Shutterfly 2013 Annual Report Download - page 11

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Production system. We operate our own production facilities in Fort Mill, South Carolina, Phoenix,
Arizona and Elmsford, New York. 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, Twitter, and Myspace;
• Photo hosting websites that allow users to upload and share images at no cost such as Picasa,
Flickr, and Photobucket;
• ‘‘Big Box’’ retailers such as Wal-Mart, Costco, Sam’s Club, 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, and 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/pharmacy, and others that offer in-store pick-up from
their photo website internet orders;
• Mobile digital photography services companies such as Instagram (acquired by Facebook),
Woven, and iPhoto;
• Self-publishing companies and services such as Lulu, CafePress, and Zazzle;
• Cloud-based storage services and file-syncing services such as Dropbox, SugarSync, Box,
Amazon Cloud Drive, and iCloud;
• Specialized companies in the photo book and stationery business such as Hallmark, Cardstore
by American Greetings, Minted, Picaboo, Blurb, Mixbook, MOO, Smilebox, Creative
Memories, and Photobook America;
• Photo-related software companies such as Apple, Microsoft, Corel, and FotoFlexer;
• Internet portals and search engines such as Yahoo!, AOL, and Google 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, Canon, and Kodak that are
seeking to expand their printer and ink businesses by gaining market share in the digital
photography marketplace;
9