HP's Snapfish Could Bite Into At-Home Print Business
05.26.05, 9:01 AM ET
Standard & Poor's Equity Research reiterated a "hold" rating on Hewlett-Packard (nyse: HPQ - news - people ) after the company reduced digital photo printing prices (for 4 x 6 prints) to 12 cents from 19 cents at its Snapfish online photo unit. "We view this as an aggressive move by the company to attract more subscribers and volume to [Snapfish]. We believe the business is profitable at these levels and think the move means that HP is willing to potentially cannibalize its own at-home print business before competitors do," the research firm said. S&P Equity Research earnings estimates remain unchanged and explained its rating. "With shares at a price-to-sales ratio of 0.8 times, below peer average, we view HP as worth holding."
forbes.com
HP's online photo service cutting prices
Thursday May 26, 1:13 am ET
SAN FRANCISCO (Reuters) - Hewlett-Packard Co.'s recently acquired online photo service Snapfish is cutting prices on digital photography prints by almost 45 percent, as the world's No. 1 personal computer printer maker angles for a larger share of the fast-growing but still nascent market.
HP (NYSE:HPQ - News), which is also the world's No. 2 PC maker after Dell Inc., is dropping prices on the popular 4-inch by 6-inch prints by 37 percent to 12 cents from 19 cents, said Ben Nelson, the head of Snapfish, which is now a unit of HP, in a telephone interview.
For customers who prepay for prints, prints will now cost 10 cents, down from 17 cents. The move comes ahead of the U.S. Memorial Day holiday weekend and the unofficial start of summer.
HP's price cuts undercut those by other online photo service companies, such as Eastman Kodak Co.'s KodakEasyShare Gallery, which charges 25 cents per 4X6 print, Shutterfly, which charges 19 cents per 4X6 print and others.
Snapfish, which claims more than 13 million registered users, also continues to grow rapidly, Nelson said, adding that part of the reason HP is able to cut its prices is because the Snapfish unit is adding more than 500,000 registered users each month.
Nelson declined to give Snapfish's annual revenue but said the HP unit will remain profitable after the price cuts.
"We're still making money at both the 10 cent and 12 cent prices," Nelson said. "We're growing at probably a much faster rate than the other online photo printing companies."
Snapfish, like other online photo services, offers free online photo sharing, photo storage and management, free editing and software, as well as online print ordering. It also offers some 70 photo gifts such as picture-emblazoned coffee mugs, T-shirts and other items.
Palo Alto, California-based HP is also cutting prices on other print sizes. A 5X7 print now costs 39 cents to 79 cents, depending on the number of prints ordered, down from 59 cents to 95 cents; 8X10 prints were reduced to $2.99 each from $3.79; and wallet size prints are 99 cents, down from $1.79, a reduction of nearly 45 percent.
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