Vendors Mixed on Potential Product Shortages

TWICE: Last year, there was trouble with product shortages. Is this cause for concern again going into the third and fourth quarters of 2003?

Elliot Peck (Canon): I know I brought that up last year, fortunately or unfortunately, it turned out to be true. I think for most of us, we are probably already starting to field those questions and demands from every level of retailer, from the big-box electronic guys right down to the smallest mom-and-pop camera store. They have all benefited from the dramatic growth of this business, they know about the shortages that they went through last holiday season. Even at this point, there's a shortage of 3- and 5-megapixel products available to them. When we throw in the digital SLR and 6-megapixel camera, there's no way we can come close to supplying the demand now, let alone what's going to happen at Christmas.

So I think we're going to continue to see a demand for the $299-, $399-, $499-price-points and our estimation is that there's going to be a very severe shortage of products for the second half.

John Sienkiewicz (Minolta): I agree.

Greg Young (Sony): We look at the third-party analysts who look at this industry, not one of them was predicting 50 percent unit growth. And yet that is exactly what we are seeing this year. So, if we took the analysts at their word, there's no way we'll have enough product. I think most of us kind of disagree with the analysts and so we've been planning for a very healthy growth.

Nancy Carr (Kodak): What we were experiencing for the last couple of years is constant changing in the technology, revamping your product line and your tooling almost every three to six months, which really gives you the hiccups. But now all of us are getting a lot smarter and savvier at developing products that can be transitioned into the next line a lot easier. We're getting smarter at supply, getting smarter at designing cameras that can last longer than three to six months on the shelf because the technology is starting to stabilize.

Alan Arnette (Hewlett-Packard): I agree. We've been spending just an inordinate amount of time working with suppliers and our manufacturers as well as our own internal planning to try to avoid what's happened over the last couple of years, so I'm not quite as pessimistic as some of my colleagues here. I think it will be a good season, I don't think there will be chronic shortages like there have been in the past.

Jerry Grossman (Nikon): I think manufacturers have gotten smarter in planning and I also think that retailers appreciate the fact that models are hanging around a little longer than three or six months. I know one retailer talked to us rather sternly about introducing a product and then six months later taking it off the shelf because people are just starting to recognize the product and it costs them a quarter million dollars every time you change out your product. So I think the product life cycles are getting longer and I think what we can do as manufacturers is work with retailers and be honest with them. I think the worst thing that can happen is you say to a retail partner, "Well, we'll have it." And then two months later you call him up and say, "Sorry, we don't have it."