TWICE Digital Imaging Roundtable - Twice

TWICE Digital Imaging Roundtable

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TWICE: Some industry projections are indicating a slow down in growth for 2005. From the past two quarters, are those predictions accurate? What can we expect over the holidays?

Chuck Westfall, Canon: 2005 is still a little bit slower in terms of growth than 2004 and the previous years. We’re probably talking for the US in the compact camera category in the vicinity of 15 percent unit growth. It looks to us like there could be possibly a total of 24 million units roughly in the USA market. So far, it looks to us that the numbers on the first half are coming in very, very well, not too far off of what was forecast; a little better than what we forecast but not that far. And by all indications, it looks like the second half should be a very healthy one.

Philip Scott, Kodak: I think what’s interesting is, it seems like this category, this industry, has under-predicted the size of the growth every year, at least for as long as I can remember. So I think the category continues to be strong. It’s not as strong, or the growth percentage isn’t as great as prior years, but I think this is going to be another year where we just under-predicted the size of the category for the full year. And the fourth quarter shouldn’t taper off in my estimation.

Stewart Muller, Olympus: One area of growth which will be robust this year as it was last year, meaning in excess of 60 percent unit growth, will be the digital SLR category. And that’s obviously a good place for growth, because that keeps the average selling prices up for both everyone in this room as well as the retailer. There’s also always talk in a maturing industry as we reach 40 percent household penetration and a lot of capacity, that there’s an oversupply of products. But there is room for breadth in this market. It doesn’t necessarily follow the 80/20 rule, because the top 20 models in the industry only account for about 40 percent of the total market, whereas some industries the top 20 models will be roughly 80 percent of the market. So there is room for breadth. Is there room for 150 compact digital cameras? Probably not. But is there room for 50 successful compact digital cameras? There probably is.

Bill Giordano, Nikon: We’re extremely optimistic about what’s going on in the category so far and extremely optimistic about the future. I think we’ve just really scratched the surface here in terms of digital photography and the opportunities that lie ahead of us. The category is growing really dramatically, and we’re extremely pleased with our results so far. And digital SLRs are doing extremely well, and compact cameras have really seemed to find their place. And when my 80-year-old mother asked me the difference between digital zoom and optical zoom, I scratched my head. Something must be working here.

Ron Gzzola, Fujifilm: I think the key opportunities for growth are cameras that really speak to what the consumer’s are looking for. I think we’re dealing with a savvier consumer. The consumer is expecting a little bit more than just megapixels. And delivering those key benefits and image quality in picture taking is what consumers are looking for.

B.J. Adams, Pentax: Obviously [the market is] maturing, and it’ll grow slowly, but what Ron was alluding to, the second time buyer, that return customer, they are a savvier customer. They are looking for unique products, something that’s going to step them. I think that the digital SLR market is certainly going to grow from a revenue standpoint significantly.

Paul Zakrzewski, Konica Minolta: We’re very pleased with the growth that we’ve seen so far this year. . With the digital SLR market we’re seeing that the return buyer is looking for those extra features. They’re looking for that step-up to make their photographic experience that much better.

Bert Desmond, Panasonic: I think that the industry is outpacing what we initially thought it was going to do this year, which is a very positive trend. We’re very bullish on the category. We see there’s a lot of opportunity for growth, and we’d like to take advantage of that.

Scott: Products like digital SLRs and new technologies like the EasyShare One wireless camera will help maintain higher ASPs in general, which will help uphold revenue growth.

Education

TWICE: How do you educate customers – and your dealers – about the new features of a camera that defy easy explanation?

Giordano: You have to educate the guy who’s selling these products for you. You have to educate the consumer, and sometimes educating the consumer is a difficult task. You have to drag them kicking and screaming into your store. But I think consumers today are a lot smarter. The world we live in is a fascinating one, you can go to the Web and research anything, anything you want. If you need a de-humidifier, man, I’m going to find out the top 10 de-humidifiers and learn all there is to know.

So the Web offers us tremendous opportunity to reach consumers and try to educate them. And at the same time, we’ve got to motivate and really try to get into the heads of the people who are selling these products everyday. Get them to understand there’s more to it than a price point and a resolution and a zoom. Education is critical.

Westfall: I think the pace of the product introductions has become so fast that basically the Web has become absolutely essential to get the product information out to the customers and to the dealers. At Canon, we put together a couple of different Web-sites for training purposes at cyberscholar.com. Our presence there, for dealer training, has already started to show dividends, even in the first year or so since we started it.

