Strictly for big-picture types
Will digital picture frames -- costing $800 or more apiece -- click with consumers?
Eilene Zimmerman, FSB contributor

NEW YORK (FORTUNE Small Business Magazine) - Americans bought more than 22 million digital cameras last year, adding billions of never-to-be-seen photos to those already etched on the hard drives of countless home PCs. That phenomenon prompted Mark Van Buskirk and Robert Jordan to start PhotoVu, a company that sells wireless-enabled digital picture frames.

The partners used their savings to launch the company in April 2004 and offer three frames, with the fourth -- a 23-inch with a wide-angle screen--now being rolled out. According to industry analysts, it is the first widescreen digital frame on the market.

Childhood chums Van Buskirk, 42, and Jordan, 41, were unemployed engineers in Boulder when Van Buskirk came up with the idea for PhotoVu. The company's frames sport high-resolution LCD displays and come with sophisticated proprietary software that allows users to access photos on a computer wirelessly (or using an Ethernet cable) and to display them in a continuous slide show.

Because PhotoVu's software works with photo-management programs such as iPhoto, users can mix collections for viewing -- say, combining childhood photos for a birthday party.

The lowest-priced model has a 17-inch display and an $800 pricetag; the 19-inch frames cost $1,000 or $2,000 for a higher-quality display, which is why PhotoVu's market right now is a niche: affluent gadget lovers. Even so, Van Buskirk projects that sales will break the $1 million mark this year.

Marketing is limited to PhotoVu's website and to search-engine optimization to "keep prices as low as possible," says Van Buskirk. Orthodontists buy them to display before-and-after shots of patients' overbites, and funeral homes show photos of the deceased on them.

Andrea Wood, an analyst with Jupiter Research, eyes big potential for the frame. "There's a huge amount of growth in the luxury market," she says. According to InfoTrends Research in Norwell, Mass., only 2% of U.S. Internet users own digital photo frames. Van Buskirk expects prices to continue falling as the frames catch on.

Yes, that's true, but prices of consumer electronics products can drop quickly and dramatically, something that would cut into PhotoVu's future profit margins. Moreover, digital photography is a brutally competitive field, and there's no reason some giant competitor such as a Kodak or Hewlett-Packard couldn't come out with a competing frame.

Van Buskirk, though, doesn't seem too worried about finding customers because, as he says, "These frames change lives." Thomas Carter, co-founder of Access Electronics in Gurnee, Ill., and a PhotoVu customer can attest to that. "Every day I walk by and see a different period of our lives. I wasn't expecting that," he says. "I see this wonderful history I had forgotten about."

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.