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Price War Hits Digital Photos



 
 
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  #1  
Old March 17th 05, 07:58 PM
MrPepper11
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Default Price War Hits Digital Photos

"The evidence seems to be that the future for printing is smaller than
anyone had imagined."

March 17, 2005
A Price War Hits Digital Photos
Wal-Mart, Costco Cut Cost Of Printing Snapshots, as H-P Reduces Rates
on Paper, Ink
By WILLIAM M. BULKELEY
Staff Reporter of THE WALL STREET JOURNAL

A price war has broken out in digital photo printing.

Wal-Mart Stores Inc., Costco Inc. and other retailers are sharply
cutting prices on digital-photo prints in a furious effort to win
consumers who are switching to digital cameras from traditional film.

The companies that make home printers are also stepping up their bid to
grab more of this business. Hewlett-Packard Co., which has sold many
consumers on the convenience of making digital images at home, says it
will effectively cut the per-print costs by 17% for people who own H-P
printers and buy its paper and ink.

The price cuts come at a critical time for retailers and printer
makers. With the shift from film to digital picking up steam, the next
two years are seen by many experts as crucial in forming consumer
habits.

As the heavyweights slug it out, digital-camera owners are the big
winners. They are in many cases finding that it is cheaper to print
digitally captured images than those taken with film.

Two weeks ago, Wal-Mart cut prices on standard 4-by-6-inch prints made
from stored digital images to 19 cents from 24 cents. Wal-Mart, the
nation's largest photo finisher, charges 29 cents apiece for prints
from film.

For customers who don't mind transferring the images from their
computers to Wal-Mart.com's Web site, the per-print price has dropped
to 17 cents. (The prints are ready for pickup at the store in two
days.) Wal-Mart's wholesale-club affiliate, Sam's Club, charges even
less for a similar service: 15 cents, down from 16 cents before the
recent round of cuts.

To undercut Wal-Mart, wholesale-club leader Costco is planning to lower
its rates this week on one-hour processing to 17 cents from 19 cents.
Meanwhile, drugstore giant Walgreen's Inc. is running a digital-print
special at 20 cents a piece for 50 prints in some markets, compared
with the 29 cents it normally charges for digital or film prints.
Walgreen's store signs proclaim that its prints are "half the cost of
printing at home" says a spokesman. The calculation is based on the
prices of home-PC printer supplies like ink and paper.

The other players in this battle are the online photo sites such as
Shutterfly.com and Ofoto, which is owned by Eastman Kodak Co. These
sites accounted for a combined 8% of all prints made last year.

Photo finishers are hoping that the lower prices will induce consumers
to print more of their digital pictures. Consumers spent an estimated
$8.2 billion for prints last year, including both those made at retail
outlets and at home, according to Photo Marketing Association
International, a trade group. But that is a fraction of the potential
market: Only about 20% to 30% of digital pictures taken are developed.

The price cuts also come as digital cameras are rapidly stealing market
share from film cameras. Of the cameras sold this year, about 80% are
expected to be digital. But despite the growth in digital photography,
the number of overall prints made at home and at stores fell 4.5% in
the U.S. last year to 27.4 billion, according to PMAI.

With the film business drying up, retailers can ill afford to lose
printing revenues, too. After a slow start, retailers are beginning to
gain traction with digital printing. Digital prints ordered at
retailers more than tripled last year, says PMAI, while the number of
prints made at home were up 37%. And the momentum is clearly with the
retailers: Last year, while about 61% of all digital prints were made
at home, that is down from 90% in 2000.

One reason is the sharp increase in retail outlets offering digital
printing. Most drug and discount stores can now handle digital prints
in their one-hour photo-processing minilabs. Labs can produce prints at
a cost to operators of less than five cents a piece, says Greg Joe,
marketing manager for Japan's Noritsu Ltd., a big minilab maker.

Retailers with less business can install cheaper, but also slower,
digital kiosks. The number of photo kiosks in the U.S. is expected to
grow to 121,000 by 2008, up from 75,000 today, says Kerry Flatley, a
consultant with market researcher Infotrends. Last year, 17% of
digital-camera owners used a kiosk vs. just 6% the year before, she
says.

