Future Image Sees 500 Million Dollar Opportunity in New Consumer Photo Category.

Business Editors/High-Tech Writers

SAN MATEO, Calif.--(BUSINESS WIRE)--Feb. 21, 2003

Future Image Inc., the leading provider of digital imaging information and analysis, today announced the results of its investigation into the emerging field of Integrated Electronic Personal Photo Sharing (IEPPS) systems, a new category of products which give consumers the ability to find and view their personal photos and videos on their home entertainment systems. Evolution to a common digital technology base for home entertainment and photography is enabling vendors to begin delivering such solutions. First generation IEPPS products, including Media Receivers, Media Servers and Media Center PCs were the hottest new trend at the January 2003 Consumer Electronics Show.

Future Image's analysis of the necessary components indicates that most pieces needed to deliver truly high-value solutions are already in place. While critical "binding elements" are missing, they do not require major technology leaps. However developing the market opportunity that lies at the convergence of Digital Photography and the Entertainment Center will require evolving new value propositions.

"It's not about being entertained with photos, it's not about being productive, and it's not necessarily about prints," said Rajiv Mehta, principal author of the report. "Personal photography usage is primarily about social interaction, about using photos to inspire and support the conversations which bind our lives with friends and family. If conceived and executed appropriately, IEPPS systems can deliver a quantum leap in that experience. To the extent they do so, they will be enormously successful, but if they don't they will be a dead end."

"There's a tremendous amount of energy behind the emergence of IEPPS systems," said Alexis Gerard, president, Future Image Inc. "Customers today are rebelling against new technology for its own sake. They demand that it integrate with related technology products they already own, and enhance their value. That's precisely what IEPPS systems offer. If done right, they will reshape the entire consumer imaging market."

Future Image estimates at least 160,000 units of hardware components for IEPPS solutions will be sold in 2003 for retail revenues of $32 million, rising to 2,779,000 units by 2007, with a conservative revenue estimate of $453 million and an upside at $905 million.

As with all disruptive innovations, the emergence of IEPPS systems also has potential downsides, particularly for established photography players. IEPPS systems will not be an ancillary product, they will be at the center of consumer's photography usage, and hence impact everything they do after taking an image. Accordingly incumbents will do well to find ways of participating in this usage shift starting in its current early phases.

The study's methodology integrates behavioral analysis and technology analysis. It covers:

-- Recent sales performance, and forecasts for key related product categories.

-- The four key ways in which consumers "consume" their personal images, and the technology requirements for each.

-- A review of the performance and connectivity issues related to the display of digital images for Analog CRT Televisions, Digital CRT Televisions, LCD Televisions and HDTV Televisions.

-- An examination of current offerings in Media Servers, Media Receivers, and Media Center PCs.

-- An examination of wired and wireless home connectivity issues.

-- A discussion of image organization and user interface issues as they relate to the implementation of IEPPS systems.

-- A list of requirements for second generation IEPPS systems.

-- A five year unit and revenue forecast along with a discussion of opportunities and threats, particularly for providers of printing services.

-- A review of the offerings and strategies of the top ten players: Adobe Systems, Digeo, Eastman Kodak, Hewlett-Packard, Intel, Microsoft, Philips, Pioneer Electronics, Sony and Tivo, including interviews with key executives.

The study, entitled "Integrated Electronic Personal Photo Sharing -- The Future of Consumer Photography" is 37 pages, with 23 tables and figures. It is available now from the Future Image web site (www.futureimage.com).

Rajiv Mehta is a strategy consultant focused on the development and market entry of disruptive products and technologies, often but not exclusively in imaging. He has led the development of ground-breaking digital imaging hardware and software products, in either executive or consulting roles, at Adobe Systems, Apple Computer, Hewlett-Packard, Interval Research, Kleiner Perkins, Regis McKenna, and Sony.

About Future Image

Future Image Inc. is the leading independent center of expertise on the convergence of imaging, technology and business. It publishes two continuous information services, the Future Image Executive Information Service, and the Future Image WIRE (Wireless Imaging Research Edition) as well as research studies on the impact of emerging imaging-focused technologies or business trends. Recently published studies include "Beyond The 4x6 -- New Print Options For Consumer Digital Photography," "CPXe -- Reshaping Photofinishing Through Web Services," "Image Servers -- Vendor Competitive Profiles And Early Adopter Case Studies" and "Digital Cameras -- The Battle For The Emerging Consumer Market." Future Image is the official information and research partner of the International Imaging Association (I3A), and the Managing Partner of the Visual Communication initiative (www.visualcommunication.info), supported by Eastman Kodak, Epson, Hewlett-Packard, LightSurf, Microsoft, Nikon and Sprint PCS. Founded in 1991, the company is headquartered in San Mateo (CA).

Note to Editors: Excerpts of the reports are available for publication.