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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

September 9, 2009 at 11:52 AM

Smilebox buys Preclick, moving team from Fremont to Redmond

People who order photo prints from stores like Costco, Wal-Mart and Walgreens will have more options for customizing and packaging their images, now that two Seattle-area photo services companies are merging.

They may not have the high profile of Web photo sites like Flickr, but Smilebox and Preclick will reach a large share of the people who buy photo prints at stores, where the majority of prints are produced.

Redmond-based Smilebox sells tools for creating, editing and sharing digital postcards, slideshows and other multimedia products. It has acquired Preclick, a company that provides white label photo organization tools to major retailers.

Smilebox tools will be offered in retail one-hour photo service centers via Preclick in time for the holidays. For consumers this means they’ll have a free way to use Smilebox templates — instead of buying them directly.

Retailers will benefit because the tools should encourage people to buy larger, higher-margin prints than the “commodity” 4×6 prints, and Smilebox will receive a commission, said Smilebox founder and Chief Executive Andrew Wright.

Smilebox began exploring ways to increase its retail presence after noting that 40 percent people using one of its print features were doing so at stores. A quarter were printing at Wal-Mart, 14 percent at Walgreen’s, 10 percent at Costco and about 7 percent at Sam’s Club.

“All that data said we need to work with retailers,” Wright said.

Wright led RealNetworks’ casual games business before starting Smilebox in 2005, with angel funding from Real founder Rob Glaser and former Real exec and Big Fish Games founder Paul Thelen, among others. Smilebox has raised $14 million and expects to be cash-flow positive within six months.

Details of the Preclick deal weren’t shared, but Wright said it should account for 20 percent to 30 percent of Smilebox’s business in two or three years.

Wright said the company could do additional acquisitions after Preclick is fully integrated but it’s not a high priority.

Preclick was technically based in Atlantic Highlands, N.J., because that’s where one employee — it’s chief executive — was based. But its four-person engineering team was in Fremont, and two others worked in Oregon. Six of the seven are being taken on by Smilebox, giving it a total of 40 employees.

Brian Smiga, Preclick’s founder and chief executive, will stay in New Jersey and become Smilebox vice president of business development and retail.

Comments | More in | Topics: preclick, smilebox, Startups

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