Both retailers and home-printer makers insist that the future of
digital printing is leaning in their favor. Pierre Schaeffer, Kodak's
consumer imaging marketing manager, says some consumers may accept the
higher cost of home printing to, for instance, easily print pictures at
a party for guests to take. But if they have a camera full of hundreds
of pictures from vacation, they would prefer to take them to a low-cost
retailer, he argues.

Long term, home printing is likely to decline to just 15% of all
prints, says Gael Lundeen, general manager photofinishing and Web
services for Fuji Photo Film USA Inc., the leader in the minilab
business with customers including Wal-Mart. "The third wave of digital
photographers is coming in, and they find digital printing at home is
very expensive and very inconvenient," says Ms. Lundeen.

Not surprisingly, makers of printers disagree. Next month, H-P will
effectively cut home-printing costs -- not including the customer's
initial outlay for the printer itself -- to 24 cents a print, for
customers who buy a 200-sheet value-pack, down from 29 cents, says John
Solomon, H-P's vice president of imaging. He believes that as long as
home printing is only 25% more expensive than the retail option,
consumers will generally prefer its convenience.

The online photo companies, meanwhile, are betting that consumers will
print out many of their images in albums and calendars or on
coffee-cups or refrigerator magnets. That is a prime source of revenue.

All photo finishers are trying to make it easier to order multiple
prints and upgrade to 5-by-7-inch prints, because that is where the
profit margins are higher. For the consumer, for example, a 5-by-7
print can cost five times what a 4-by-6 does, even though it is only
45% larger in surface area.

Of course, there's another possible answer to this debate over where
people will print their digital pictures in the future. Frank
Baillergeon, an industry consultant from Eagle, Idaho, contends that
photo finishers are engaging in "a lot of wishful thinking."

Most consumers, he says, appear to perfectly content to keep most of
their images in their PCs. "The evidence seems to be that the future
for printing is smaller than anyone had imagined," he says.

A SNAPSHOT

A look at the dropping prices for printing pictures. The following are
for 4-by-6-inch color photos.

Print price Printer price Mailing Price Total
Retail
Wal-Mart (1 hr.) 19 cents NA NA 19 cents
SamsClub.com 15 cents NA NA 15 cents
Costco (1 hr.) 17 cents NA NA 17 cents
Walgreen's (1 hr.) 29 cents NA NA 29 cents
CVS (1 hr.) 29 cents NA NA 29 cents

Home Printing
Hewlett-Packard 24 cents (1) $150 NA 36 cents
Kodak 62 cents (2) $150 NA 74 cents

Online (3)
Kodak Ofoto 25 cents NA 5 to 16 cents 30 cents
Shutterfly.com 22 cents (4) NA 5 to 18 cents 27 cents

1 Based on buying 200-print pack with ink for $48. Print price assumes
$150 printer making 300 prints a year for four years.
2 Based on 40 print-pack for $24.99 at CompUSA. Print price assumes
$150 printer making 300 prints a year for four years.
3 Online pictures take five days to arrive in the mail.
4 Based on prepaid 100-print plan plus $4.99 shipping for 100 photos.

Source: WSJ Research

  #2  
Old March 17th 05, 08:14 PM
hotchkisstrio
external usenet poster
 
Posts: n/a
Default

Very interesting stuff.

I don't know that people will print more digital photos (they say less than
30% get printed) with lower prices. I know for myself and my wife we only
print a fraction of our pics because we are taking 3X what we took on film,
and then tossing all the bad ones. It always sucked waiting a couple weeks
to get film developed and then finding out that half the roll was crap!

"MrPepper11" wrote in message
oups.com...
"The evidence seems to be that the future for printing is smaller than
anyone had imagined."

March 17, 2005
A Price War Hits Digital Photos
Wal-Mart, Costco Cut Cost Of Printing Snapshots, as H-P Reduces Rates
on Paper, Ink
By WILLIAM M. BULKELEY
Staff Reporter of THE WALL STREET JOURNAL

A price war has broken out in digital photo printing.

