What Will HP Do With Motionbox?

Hewlett-Packard (NYSE: HPQ) just bought a video hosting service to fold into its Snapfish photo portal. This is not another blockbuster deal in the Palm mold but a small, snap-on acquisition. Call it a mission statement rather than a business move.

HP's Snapfish photo service is snapping up the privately held video sharing site Motionbox for an undisclosed amount. Insider sources have revealed a $20 million price tag to digital video guru Dan Rayburn, though. For big, bad, and rich HP, it's a drop in the photo bucket.

It's also a sign of consolidation in a media-sharing sector that's awash in competing options. Snapfish calls itself "the No. 1 online personal publishing service in the world, with more than 85 million registered users," but that claim rings hollow when you look at the 99 million registered user of News Corp.'s (Nasdaq: NWS) part-owned Photobucket service. And Facebook makes a joke out of any such leadership claims because the social networking site accounts for a staggering 65% of all people placing online each month, according to comScore reports.

Motionbox gives HP a handy set of fully developed video tools, including transcoding and publishing features. That doesn't make Snapfish a threat to Facebook, and doesn't do much to distance the service from Yahoo!'s (Nasdaq: YHOO) Flickr. What Motionbox does do for HP is provide mobile-friendly video services, where you shoot and upload your video once and then mess around with publishing and broadcasting it online. It dovetails nicely with that Palm buy we talked about earlier. I see this buyout as a statement of purpose: HP is serious about making Palm a viable smartphone competitor. It's not just about fancy user interfaces for HP's printers.

And before you write the whole affair off as insignificant, consider this: Tiny photo mangler Shutterfly (Nasdaq: SFLY) commands a $660 million market cap on the strength of just 1.1 million transacting users. A fortified Snapfish plus a relaunched Palm plus HP's deep coffers could add up to something special in the personal media space. Cisco Systems (Nasdaq: CSCO) better go nurture its Flip video cameras; HP might be shooting for it in yet another market space.