Barksdale funds Clark's rival Ofoto

Barksdale weighed in today with an investment in digital photo-finishing start-up Ofoto, one of numerous rivals to Clark's Shutterfly.com. The 7-month-old company received $16 million in a first round venture financing from The Barksdale Group and Benchmark Capital.

Barksdale and Clark, formerly of Netscape Communications, could not immediately be reached for comment.

The Barksdale Group's Peter Currie, who today joined Ofoto's board, called Clark's move "corroborating evidence" of the viability of the digital photo market, but he said today's investment was attractive on its own merits.

"There is a format change going on in photography that we haven't seen since 35 mm film was developed," he said.

According to research firm International Data Corp., digital camera use is set to take off, growing from sales of about 4.7 million units in 1999 to 22 million units by 2003. The advent of relatively cheap and effective digital cameras has sparked a stampede among start-ups, industry heavyweights and even traditional neighborhood photo shops to offer digital photo-finishing services over the Internet.

Shutterfly and Ofoto both tout fast uploads of pictures from customers' desktops to the Net and enhanced processes for creating conventional prints from digital photo files. Ofoto also announced today a feature allowing customers to crop their photos online.

PhotoAccess.com went live last month, planning to offer similar services. Also last month, former employees at Excite@Home and Cisco Systems unveiled Snapfish.com, which plans to offer free photo-finishing services.

Meanwhile, companies like Kodak and Fox Photos are looking to transform their businesses so they don't get left behind.

Kodak, for example, is working with America Online on a service called You've Got Pictures, which allows customers to post pictures on the Web when their film is processed at a photo lab. Kodak also has launched a service called PhotoNet Online through subsidiary PictureVision.

Hewlett-Packard, meanwhile, has launched a number of digital image initiatives, including its online photo album service, Cartogra. It has also entered a partnership with Excite@Home to create a Web site catering to digital photos, dubbed Excite Photo Center.

In this crowded field, start-ups are falling over themselves to offer incentives for first-time users.

A 4-by-6 print typically costs 49 cents. Shutterfly is offering 200 free prints, while Ofoto is offering consumers 100 free prints.

"We're convinced the future of photography is digital," said Ofoto chief executive James Joaquin. "But getting early adopters is very important."