We’re trying to emphasize an end-to-end solution. We’re not talking just about cameras. In our case, we’re talking about cameras and printers, and it’s very much of a synergistic flow, which also has a terrific benefit to our dealers because they stand to benefit not only from the sales of the hard goods but also the consumables.

Zakrzewski: Not too many years ago, consumers spent a lot of time educating themselves and learning about the product at retail. Today, these consumers are going into retail already knowing a lot of the answers and looking for confirmation from those people on the sales floor. So it’s our job to make sure that we communicate that to the customer before they get there, but then make sure we reinforce it with the people on the floor to make sure that the message is consistent.

Retail Dynamics

TWICE: What’s going on at retail?

Scott: I think there are retailers that have become successful understand their place in the category or in the marketplace. They’re focusing on the consumers, and.. Best Buy is amongst the best at doing this. They understand their place. They understand what consumers they have.

Most people don’t realize this, but we have a tripod socket underneath our dock. Now you don’t need to mount a dock on a tripod. They are solely for the purpose of execution at retail. Things like internal memory have provided a better experience, so consumers can stand in a store and take a picture. But the successful retailers will understand their place in the market and understand their consumers and deliver on the needs of those consumers.

Desmond: I think that right now, there’s probably close to 30 percent of the industry business done with two retailers. There are segments where those two major players maybe aren’t the strongest. So the challenge is to focus your product and your distribution correctly so that you’re able to get the message of your features/benefits to the consumer. In a lot of environments, that’s very difficult to do. So as we undertake the launch of an SLR next year, I think that we’re going to focus a lot on independent camera shops who are able to point out the feature/benefits of a product that we might be able to bring to market that differentiates us from others. From our perspective, the SLR business needs a concentration in independent specialty camera shops to meet our goals.

Westfall: In our experience so far with the digital SLR, what we’ve really discovered is that we’ve been able to spread the business out quite a bit across our dealer networks. We know this by virtue of the fact that there’s just not enough product for us to be able to get in the market. Essentially, we have customers chasing product around the country, trying to find it at different dealers. And in order for us to be fair to our dealers, basically we have to put everything on allocation, pretty much, to make sure that everybody’s getting their fair share.

TWICE: So product segmentation by retail channel will continue indefinitely?

Desmond: I think rather that manufacturers need to look to distribution that will support their message, that will support their benefits, and be able to tell their story at retail. And depending upon price points and features, you would want to select different distribution to accomplish your goals. So I guess it depends upon where you are in your cycle, that it’s going to lead you as a manufacturer to choose distribution patterns.

TWICE: Any issues of short supply?

Westfall: We’re pretty much planned our manufacturing capacity to be able to handle the demand that we forecast. We are pretty much are on target to be able to meet the expected demand.

Muller: I think we’ve all been at this about eight years now, so we’re getting better and better at it. The first couple of years were a little rocky, figuring out you don’t want to be too long on inventory. It just drives the pricing down. You don’t want to be short. You’re missing opportunities. I think we’ve all collectively as a group gotten a lot better at that, so I don’t see any major shortages. And I certainly see us being able to keep up with the growth in the industry.

TWICE: And this includes digital SLRs?

Muller: Yes.

Scott: I think year-end inventory is probably an issue for every one of us, and we’re going to balance supply against not being left with a lot of inventory. I know at Kodak, we will be managing that very carefully, but with the market share gains that we’re continuing to see - we’re not on an allocation across the board, obviously, but we’re on the tight supply situation through the year-end. And we’re addressing that from a manufacturing perspective.

Hot Features, Key Price Points

TWICE: What features will drive sales in the upcoming quarters? What will be the hot price points?

Westfall: In the compact camera market, what’s going to drive consumers is definitely going to be pricing for megapixel. I think that really is something we can’t avoid, as much as we’d all like to. People are looking for ever higher and the pricing sweet spot in the compact area that we see is generally speaking in the range of roughly $299–499.

As far as the digital SLR, it’s the extra performance that customers get. Faster shutter lag, better selection of lenses, ability to track focus on a moving subject, and ability to get better pictures with lower noise.

Scott: When you look at the fact that 50 percent of the cameras sold will go to a household that already has a digital camera, they’re looking for improvements to prior dissatisfactions.

I didn’t touch on systems, where consumers are buying not only the digital camera, but the printer system as well. That is going to contribute to sustaining good growth in category revenue. There’s a kind of a nowhere land from $500 up to the entry point of digital SLRs. I can’t see that changing too much. There seems to be a mental threshold for consumers at $499, and that’ll probably continue on into the future.

