New WiFi camera technology a boon for photo-sharing sites

October 30, 2007, 4:01 AM UTC

By Michal Lev-Ram

At a friend’s wedding back in 2004, Yuval Koren and fellow guests snapped dozens of photos of the special day. They promised to share their pictures, but months later Koren realized he still hadn’t seen any of them.

That got the former Cisco Systems engineer thinking — what good are digital cameras if many of the pictures they take remain imprisoned on memory cards? Convinced that consumers would pay for an easier way to upload their photos, Koren left Cisco, assembled a team and founded Mountain View, Calif.-based Eye-Fi. Last summer the company raised $5.5 million from Silicon Valley firms Shasta Ventures and Opus Capital.

The result is an orange 2-gigabyte memory card embedded with a Wi-Fi chip that allows cameras to automatically and wirelessly upload digital pictures. The $99.99 Eye-Fi (available for Mac and PC) hits online store like Amazon and Wal-Mart today. (For a review of the Eye-Fi by Fortune’s Josh Quittner, see “Wireless photo-sharing.”)

“We evaluated a few different solutions,” says Koren. “This was definitely the easiest for mass consumers to adopt.”

And that, says Eye-Fi co-founder Ziv Gillat, the company’s VP of marketing and sales, could mean more business for photo-sharing sites websites that rely on members uploading and sharing new pictures as often as possible.

“We’re unlocking potential money here,” says Gillat. He adds that photos that aren’t uploaded within a week generally don’t get printed — one of the ways photo sharing sites make money.

“People want to share photos quickly,” agrees Alice Lankester, VP of marketing at Photobucket, a photo-sharing site owned by News Corp.’s Fox Interactive Media and an Eye-Fi partner. “They’re looking for ways to simplify that process.”

Here’s how Eye-Fi works: Camera owners set up their Eye-Fi account online and choose where they’d like to upload photos online and on their desktops. Photos can be sent to 17 photo-sharing and blogging sites, including iPhoto, Flickr, Shutterfly and TypePad. They then pop the Eye-Fi card into their camera’s memory card slot and snap away. A Wi-Fi chip (made by Santa Clara, Calif.-based Atheros) then communicates with their home network and automatically uploads photos to their computer and the Web.

Of course, Eye-Fi isn’t the only solution to the digital photo conundrum. Some pricey high-end digital cameras already come equipped with a built-in Wi-Fi chip.

The coolness of Eye-Fi’s WiFi memory card aside, some analysts say the company’s real value derives from the software it’s developed to automatically send photos to multiple websites and locations on a computer.

“I am 100 percent enthusiastic about the notion of automatically getting photos moved from the camera to various destinations,” says Steven Wilson, principal analyst with ABI Research. “However, that is a software problem, not a hardware problem.”

Indeed, Gillat says software-licensing deals may eventually be part of Eye-Fi’s plan. For the time being, though, Eye-Fi is counting on the effortlessness of WiFi photo-sharing to boost its fortunes. For while uploading photos via WiFi can take longer than plugging in a USB cable, it’s the simplicity factor that counts.