Shutterfly 2014 Annual Report Download - page 10

By using this deep customer intelligence and ongoing analysis, we are able to offer customers a more
personalized website experience and to target them with specific website promotions, discounts, specialized
e-mail, and direct mail offers. Our promotion engine generates special offers that are account specific and
applied automatically at checkout.
We are also able to dynamically assign visitors to test and control groups who are shown different
versions of our service. This form of A-B testing enables us to continuously optimize products, pricing,
promotions, and user interaction with our websites.
Website system. We have designed our website systems to be highly available, secure and
cost-effective. We can scale to increasing numbers of customers by adding relatively inexpensive industry-
standard computers and servers. We have a strong commitment to our privacy policy, and we utilize
technologies such as firewalls, encryption technology for secure transmission of personal information
between customers’ computers and our website system and intrusion detection systems.
Image archive. We store our customers’ images in our image archive. Once a customer uploads a
photo to our website, it is copied to multiple redundant systems, including an off-site copy. We continue to
expand our storage capacity to meet increasing customer demand. Our innovative storage architecture
provides low storage costs, facilitates the safe, secure archiving of customers’ images and delivers the speed
and performance required to enable customers to access, enhance and edit their images in real-time.
Render farm. Once a customer orders a photo or any photo-based product, our render farm
technology performs fully automated image processing on the image prior to production. The customer’s
original uploaded image is retrieved from the image archive, and automatic algorithms enhance the color,
contrast and sharpness of the image. The render farm also performs customer-requested edits such as
crop, borders, customized back-printing and red-eye removal.
To ensure that output is of consistent quality, we apply our proprietary ColorSure technology during
this render stage. ColorSure creates an automated mapping of the image’s specific attributes to the
printer’s specific print calibrations and attributes, prior to production. For example, this technology allows
a 4x6 print to look the same as a photo printed on an enlargement or in a photo book, even if they are
ordered at separate times.
Production system. We operate our own production facilities in Fort Mill, South Carolina, Phoenix,
Arizona, and Shakopee, Minnesota. Our automated production system controls our production processes,
including order management and pick, pack and ship operations. Using proprietary algorithms, the
production system analyzes tens of thousands of orders daily and automates the workflow into our
state-of-the-art digital presses.
Competition
The market for digital photography products and services is large, evolving, and intensely competitive,
and we expect competition to increase in the future. We face intense competition from a wide range of
companies, including the following:
• Online digital photography services companies such as Snapfish, which is a service of Hewlett-
Packard, American Greetings’ Webshots brand, Vistaprint, SmugMug, and many others;
• Social media companies that host and enable mobile access to and posting of images such as
Facebook, Intagram, Twitter, and Google+;
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