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Shutterfly-Toshiba offer may not be a bargain

Free isn't what it used to be, thanks to the Internet, where giveaways have become so commonplace that some could actually backfire.

Free isn't what it used to be, thanks to the Internet, where giveaways have become so commonplace that some could actually backfire.

Analysts have expressed doubt about a marketing ploy unveiled this week involving Shutterfly, Netscape founder delves into pictures Netscape Communications co-founder Jim Clark's online photo start-up. The deal: Consumers will get 50 free photos for one month along with the purchase of a digital camera from Toshiba.

The problem: Shutterfly gives a month of free photos to any new customer who uses its service.

"They're saying, 'Buy a new digital camera...get free prints from Shutterfly.' But...if you want free prints (without buying a new camera) you can just go directly onto Shutterfly's Web site," said ARS analyst Huyen Pham. "Customers might not quickly form an acceptance toward Toshiba" under this deal.

In defense of Shutterfly, Pham adds that the company "is branching out into a new segment. Instead of these online photo companies (trying) to promote themselves to just the general consumers, they are leveraging the consumer base of these digital manufacturers."

"It does give (online photo sites) the ability to leverage their product name more."

That's important for the online photo industry--barely a year old but already filled with about 50 companies, such as Zing Networks, Ofoto and PhotoPoint, competing for customer attention and funding. Analysts agreed that for online photo companies to survive, they need to reel in partnerships with photo-product and -sharing companies and provide services that rivals are not offering.

Analysts expect an anticipated shakeout in the industry and say that by the end of this year, consumers will be able to zoom in on the major online photo players.

In its deal with Shutterfly, Toshiba may have gotten the short end of the stick, analysts said. For one thing, they note, Toshiba's new PDR-M70 digital camera costs $899.

Free photos may sound like a great perk to move the merchandise, but bargain-hunting customers could just as easily go for a cheaper brand and sign up for Shutterfly's giveaway, too.

A Shutterfly spokeswoman said the deal offers Toshiba customers more than it does standard users of the site. She said Shutterfly will create educational materials to help Toshiba customers, including a brochure, and said the deal could involve future exclusive Toshiba promotions.