HP's Snapfish is trying to become more competitive in the online photo processing industry.  This week they lowered their price for 4x6 prints to just 10 cents.  This puts more unwanted pressure on similar companies such as Shutterfly, Clubphoto or Ezprints to follow the trend and lower their prices to stay in the game. 

Many online printing companies have already gone bankrupt and many are sure to follow, its hard to imagine being able to make a profit charging only 10 cents per print.

HP News Release:

HP’s Snapfish Resets the Online Photography Landscape: Digital Prints Now as Low as 10 Cents Each

Snapfish welcomes vacationers into summer with prints for pennies

PALO ALTO, Calif., May 26, 2005 HP today significantly reduced the pricing on its Snapfish online photo service by offering 4 x 6-inch prints for as low as 10 cents each. Snapfish prints are now priced up to 60 percent lower than those of its major online competitors.

Consumers can now go to http://www.snapfish.com to order 4 x 6-inch digital camera and camera phone prints for as low as 10 cents with a pre-paid plan and 12 cents with Snapfish’s everyday low pricing - a 7 cent reduction from Snapfish’s previous industry-leading price.

As always, consumers will receive professionally developed, high-quality prints along with Snapfish’s 110 percent satisfaction guarantee.

“Every company pledges ‘value’ to its customers, but only a select few of the best companies consistently deliver on the promise,” said Ben Nelson, vice president and general manager, Snapfish, HP. “Since our founding in 1999, ‘best value’ has been our promise to Snapfish users and, with today’s news, Snapfish isn’t just the best place to share, store and print precious memories online, it is truly the best value in photography.”

With this move, Snapfish, a division of HP, achieves yet another industry milestone - making digital printing online definitively less expensive than using film, which, on average, costs $6.44 per roll, or about 25 cents per print.

“We believe this move will spark further growth in the overall digital photography market,” said Larry Lesley, senior vice president, Consumer Imaging and Printing, HP. “A true complement to our home photo printing offering, today’s announcement encourages consumers to engage more deeply in the digital photography experience, driving further sharing and printing of photos whether online, in the home or at retail.”

Snapfish also dropped the prices of its other popular print sizes and packages by up to 45 percent, including:

                             Previously                    Now

5 x 7-inches      59 - 95 cents       29 - 79 cents

8 x 10-inches        $3.79                   $2.99

Wallet size             $1.79                  $0.99

HP’s ability to make this move stems from Snapfish’s growth. Snapfish currently welcomes more than 500,000 new users per month, generating significant increases in volume - in terms of both prints and photo merchandise, such as calendars, diaper bags and more than 80 unique photo products. This increase in volume has enabled Snapfish to scale its operation, increase efficiencies and achieve significant cost savings, which it is now able to pass on to customers.

Additional information is available at http://www.snapfish.com.

About HP

HP is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span IT infrastructure, global services, business and home computing, and imaging and printing. For the four fiscal quarters ended April 30, 2005, HP revenue totaled $83.3 billion. More information about HP (NYSE, Nasdaq: HPQ) is available at http://www.hp.com.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of HP and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including the expected development, performance or rankings of products or services; statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the development, performance and market acceptance of products and services and other risks that are described from time to time in HP’s Securities and Exchange Commission reports, including but not limited to HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended Jan. 31, 2005, and other reports filed after HP’s Annual Report on Form 10-K for the fiscal year ended Oct. 31, 2004. HP assumes no obligation and does not intend to update these forward-looking statements.