I think the megapixel war will continue, but other things like size of LCD, the size of the camera in general, certainly ease of use, and new technologies that will drive new behaviors and new uses for digital photography like wireless [imaging] will be important.

Muller: As resolution has increased, optical zoom has increased, and price points have come down, the one winner in this whole equation has been the consumer. The consumer can get very good technology for under $200. So how do we as manufacturers and retailers take these differentiating technologies and explain them to the laymen, the average consumer, in terms that they understand? And I think that the retail-manufacturer partnership that does that the best will win.

How do you explain things like a technology we will introduce called bright capture, which is geared towards both being able to view images on the LCD in low light situations and also help take better pictures and extend the flash range in low light situations. So what does bright capture mean? Now it’s a catchy phrase, but at the point of sale, being able to explain that to the millions of consumers that come in to US retailers in terms that they understand will be important.

There will always be the blockbuster price point where a 5-meg, 3x optical hits X price point, whether on black Friday. Let’s face it, none of us in this room makes money on a Black Friday item, but where we do stand to be profitable, and subsequently make retailer more profitable is with differentiated technology and being able to explain that to the consumer.

Desmond: Certainly for Q4 we’re going to see a lot of activity in the sub $200 range. It’s just under 40 percent of the total business. Not being a major market shareholder, we feel that we have to give the consumer an extreme value. And by offering an optical image stabilization system in all of our cameras, we feel that we’re giving the consumer an excellent value and a reason to make a purchase.

Zakrzewski: I second that with the image stabilization, which we call Anti-Shake. We think it is extremely important throughout the line. Also, there is the form factor; the camera becoming more of a style piece as opposed to just simply looking like a camera. I think it’s incredibly important to bring people to the point where they are willing to carry that camera not in their purse but as an actual accessory.

Adams: It’s interesting how we’re almost going back to the heydays of film where the high-end compact camera defined the low-end price of an SLR. And to what Bert and Paul are saying, I think style is going to be a big feature for consumers, especially for the second-time buyer as Ron mentioned. And I think that the differentiation as Stewart had mentioned, being able to separate yourself from the pack are going to help bring that desired customer and keep that price point high.

The uniqueness of digital photography allows us even more feature sets to compete on. In the days of film, we competed on zoom, and we competed on flash range and the speed of the product. But today we’ve got LCDs that are going to get bigger and bigger. The sensors themselves are going to get bigger within the camera, which is going to allow better image quality. I’m not so sure the consumer necessarily needs a 12-megapixel compact camera.

But we also have the speed. Boot-up speed is a unique term in the day of digital that we’re all competing on along with shot-to-shot speed. And I think the consumer’s going to really win out. As Stewart was saying earlier, they get a heck of a deal today. Just imagine what it’s going to be like tomorrow.

Gazzola: I think what benefits those second-time, third-time buyers is going to be differentiating technology. We recently introduced Real Photo technology. That technology is totally based on the consumer benefits, reducing camera shake, improving shooting in low-light conditions, those types of benefits beyond just the megapixel, beyond the size of the LCD.

Scott: We all sit around the table and talk about innovation, and I would suggest or challenge this group, that there really have been only a few companies that have truly innovated to drive consumer solutions. I think certainly in the next 12 to 24 months we’re going to start to see some real innovation that drives the technology into the product for the consumer’s sake. I think we started to do that already with EasyShare One. I believe that that is what’s going to really give us the true continued growth into the future.

Giordano: What we have is a very interesting dynamic. A digital SLR owner/customer is very different than your typical point and shoot category customer. There is a passion in photography to spend $1,000 on a digital SLR. There is an investment there. Photography is very important to that person and whether they capture images on film or whether they capture images digitally, photography is important. And as you go down the food chain, so to speak, to the $199 or under price points, it’s a completely different need for those customers.

If you would have told me five years ago that we would have cameras that would automatically find faces and would automatically correct the red eye in the camera and automatically brighten the pictures in the camera —the customer didn’t have to do anything—and just push a button, and they print their images, that is a fantastic story. And I think maybe the industry is a step or two ahead of the consumer. The consumer’s still trying to catch up. They’re kind of stuck on this megapixel/zoom thing. They haven’t discovered the other fantastic things that these cameras provide, and I think our job is to really educate the consumer, understand their needs and wants, and provide them interesting and value added solutions.

