Image Processing To Yield Retailers' Profits
By Doug Olenick -- TWICE, 12/20/1999
In the past year, the digital camera category crossed the ease-of-use threshold into the realm of mass consumer products instead of business tools and high-priced gadgets purchased by early adopters, vendors said during the PhotoImaging Manufacturers & Distribution Association's (PMDA) November meeting in New York City.
As this critical stage is passed, they said, digital cameras will experience an explosive level of growth in the next three to five years and start to make inroads into the film camera market share.
This emergence, tied to the growth in the scanner market, will offer retailers a huge profit opportunity as consumers start demanding printing and downloading services for their digital images, and the ability to have film digitized.
Manny Almeida, VP/general manager of Fuji's digital imaging division, said the type of customer now buying digital cameras will spur these extra-service sales. Fuji's new priority, he said, is enabling retailers to offer these services.
"Two years ago these products were just toys that produced a picture that was unsuitable to be displayed even on a PC screen," said Almeida, "but the megapixel cameras now available are finally delivering the pictures that people expected two years ago. In 1998 most digital cameras were used for business purposes, but that year things started to change over, and now we see that real consumers are buying digital cameras."
Fuji will focus on processing digital images from CompactFlash, SmartMedia and digitized film. "This is a money-maker for retailers," Almeida said, "Certainly, if I were a retailer, I would be offering these services onsite."
Nancy Carr, Nikon's general manager of consumer marketing, said, "We are beginning to achieve ease of use for the first time with digital cameras. Last year the question was will digital cameras replace film, but today the question is when will this happen."
Despite these improvements, digital cameras must become even simpler to use, said Ben LaMarca, Olympus group VP, digital marketing and development.
"The industry needs to focus on what will make a good digital camera," LaMarca said, "that is optics, firmware and software, and do this to the point where a digital camera mimics the ease of use of a point-and-shoot camera. But we are starting to cross that chasm."
Carr compared today's digital camera market to compact disc players just before they displaced vinyl records. Once consumers understood the portability and durability offered by CDs, vinyl was quickly supplanted, and the music industry experienced huge growth.
The photo industry will follow suit, she said, with camera dealers offering a wide range of new services that will enable digital camera customers to share their images.
LaMarca said that people will want to come into brick & mortar stores for service and to learn more about digital imaging. Consumables will be a profit center for the camera category, but instead of selling film, he said, inkjet cartridges and photo inkjet paper will be the products that keep customers returning.
"People want to do more than just share their images via e-mail. Home printing will be very big," said LaMarca, "Consumers will look at the image in the LCD on the back of that digital camera, and their feeling 'I want that image now' is going to spur a whole new growth in the area of home printing."
Will Shih, Kodak's president of digital and applied imaging, said the emergence of this category will become an important adjunct but will not endanger the traditional camera and film business. "I don't worry about film sales, I worry about the picture business," Shih said.
Fuji also sees both sides happily co-existing, and the life expectancy of film should be measured in decades, Almeida said. "We certainly don't be-lieve film will go away in our lifetime."
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