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Snapfish adds gimmick to launch

The digital photo start-up, formerly code-named "Project Skytalk," plans to offer free photo processing and prints when it launches Jan. 17.

Digital photo start-up Snapfish.com plans to offer free photo processing and prints when it launches Jan.17, CNET News.com has learned.

Formerly code-named "Project Skytalk," Snapfish yesterday announced its new name and a total investment of $7.5 million investment from @Ventures, the venture capital arm of CMGI, and the Mayfield Fund.

The company is a so-called second-generation Internet start-up fronted by executives from Excite@Home, Cisco Systems and Hewlett-Packard.

It is unclear how Snapfish plans to make money, although advertising will likely be one component of its business plan.

Chief executive Raj Kapoor--formerly in charge of e-commerce products for Excite@Home--could not immediately be reached for comment.

The ".com" highway has become littered with giveaways and freebies as start-ups pull out all the stops to rapidly build brand awareness and market share. Among digital photography sites, for example, six-month-old start-up Ofoto is offering 100 free digital photo prints to each of its first million customers--a giveaway that could cost the company as much as $50 million.

With dozens of newcomers planning to reinvent the amateur photo market, it was perhaps just a matter of time before someone offered free online printing services.

Snapfish will focus on the consumer photography market initially but may later branch into the business side of the photographic industry, Brad Garlinghouse, a general partner with @Ventures, told CNET News.com last week. The company, citing studies, believes the worldwide consumer photography industry is an $80 billion market that has been largely untapped by the Internet.

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.

Just today, Fuji Photo Film said it is considering offering online photo development services with Wal-Mart in the United States, according to Reuters. Reuters cited a report from the Nihon Keizai Shimbun business daily that said the companies may offer these services as early as January.

Yesterday, legendary entrepreneur Jim Clark launched amid great fanfare his Netscape founder delves into pictures newest venture, Shutterfly.com, which will offer enhanced digital printing services over the Web. PhotoAccess.com went live last week with a service similar to Shutterfly. Meanwhile, companies like Kodak and Fox Photos are looking to transform their businesses so they don't get left behind.

Hewlett-Packard has an online photo album service, Cartogra, which allows friends and family to share pictures over the Web. Kodak 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.

Reuters contributed to this report.