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Shutterfly develops deal with Dell

Dell Computer inks a deal with the online photo company and Conexant Systems to offer consumers photo software with the purchase of a new Dell computer.

Dell Computer said Tuesday that it has inked a deal with online photo company Shutterfly and Conexant Systems to offer consumers photo software with the purchase of a new Dell computer.

The companies said the Dell Dimension desktop and Inspiron notebook computer will have a pre-installed photo software that includes Shutterfly's online photo-sharing and printing services.

Online photo-sharing sites have been reorganizing their businesses in an attempt to survive the dot-com downturn. Shutterfly, Ofoto and PhotoWorks are among those that have trimmed their work forces in efforts to cut costs. Other companies, such as Snapfish, have altered pricing for film development.

"Shutterfly is discovering that, although it's a strong Web site on its own, that in order to be around for the long haul, it has to work and maintain these strategic relationships," said Suzzana Ellyn, a research analyst for La Jolla, Calif.-based ARS.

Redwood Shores, Calif.-based Shutterfly, which is backed by Netscape Communications co-founder Jim Clark, is working through a shaky period, having undergone two rounds of layoffs in the past few months as well as losing its chief executive, Jayne Spiegelman. The company, however, is bouncing back with not only a new partnership, but also a new CEO. Early this month, the company named Andy Wood, former CEO of Sevant, as the head of Shutterfly.

Ellyn said the company's deal with Dell is "a good strategic move" because it gives it access to more customers and also shows that Shutterfly could be around for a while.

"I've seen a few of these photo-sharing dot-coms bite the dust the past few weeks," Ellyn said. "That's always in the back of people's minds, I'm sure, when they're using these online services--that is, the security of their pictures and will that Web site be around."