Devoted to hardware, software, IT issues, and information technology management

There is a biting piece in this morning’s New York Times about the Shutterfly saga and how its IPO has not proven to be the pot of gold at the end of the rainbow that most of its founders/investors expected. It’s really too bad— after all Shutterfly is the last of the photo 1.0 sites that is still independent, and they seem to have users that like what their product (Shutterfly is after all, the most mentioned site by the photo 1.0 refugees that we’ve gotten at Tabblo).

At the end of the day, the challenge that all of these guys (Shutterfly, Ofoto, and Snapfish) faced was building and ramping big businesses on two flawed assumptions. The first was that people would print a lot more 4×6s than they actually want to print in the era of digital cameras. When combined with the fact that there was a commonditization of the silver-halide print market (taking prices from $0.50 to $0.12 in a couple of years), this was cause for just horrible economics for all three of these guys. However, alone this flawed assumption is correctable which is why you see all three vendors moving aggressively into specialty print products (books, cards, calendars) and away from the dying 4×6.