Hewlett Packard (HP) has signed a definitive agreement to acquire Snapfish, a leading online photo service. With more than 13 million members, Snapfish is the third largest online photo sharing service provider, behind Eastman Kodak’s Ofoto and Shutterfly.
Co-founded in 1999 by Raj Kapur, Shripati Acharya, Suneet Wadhwa and Bala Parthasarathy, the online photo services coupled with HP’s worldwide customer reach will rapidly enhance HP’s ability to capitalize on the growing market for online photo printing.
“HP approached us in late 2004 and was looking for a company like us. We weren’t looking to sell, but it was an extremely strategic opportunity, and their strategy made a lot of sense,” Kapur says.
While company sources did not comment on the acquisition cost, a Merrill Lynch report estimates that HP may have paid approximately $300-400 million for Snapfish, and believes that Snapfish’s revenue is less than $100 million.
San Francisco-based Snapfish offers high-quality photo products and services, including free online photo sharing, photo storage and management, free editing tools and software, online print ordering, wireless imaging services for camera phone and color handset users, and more than 70 personalized photo products.
Snapfish also provides infrastructure services to leading retailers, Internet service providers and wireless carriers. This allows them to offer the same products and services to their own consumers.
“Bringing Snapfish into HP’s digital photography portfolio is a strategic move for both companies,” said Larry Lesley, Senior Vice President, HP Consumer Imaging and Printing. By offering a superior online photo service through Snapfish, we will be able to offer the home photographer greater choices when deciding exactly how, when and where they share, store and print their photos.”
According to IDC, the online photo finishing market is expected to grow at rate of more than fifty percent over the next few years, reaching annual revenue of approximately $5.5 billion in 2008.
Snapfish will remain in San Francisco and all of its approximately 80 employees will be retained. They will be lead by the existing management team, providing much autonomy to the company. The acquisition, which is subject to various standard closing conditions, is expected to close in April 2005.
While Kapur has moved on to become a partner with Mayfield, a venture capital firm, Parthasarathy will continue to advance with HP— he built the service from ground up and hopes to increase the customer base to 130 million.
“One of the key reasons they bought was the fact that we have a very cost effective product development team, because we leverage India,” Kapur adds.
“We have a team at Value Labs based in Hyderabad. They power a lot of our development from there,” Parthasarathy adds.
By taking the company to the next level, CTO Parthasarathy said, “We are looking to provide further end-to-end solutions to our customers. Today people have a lot of digital imaging needs not only for pictures also for video’s, the need to share, store and print we hope to meet that.”
“We are sharing our original vision of being the ultimate source for personal multimedia destination, be it audio, video or images,” he adds.
Snapfish customers will enjoy the same benefits they currently receive, along with added benefits from HP’s digital photography portfolio, including easy access to products and information that will help enhance their digital photography experience.
Whether a consumer wants immediate gratification of printing photos at home, or the simplicity of ordering a large batch of prints or photo merchandise online, consumers will have access to a more simple, affordable and comprehensive digital photography experience through HP and Snapfish.