Ontela Merges with Newly Independent Photobucket, Looks to Combine Companies’ Reach on Web and Mobile

12/16/09Follow @gthuang

OK, so there was truth to the rumors. But this is no ordinary merger or acquisition. Seattle-based Ontela, the mobile imaging startup focused on getting pictures off your camera phone, announced today it is merging operations with Photobucket, the Denver, CO-based photo sharing site. Financial details of the merger weren’t announced.

The new, combined entity will be called Photobucket, and the company plans to maintain a permanent office in Seattle and headquarters in Denver. No layoffs are planned, and no relocations have been announced, says Ontela CEO and co-founder Dan Shapiro.

I spoke with Shapiro from Denver this morning. He says the deal was “many months in the making.” They just signed it today. “We could not be more excited,” Shapiro says.

The deal is unusual, in that Photobucket (until today) was owned by News Corporation. It seems News Corp. is spinning out the company and ceding some control to private investors—I’ve heard that Ontela’s venture backers, including Steamboat Ventures, Oak Investment Partners, Covera Ventures (formerly Hunt Ventures), and Voyager Capital, are investing new cash in the combined entity. And noted Seattle VC Tom Huseby is staying on as a board member of Photobucket. Meanwhile, News Corp. will maintain a “significant equity stake” in the company.

“Combining their reach on the Web with our reach in mobile, the combined company will be more valuable in the future,” Shapiro says.

Ontela has been working with Photobucket for years. Just last March, for instance, Ontela announced its service was available through T-Mobile via a partnership with Photobucket. That came on the heels of a similar deal involving Verizon Wireless. The idea is to make it easy for mainstream consumers to move pictures from their mobile phones to the Web and social networks like Facebook and MySpace.

“We’ve always had conversations about the amazing things we could do together,” Shapiro says. “You take the leader in photo hosting/sharing on the Web, and the leader in mobile imaging. We think there’s a transition happening now, from the digital camera to the network-connected camera. I think the company that gets that right is going to be the undisputed leader in the imaging space.”

On the leadership front, Shapiro will become chief technology officer of Photobucket. Tom Munro, Ontela’s chief financial officer, will become president and CFO of the new entity. Photobucket’s general manager, Darren Kelly, will be in charge of sales. Shapiro says the company is looking to fill the chief executive position over time.

Ontela currently has 23 employees, and its software is offered by 30-plus wireless carriers. Photobucket’s site has 22 million monthly unique visitors in the U.S., and it will take advantage of Ontela’s relationships with wireless carriers to reach about 140 million wireless subscribers. Shapiro says all existing Ontela products will continue as they are, and Photobucket users will “continue to have the same great experience”—but now it will extend all the way down to their phones.

The deal is significant for the local mobile industry as well. “Seattle remains the hub of wireless innovation in the U.S., I believe,” Shapiro says. “There’s no way you can have a business that gets the frontiers of mobile without seeing what’s happening in Seattle.”

Heading into the holidays, the deal’s timing seems particularly good. “It’s a heck of a present for all of us,” Shapiro says.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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