Shutterfly 2007 Annual Report Download - page 16

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Table of Contents
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:
We believe the primary competitive factors in attracting and retaining customers are:
We believe that we compete favorably with respect to many of these factors, particularly customer trust and
loyalty, quality and breadth of products and services, and customer service. None of our competitors offers a
comparable value proposition, trusted brand or singular focus on customers. Many of our competitors promote their
products on the basis of low prices or the convenience of same-day availability for digital photos printed in
drugstores or other retail outlets. As a general matter, we currently plan to distinguish ourselves from such
competitors principally on the basis of product quality and innovation, rather than price or same-day delivery.
The level of competition in our industry is likely to increase as current competitors improve their offerings and
as new participants enter the market or as industry consolidation further develops. These competitors have or could
develop a variety of competitive advantages over us, including significantly longer operating histories; larger and
broader customer bases; greater brand recognition; greater financial, research and development and distribution
resources; and greater ability to acquire, invest in or partner with traditional and online competitors. Well-funded
new entrants may choose to prioritize growing their market share and brand awareness instead of profitability. We
may be unable to compete successfully against current and future competitors, and competitive pressures could harm
our business and prospects.
11
• online digital photography services companies such as Kodak EasyShare Gallery (formerly known as Ofoto),
Snapfish, which is a service of Hewlett
-
Packard, Sony
’
s ImageStation and others;
• “Big Box” retailers such as Wal-
Mart, Costco and others that are seeking to offer low cost digital photography
products and services. These competitors provide in-store fulfillment and self-service kiosks for printing,
which may, among other strategies, offer their customers heavily discounted in-store products and services
that compete directly with our offerings;
•
drug stores such as Walgreens, CVS and others that offer in
-
store
pick
-
up
from Internet orders;
• regional photography companies such as Wolf Camera and Ritz Camera that have established brands and
customer bases in existing photography markets;
• Internet portals and search engines such as Yahoo!, AOL, Google and CNET that offer broad-reaching digital
photography and related products and services to their large user bases;
• home printing service providers such as Hewlett-Packard, Epson and Canon, that are seeking to expand their
printer and ink businesses by gaining market share in the emerging digital photography marketplace; and
•
photo
-
related software companies such as Adobe, Apple, Microsoft, Corel and others.
•
brand recognition and trust;
•
quality of products and services;
•
breadth of products and services;
•
user affinity and loyalty;
•
customer service;
•
ease of use;
•
convenience; and
•
price.