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1/14/2002
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Digital Photo Craze Leads To Services Growth

Photo-editing software is growing in popularity among consumers, and even though the trend isn't seen as sparking any immediate boost in PC sales, Microsoft and Apple see a revenue potential in offering services related to digital photography.

The number of people using their PCs to edit pictures of loved ones is growing. In October 2001, 21.5 million consumers used photo-editing software in their home computers, up 27% from 16.9 million in January 2001, according to research firm Jupiter Media Metrix. At work, 12 million people used photo-editing software, up 37% from 8.7 million in the previous January. Both cases exceeded growth in online computer usage at home and work, which was 18.6% and 18.1%, respectively.

Despite the popularity, photo-editing software probably won't drive more PC sales anytime soon, because most machines, even many older models, are capable of running the applications. However, the more people expand their use of the PC beyond word processing, E-mail, and Internet surfing, the more likely they are to upgrade. "As new stuff comes out, upgrading gets more attractive," says Gartner Group analyst Michael Silver. "The question is, when do I decide my current PC can't handle it?"

Apple Computer and Microsoft are looking to hook their revenue wagons to the growing photo craze through their services. Microsoft's latest operating system Windows XP has links to Web sites of Fuji Photo, Shutterfly, and Ofoto, which provide services such as ordering prints and archiving pictures to share with others. Apple's new iPhoto program, unveiled last week at the Macworld Expo in San Francisco, lets Mac owners order prints or a hardcover photo album. "Today it's more of a side business for these companies," Silver says. "But in the future, there's some potential." Jupiter found that home use of Web sites offering photo sharing, printing, archiving, and other services grew 22% from 3.5 million users in January 2001 to 4.2 million in October.

The study also found that the most popular photo-editing applications at home in October were Image View, with 5.5 million users; Photo Editor, with 4.1 million; and MGI PhotoSuite, with 3.7 million. The fastest-growing applications between January and October 2001 were Microsoft Picture It!, up 74% to 2.7 million; Image View, which grew 43%; and MGI PhotoSuite, which increased 39%.

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