lots of creative ways to do this without giving away Petabytes of free storage) is probably best for photo, as it would avoid presenting today’s social network users with a very difficult choice…either keep your friends or keep your photos.

…but then, I would never dream of underestimating Google either!

Get Everything Digital from a Retailer Down the Street!

I read a tremendous amount of excitement about the ability to buy software published “while you wait” at the new Microsoft retail stores http://bit.ly/MicrosoftPublishing . With a little help, consumers could be a lot closer to this than anyone thinks; we don’t need to wait for a new Microsoft store; and we really don’t have to limit ourselves to desktop software only from Microsoft!  Consumers could get virtually anything that comes on a CD or DVD…with packaging, quality and reliability identical to conventional mass produced copies. Imagine no inventory, no distribution, no floor space… all from a friendly retailer just down the street. While we’re at it, why not publish your own professional demo CDs or business presentations, or just make yourself some personalized CD or DVD blanks that just say you in style!

As I write this, there are already more than 2,000 fully networked, geographically distributed retail stores that burn and full color label CDs and DVDs. Some also offer personal entertainment hardware, computers and peripherals...and many have a wide variety of software for all of it!

The reason you didn’t know about it is because these systems currently masquerade as retail digital photofinishing counters; but with a little help, they could easily add the capability of on demand manufacturing for virtually every kind of digital content imaginable. Today most are in Walmart locations, but the number would approach 10,000 if others like Walgreens, CVS, Ritz and Cord added full color disc printers to address an exciting new market opportunity.  All they really need to fulfill this vision is an innovative digital industry partner that is willing to step in and help them move the data from the store end of the wire to their existing CD/DVD manufacturing and printing equipment!

The photo companies have no reason to invest and nothing to gain. We need somebody smart enough and big enough who cares! Palo Alto how about you? Redmond, remember Itunes? You can’t wrap a download and put it under the Christmas tree! This could change everything!

The air is draining from Kodak and Rochester

After having spent almost 40 years in the photo industry with both Kodak and Fuji, driving innovations ranging from dye sublimation printing to 1 hour web to in-store printing, there are some major issues “between the lines” of today’s Kodak Q3 press release. Although not specifically mentioned in releases, their 10Q contains this ominous statement:

“The Company and one of its significant Retail Systems Solutions customers will not renew a contract that expired on September 30, 2009. The Company plans to replace a significant portion of this volume of business, although the timing and extent is uncertain.”

As many industry observers have noticed, it appears that Kodak Picture Makers, Kodak’s last remaining customer facing brand presence at retail, have recently begun being replaced in some Walmart stores by a new HP instant printing system. In addition, Walmart was noticeably absent from their upbeat enumeration of major and minor “dry lab” and kiosk customers which was released yesterday. We can now be pretty sure that this “significant” customer is in fact Walmart US. While Walmart stores in the US represent less than 4000 of Kodak’s 100,000 “locations”, US retail print volume numbers would predict that this loss should represent at least $100M in annual media sales. In the US market, mass merchants are where the retail printing volume is and Walmart is by far the leader in the category.

While an ongoing loss of $100M in annual sales to Kodak is a very serious issue, their complete loss of customer facing brand presence at US photo retail locations could be even more important. What will this mean to the remaining Kodak retailers, like CVS with its 15,000 Kodak kiosks? Where will Kodak media cost (and therefore price) go with such a significant loss of thermal dye transfer media manufacturing volume? Time will tell, but at least we finally have some closure on the death of the world’s original photo market mover.

The digital transition has been difficult for everyone in the photo industry. Traditional market movers have abdicated leadership roles due to very significant consumable and service volume losses. Many retailers have either disappeared entirely or abandoned the photo category, while the consumer has been left to figure out how to personally manage the entire transition themselves, at the risk of losing personal memories forever.

This now leaves retail photo dependent on HP, Fuji and a few others.  While HP has installed systems at much smaller retail chains, Walmart would be their first major, mass merchant “print at retail” customer. Fuji has enjoyed the dominant share in “behind the counter” solutions for quite some time, and while challenged to lead or follow the industry’s evolution to all digital, is still quite comfortable in this market. Clearly, Kodak and Fuji practiced détente for years; retail photo is a very unique market and where we go from here is much more complicated, depending on how Fuji reacts to HP and whether HP can adjust its focus to become a real “turnkey” retail photo solution provider.

Even at today’s digital printing volume, there is a lot of money on the table!