Sony Corporation (NYSE: SNE) is calling it quits with its ImageStation online photo finishing service, and is in the process of shuttling customers to Shutterfly's market-leading photo finishing service. Sony has said that ImageStation will cease operations in mid-November. No surprise, really, since nobody I've talked to even knows Sony's offering ever existed.

This is another case of an electronics market leader trying to offer a complementary service to one of its product lines (like Sony digital cameras), and that effort failing miserably. In Sony's case, it marketed ImageStation with its consumer digital cameras, when it should have partnered with Shutterfly in the first place. Market leaders are generally the best way to link your brand with a service that is synonymous with online photo printing, but in classic Sony close-minded fashion (think MiniDisc and Memory Stick), it wanted to keep customers within "Sony" services. Meh.

The company says that it is closing its ImageStation service to "focus on the company's core businesses, products and services," although that's probably just a way of saying that the lack of customers did not justify the continued operation of the service. Shutterfly beat it, just like the way Apple, Inc. (NASDAQ: AAPL)'s iTunes music store bested Sony's "Connect" online music store, which the company decided to close after three years of trying to compete with Apple and others like Napster and Yahoo! Inc. (NASDAQ: YHOO) music.

Today, Shutterfly filed to go public. Founded in 1999, the company is now a leader in Web-based publishing of digital photos for consumers (allowing such things as editing, sharing, and printing).

Shutterfly's revenue model is to sell high-quality prints. In fact, to ensure quality control, the company has its own manufacturing facility in Hayward, California.

Another key advantage of the Shutterfly model is that content costs are practically nothing (the company's users create the content by uploading pictures).  Also, because people want to share photos with others, Shutterfly has a viral distribution model.  In May, the site attracted 4.1 million unique visitors.

Up until now, online photo companies have been selling out to major companies, like Yahoo! (bought Flickr) and Google (bought Picasa). In other words, Shutterfly faces intense competition.