Friday, January 04, 2008

Price war in online photo printing?

I got the promotional email from HP (NYSE HPQ) on December 28th, announcing their new nine-cents-a-print price for online (Snapfish) 4x6 photo prints, but frankly didn't pay much attention. Maybe I should have.

As some of my regular readers might remember, I'm a big fan of the "order online/pick up at Walgreen's" service offered through HP's Snapfish photo service. I've found that service to be a pleasing compromise for my fairly modest photo printing needs. It's far less hassle than with home photo printing, even for my relative light needs of typically between ten and thirty prints at a time, and the typical one-hour local turnaround satisfies my All-American "want it now" urges beyond the point that the price premium (19¢ for Walgreens vs the formerly 12¢, now 9¢ via Snapfish mail fulfillment) is irrevelant. (Local pickup also features savings on shipping fees, but in the days of $3+ gas that's no doubt a false economy.)

Anyway, the move to 9¢ by HP and its Snapfish subsidiary has reverberated into the financial markets and online photo printing pure play Shutterfly (NASDAQ SFLY), whose stock tumbled 16% yesterday. Read "Why is Shutterfly Shuddering?", the blog post by Eric Savitz at Seeking Alpha.

One conclusion about a 25% price cut could be that things are so great in online photo printing that HP is "passing the savings along" to the consumer. That's one conclusion...

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