Brutuskend
Lifer
AMSTERDAM - Millions of consumers have started to store their photos on Web sites offering unlimited free storage capacity, and the providers are racing to capture the booming demand.
But unlike the excitement caused by Google's offer of one free gigabyte of email storage, the even more generous offers by photo sites such as www.ofoto.com and www.photos.fotango.com have hardly caused a ripple. Yet Kodak-owned (EK.N: Quote, Profile, Research) Ofoto has over 13 million members and 450 million images stored on its Internet computers. Every week, it adds five terabytes of memory to keep up with a further five million new images.
This phenomenal growth is fueled by the combination of booming digital camera sales and cheap storage, said Hellen Omwando, an Internet industry analyst at Forrester Research. "One in three consumers in developed countries like the Netherlands now have a digital camera, up from close to zero just three years ago. These camera owners need to store their pictures somewhere," she said. Market researchers GfK forecast digital camera sales in Europe to grow to 29 million this year, from 18 million in 2003.
People who want to show their photo albums to family and friends and let them order as many prints as they want, find the Web-based email providers like Yahoo Mail (YHOO.O: Quote, Profile, Research) and MSN Hotmail (MSFT.O: Quote, Profile, Research) , which cap the size of photo attachments, do not meet their needs. Companies with long histories in cameras and photos have jumped to fill the gap. They insist they do more than just storing pictures. "Storage is something that we offer, but we are not, per se, a free storage service. We position Ofoto as a sharing and printing service," a Kodak Ofoto spokeswoman said.
PRINTS PAY FOR STORAGE
Printing fees explain how photo-sharing services can offer free storage. Prints are priced from 24 pence at Fotango and 0.34 euro ($0.413) at Ofoto, while storage costs the provider a fraction of that. Storing one picture, which has an average size of one Megabyte, costs less than half a penny ($0.009) for a lifetime, Fotango said. "That's the total final figure of the cost of storage," said Stuart Fox, head of new business at Fotango, a service owned by Japan's digital camera market leader Canon (7751.T: Quote, Profile, Research) .
"Photos.Fotango.com is highly profitable, with revenues coming from prints and gifts," said Simon Wardley, chief operating officer at Fotango. A source close to Ofoto said it, too, is profitable, though Ofoto declined to comment. Yahoo Photos and privately held Shutterfly are two other web-based photo services, but MSN Photos recently dropped its online image storage and printing service. Microsoft switched to selling software that organizes pictures on a personal computer. MSN Photos customers have until July 2 to retrieve their pictures or lose them forever.
MSN failed to sell enough prints, said one U.S.-based consultant to online photo services, which explains why photo-sharing Web Sites are looking to cut storage costs even further. MSN was not immediately available to comment. "It gives you a sense of the difficulties with the economics unless you really know what you are doing, even for extremely well-funded players," said the consultant, who asked not to be named. Fotango decided last month to outsource its storage and computing needs to International Business Machines Corp (IBM.N: Quote, Profile, Research) . "Growth is explosive, but hard to predict. Long-term storage cost will be reduced significantly. There are no plans, and it is not our intention to start charging for the service," Fotango's Fox said. The company's goal is to have one Petabyte of online storage, enough to store one billion pictures.
But unlike the excitement caused by Google's offer of one free gigabyte of email storage, the even more generous offers by photo sites such as www.ofoto.com and www.photos.fotango.com have hardly caused a ripple. Yet Kodak-owned (EK.N: Quote, Profile, Research) Ofoto has over 13 million members and 450 million images stored on its Internet computers. Every week, it adds five terabytes of memory to keep up with a further five million new images.
This phenomenal growth is fueled by the combination of booming digital camera sales and cheap storage, said Hellen Omwando, an Internet industry analyst at Forrester Research. "One in three consumers in developed countries like the Netherlands now have a digital camera, up from close to zero just three years ago. These camera owners need to store their pictures somewhere," she said. Market researchers GfK forecast digital camera sales in Europe to grow to 29 million this year, from 18 million in 2003.
People who want to show their photo albums to family and friends and let them order as many prints as they want, find the Web-based email providers like Yahoo Mail (YHOO.O: Quote, Profile, Research) and MSN Hotmail (MSFT.O: Quote, Profile, Research) , which cap the size of photo attachments, do not meet their needs. Companies with long histories in cameras and photos have jumped to fill the gap. They insist they do more than just storing pictures. "Storage is something that we offer, but we are not, per se, a free storage service. We position Ofoto as a sharing and printing service," a Kodak Ofoto spokeswoman said.
PRINTS PAY FOR STORAGE
Printing fees explain how photo-sharing services can offer free storage. Prints are priced from 24 pence at Fotango and 0.34 euro ($0.413) at Ofoto, while storage costs the provider a fraction of that. Storing one picture, which has an average size of one Megabyte, costs less than half a penny ($0.009) for a lifetime, Fotango said. "That's the total final figure of the cost of storage," said Stuart Fox, head of new business at Fotango, a service owned by Japan's digital camera market leader Canon (7751.T: Quote, Profile, Research) .
"Photos.Fotango.com is highly profitable, with revenues coming from prints and gifts," said Simon Wardley, chief operating officer at Fotango. A source close to Ofoto said it, too, is profitable, though Ofoto declined to comment. Yahoo Photos and privately held Shutterfly are two other web-based photo services, but MSN Photos recently dropped its online image storage and printing service. Microsoft switched to selling software that organizes pictures on a personal computer. MSN Photos customers have until July 2 to retrieve their pictures or lose them forever.
MSN failed to sell enough prints, said one U.S.-based consultant to online photo services, which explains why photo-sharing Web Sites are looking to cut storage costs even further. MSN was not immediately available to comment. "It gives you a sense of the difficulties with the economics unless you really know what you are doing, even for extremely well-funded players," said the consultant, who asked not to be named. Fotango decided last month to outsource its storage and computing needs to International Business Machines Corp (IBM.N: Quote, Profile, Research) . "Growth is explosive, but hard to predict. Long-term storage cost will be reduced significantly. There are no plans, and it is not our intention to start charging for the service," Fotango's Fox said. The company's goal is to have one Petabyte of online storage, enough to store one billion pictures.