Wal-Mart Stores Inc., Costco Inc. and other retailers are sharply
cutting prices on digital-photo prints in a furious effort to win
consumers who are switching to digital cameras from traditional film.

The companies that make home printers are also stepping up their bid to
grab more of this business. Hewlett-Packard Co., which has sold many
consumers on the convenience of making digital images at home, says it
will effectively cut the per-print costs by 17% for people who own H-P
printers and buy its paper and ink.

The price cuts come at a critical time for retailers and printer
makers. With the shift from film to digital picking up steam, the next
two years are seen by many experts as crucial in forming consumer
habits.

As the heavyweights slug it out, digital-camera owners are the big
winners. They are in many cases finding that it is cheaper to print
digitally captured images than those taken with film.

Two weeks ago, Wal-Mart cut prices on standard 4-by-6-inch prints made
from stored digital images to 19 cents from 24 cents. Wal-Mart, the
nation's largest photo finisher, charges 29 cents apiece for prints
from film.

For customers who don't mind transferring the images from their
computers to Wal-Mart.com's Web site, the per-print price has dropped
to 17 cents. (The prints are ready for pickup at the store in two
days.) Wal-Mart's wholesale-club affiliate, Sam's Club, charges even
less for a similar service: 15 cents, down from 16 cents before the
recent round of cuts.

To undercut Wal-Mart, wholesale-club leader Costco is planning to lower
its rates this week on one-hour processing to 17 cents from 19 cents.
Meanwhile, drugstore giant Walgreen's Inc. is running a digital-print
special at 20 cents a piece for 50 prints in some markets, compared
with the 29 cents it normally charges for digital or film prints.
Walgreen's store signs proclaim that its prints are "half the cost of
printing at home" says a spokesman. The calculation is based on the
prices of home-PC printer supplies like ink and paper.

The other players in this battle are the online photo sites such as
Shutterfly.com and Ofoto, which is owned by Eastman Kodak Co. These
sites accounted for a combined 8% of all prints made last year.

Photo finishers are hoping that the lower prices will induce consumers
to print more of their digital pictures. Consumers spent an estimated
$8.2 billion for prints last year, including both those made at retail
outlets and at home, according to Photo Marketing Association
International, a trade group. But that is a fraction of the potential
market: Only about 20% to 30% of digital pictures taken are developed.

The price cuts also come as digital cameras are rapidly stealing market
share from film cameras. Of the cameras sold this year, about 80% are
expected to be digital. But despite the growth in digital photography,
the number of overall prints made at home and at stores fell 4.5% in
the U.S. last year to 27.4 billion, according to PMAI.

With the film business drying up, retailers can ill afford to lose
printing revenues, too. After a slow start, retailers are beginning to
gain traction with digital printing. Digital prints ordered at
retailers more than tripled last year, says PMAI, while the number of
prints made at home were up 37%. And the momentum is clearly with the
retailers: Last year, while about 61% of all digital prints were made
at home, that is down from 90% in 2000.

One reason is the sharp increase in retail outlets offering digital
printing. Most drug and discount stores can now handle digital prints
in their one-hour photo-processing minilabs. Labs can produce prints at
a cost to operators of less than five cents a piece, says Greg Joe,
marketing manager for Japan's Noritsu Ltd., a big minilab maker.

Retailers with less business can install cheaper, but also slower,
digital kiosks. The number of photo kiosks in the U.S. is expected to
grow to 121,000 by 2008, up from 75,000 today, says Kerry Flatley, a
consultant with market researcher Infotrends. Last year, 17% of
digital-camera owners used a kiosk vs. just 6% the year before, she
says.

Both retailers and home-printer makers insist that the future of
digital printing is leaning in their favor. Pierre Schaeffer, Kodak's
consumer imaging marketing manager, says some consumers may accept the
higher cost of home printing to, for instance, easily print pictures at
a party for guests to take. But if they have a camera full of hundreds
of pictures from vacation, they would prefer to take them to a low-cost
retailer, he argues.

