Jim Clark's new gig : Say cheese

With Shutterfly, the legendary entrepreneur looks to cash in on the growing craze surrounding digital photography. Can he play Midas again?

When it comes to picking them early, few people have enjoyed as much success as Jim Clark. With a roster of start-ups that includes Silicon Graphics, Netscape and Healtheon, the peripatetic billionaire entrepreneur has demonstrated an enviable knack for spotting technology trends long before they turn into the conventional wisdom du jour. Shutterfly.com is Clark's newest new thing. Shutterfly is a Web site that turns digital photos into prints, aiming to capitalise on the surging growth in digital photography. (Shutterfly's other big investor is Silicon Valley powerhouse Mohr, Davidow Ventures.)

While Shutterfly isn't without competition, analysts say the timing for the debut couldn't be better. First, digital cameras are getting much cheaper. "What used to be a professional product selling for $1,000 (£600) is now available at $300," said Seamus McAteer, an analyst with Jupiter Communications.

To be sure, the traditional lines of demarcation between conventional photography and computer technology are blurring. Until now, digital cameras have remained appliances used by reasonably sophisticated PC users. But this is a category that's in the process of turning supernova, with the number of digital cameras worldwide increasing at a 56 percent compound annual growth rate.

That growth has been spurred by a combination of lower prices, increased ease-of-use and more functionality. But it's taken time to develop. Alexis Gerard, president of market researcher Future Image, has worked with digital cameras for the last eight years, and only now does he recommend friends buy one. "I've always said "no" because I knew there wasn't an inexpensive option for prints," he said. "Things have changed."

And that's one good reason why Shutterfly.com, which goes live Monday, is setting up shop as the latest "dotcom" to take a stab at this market.

Unlike PhotoAccess, perhaps the most successful outfit to try its hand in this field, Shutterfly.com will not subcontract printing. The firm offers its own in-house printing facility and management believes it offers technology advantages, like red eye removal, that will ultimately afford a heads up advantage over rivals.

Shutterfly.com processes digital images uploaded by customers and then mails out 35-mm quality prints for a fee. Users are provided with 50 megabytes of free storage on the Web site where they can upload their digital pictures. Customers will then be able to commission Shutterfly.com to personalise their photos with messages or the addition of frames, and then have them shipped to several different addresses. Friends and family will also be able to view photos online and order their own prints off the Web site.

Shutterfly.com charges 49 cents to develop and ship 4 x 7 inch prints, $1.99 for 5 x 7 inch prints and $4.99 for 8 x 10 inch prints -- not exactly cheap, but on a par with the competition. The company says it has designed an all-digital process from the ground up that will capture colours more consistently than print-at-home solutions or commercial printing services.

The management team assembled by Clark, who is chairman, is led by CEO Jayne Spiegelman, a former merchandising vice president with The Good Guys and self-described "non geek." In making the decision to change careers, Spiegelman said her expertise working in retail had afforded a particular insight. "I know about digital cameras and I know about the frustration people have with getting great images," Spiegelman said. "We're going to help people get those good quality pictures that they hoped to get when they made their purchase."

A number of other Web sites are similarly taking advantage of the digital photography boom. Several large companies offer online photo album services. Hewlett-Packard lets friends and family share pictures over the Internet from their Cartogra site. "You've Got Pictures" is an initiative launched by America Online in conjunction with Eastman Kodak that similarly allows users to post pictures on the Web when their film is processed at a photo lab.

At the same time, there is a long list of Web companies that offer users the ability to upload their digital images and have them printed. But the category remains fragmented between traditional film processors, so-called niche online printers and online communities. In the near-term, at least, analysts believe that will work in Shutterfly.com's favour.

"There is no one on the horizon in the next nine months," according to Jupiter's McAteer. Still, that's not an eternity -- even in the world of cyberspace. Indeed, there's nothing preventing another well-funded company from joining the fray, or for the existing players to retool their sites and offer comparable services.

For Ron Tussy, the president of Imerge Consulting Group, the ultimate winners will be those companies that take advantage of the technology to produce truly "wow" results.

"This market's still in its infancy," he said. "I look at digital cameras and their extension into the Internet, and I'm saying that it's not good enough for companies to provide functionality that's just equivalent to film cameras. In the digital age, they have to go beyond that." If Shutterfly does, Clark will have yet another winner.