On April 21, 2015, the financial sector was abuzz with the breaking news that Hewlett-Packard Co. (HPQ, Financial), the multinational Information technology giant, will be selling its popular digital imaging subsidiary SnapFish to District Photo.Ă‚
Disctrict Photo is an innovative printing platforms solution provider, although, negotiating terms and details of the transaction have not yet been disclosed. The announcement came right after HP shares fell by almost 17% throughout this year with a value of $33.21 at 10:15 a.m. New York time on Tuesday morning, while the S&P 500 information-technology index surged by 1.7%.
The players
Out of the three players in the transaction, HP is by far the strongest company with a wide range of successful enterprising solutions in the hardware sector, software development and customised services for individual users, small to medium-sized businesses (SMBs) and established organisations with prominent contributions in government, health and educational projects. With humble origins in a one-car garage by the founders William "Bill" Redington Hewlett and David "Dave" Packard, the California based corporation has grown exponentially and established itself among the world's leading PC manufacturers, holding the coveted top spot from 2007 to Q2 2013. The computing, data storage, customised software solutions and network hardware development specialist, deals in diverse product lines ranging from personal to enterprise and industry standard computers and servers to computing softwares and an assorted range of printers and other imaging products. In an undertaking to expand its presence in the promising photo sharing market, HP acquired Snapfish for a cool $300 million in 2005.
Snapfish, a prominent Web-based photo sharing and photo-printing service, was started in San Francisco in 2000 by Rajil Kapoor and partners and hosts a rich archive of almost a billion unique photos with more than 90 million subscribers. The offered service enable easy sharing, effortless printing with professional –quality results and unlimited online and offline storage at possibly the lowest price in the market. The additional perks of creating personalised photo products like calendars, mugs, mouse mats, books and puzzles are extremely popular.
The third cog in the wheel is the Beltsville, Maryland based, photo industry veteran District Photo which has multiple state-of-the-art digital labs and has reacquired Snap fish for an undisclosed sum. The original acquisition was in late 2001 when Snapfish was just an online film developer.
Fine points of the deal
Although the exact numbers are not revealed yet, it is clear that after the transfer of ownership, the trademark HP printing services will still be used by Snapfish and PCs developed by HP will continue providing the HP Connected Photo application originally developed by Snapfish. The reacquisition will give District Photo access to all technology assets, employees and resources of approximately 90 million users of Snapfish.
Way Ahead
On 6 Oct, 2014, Hewlett-Packard announced extensive plans to divide the PC and printers business from its Enterprise products and services business for dedicated progression and concentrated customer service in each sector. In its efforts to categorise relevant assets, HP has resorted to divestiture and has been trying to sell its photo-sharing site Snapfish for the last few years with a failed attempt by ShutterFly Inc. (SFLY, Financial) last year. Meg Whitman, Hewlett-Packard’s chief executive officer, told shareholders in Mar 2015 that the company was on track to complete the split by 1 Nov, into HP Enterprise that will focus on supplying businesses with software, services and hardware and HP Inc. for selling personal computers and printers to consumers and businesses.