Long term, home printing is likely to decline to just 15% of all
prints, says Gael Lundeen, general manager photofinishing and Web
services for Fuji Photo Film USA Inc., the leader in the minilab
business with customers including Wal-Mart. "The third wave of digital
photographers is coming in, and they find digital printing at home is
very expensive and very inconvenient," says Ms. Lundeen.

Not surprisingly, makers of printers disagree. Next month, H-P will
effectively cut home-printing costs -- not including the customer's
initial outlay for the printer itself -- to 24 cents a print, for
customers who buy a 200-sheet value-pack, down from 29 cents, says John
Solomon, H-P's vice president of imaging. He believes that as long as
home printing is only 25% more expensive than the retail option,
consumers will generally prefer its convenience.

The online photo companies, meanwhile, are betting that consumers will
print out many of their images in albums and calendars or on
coffee-cups or refrigerator magnets. That is a prime source of revenue.

All photo finishers are trying to make it easier to order multiple
prints and upgrade to 5-by-7-inch prints, because that is where the
profit margins are higher. For the consumer, for example, a 5-by-7
print can cost five times what a 4-by-6 does, even though it is only
45% larger in surface area.

Of course, there's another possible answer to this debate over where
people will print their digital pictures in the future. Frank
Baillergeon, an industry consultant from Eagle, Idaho, contends that
photo finishers are engaging in "a lot of wishful thinking."

Most consumers, he says, appear to perfectly content to keep most of
their images in their PCs. "The evidence seems to be that the future
for printing is smaller than anyone had imagined," he says.

A SNAPSHOT

A look at the dropping prices for printing pictures. The following are
for 4-by-6-inch color photos.

Print price Printer price Mailing Price Total
Retail
Wal-Mart (1 hr.) 19 cents NA NA 19 cents
SamsClub.com 15 cents NA NA 15 cents
Costco (1 hr.) 17 cents NA NA 17 cents
Walgreen's (1 hr.) 29 cents NA NA 29 cents
CVS (1 hr.) 29 cents NA NA 29 cents

Home Printing
Hewlett-Packard 24 cents (1) $150 NA 36 cents
Kodak 62 cents (2) $150 NA 74 cents

Online (3)
Kodak Ofoto 25 cents NA 5 to 16 cents 30 cents
Shutterfly.com 22 cents (4) NA 5 to 18 cents 27 cents

1 Based on buying 200-print pack with ink for $48. Print price assumes
$150 printer making 300 prints a year for four years.
2 Based on 40 print-pack for $24.99 at CompUSA. Print price assumes
$150 printer making 300 prints a year for four years.
3 Online pictures take five days to arrive in the mail.
4 Based on prepaid 100-print plan plus $4.99 shipping for 100 photos.

Source: WSJ Research



  #3  
Old March 18th 05, 06:22 PM
Scott W
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Posts: n/a
Default


Dr. Joel M. Hoffman wrote:
If it was my machine, I would charge more too, because they need to
change the roll of paper. I wish I had some place near me that had a


machine with 12" paper -- the largest I know of maxes out at 8x10.


I'm amazed how easy it is to get 8x10 and how hard it is to get 8x12.
I find 8x10 a fairly useless size because of the cropping.

-Joel


You might try Costco, it seems that their print sizes are all 3:2
aspect ratio or very close to it. I get 12 x 18 prints there and
whereas I am not sure I think they may have a 8 x 12 size.

Scot

  #4  
Old March 19th 05, 01:32 AM
George Kerby
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Posts: n/a
Default

You're in Houston, right?

Try a "real" Camera Sto
1. Houston Camera Exchange on Richmond
2. Camera Center on West Gray

Both have excellent service in 8" x 12" printing.


On 3/18/05 9:29 AM, in article , "Dr. Joel M.
Hoffman" wrote:

If it was my machine, I would charge more too, because they need to
change the roll of paper. I wish I had some place near me that had a
machine with 12" paper -- the largest I know of maxes out at 8x10.


I'm amazed how easy it is to get 8x10 and how hard it is to get 8x12.
I find 8x10 a fairly useless size because of the cropping.

-Joel

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