Digital SLRs Fight Fixed Lens

TWICE: Fixed lens models over $500 haven’t disappeared, but are they an endangered species?

Westfall: The volume of the business is just not there anymore. I mean, it’s going to continue. There’s probably going to be a fairly decent selection of high-end pieces from all the top players. And I think there is certainly still a percentage of customers who are interested in cameras like that for the reasons that we all know: being able to preview the picture before you shoot it, having an extended zoom range compared to what you could normally get in a digital SLR, and the movie clip capability.

So there’s certainly a lot of reasons for that product category to exist, but it just doesn’t look to us as if it’s going to be a real growth area. In fact, it’s kind of a negative growth area overall compared to what it’s been.

Scott: I think for those of us that get into this space we need to, as Chuck was saying, really focus in on those things that make it different—video, certainly wider angle with a lot of optical zoom and a more compact body. To be successful in that limited space, which it is, you’d better focus on those things that deliver differentiation over digital SLR.

TWICE: What’s stopping that fixed lens customer from spending an extra hundred bucks for an SLR?

Giordano: Well it’s interesting. I don’t know whether the customers have discovered [the high-end fixed lens models] or not, but certainly at Nikon, we have three 8-meg cameras out there with ultra zoom lenses that offer tremendous value. If you were to make that system out of an SLR, it would cost you thousands and thousands and thousands of dollars.

The proliferation of film higher zoom cameras came along because people didn’t want to carry a large SLR. It’s really funny how history is kind of repeating itself but in a different way. And customers will find those products, I think, in the long run. Obviously today there is such a clamor for SLRs, which is great.

Desmond: I think that both Bill and Chuck really nailed the question pretty accurately, but one point I would like to make, I think, is that the price point of SLRs is going to dictate the space. If you can offer a consumer at the appropriate price gap a great alternative at a price value, I think that is a limited space, but if you have the right product, and you’re at the right price point, you have the right gap to an SLR, that there is space to be successful there. But it isn’t going to be a huge segment of the market.

Adams: I think we’re just about there, aren’t we? I mean, we’re at $800 for body and lens for entry-level digital SLR… If we’re talking about the leap from $500 to $800, we’re just about there, when the consumer is looking at the opportunity to expand their selection of lenses, their opportunity to get a little more creative. It’s a larger sensor, so even though the megapixel count might be the same or even less than a high-end compact, the image quality is much, much greater because the photo sensor is a lot larger. Certainly at Pentax, we’ve also concentrated on the size of the overall SLR product, making it much, much more compact, lighter weight, easier to carry it around, not too different from what you might call a super zoom compact camera. That gap in price points isn’t so unreasonable for the consumer to make the leap [to an SLR].

Westfall: When we brought out the Digital Rebel XT I went back into my sample cabinet and pulled out a camera that we sold about three or four years ago called the PowerShot Pro 90. If you put them side to side, these things are virtually identical in terms of size. Just about everybody who’s coming out with SLRs, they’re all working towards making it more attractive, and part of that equation is making them nice and compact.

TWICE: How has the success of the d-SLR impacted your retail distribution?

Giordano: Well it’s amazing how the digital SLR has kind of given the traditional cameras stores a renaissance. All of a sudden, these guys now are—they’re it. They have the huge selection. They’ve got the accessories. They have a knowledgeable sales staff. They’re the destination for serious photographers, people who are passionate about photography. They’re on a tremendous rebound here, but yet, the other players, the other channels, certainly want to take advantage of this opportunity that’s been presented to them. And so when you have people who five years ago never would have considered stocking or selling SLRs of any kind now want those products. It just means that there’s a tremendous demand out there for customers, and their customers want them. They want those products.

Westfall: But the SLR marketing has gone toward a kit concept, where it used to be very much component oriented. And that, I think, is very intentional on the part of the manufacturers, because it allows them to distribute those products out to a greater range of dealers. You don’t necessarily have to have a totally highly educated sales force, if you’ve got everything in one box that you can hand across the counter to the customer. That’s part of what’s going on, but certainly the traditional retailers, especially the people who had experience in SLR sales have the greatest possibility to gain by the digital SLR business.

Zakrzewski: The kit factor, I agree with Chuck, makes it a little less scary for the consumer. When they can see a box, that everything they need is in that box, and they can walk out of the store one time without having to make too many decisions about what they need to add on to this.

Camera Phones Yet to Impact

TWICE: The consensus on the camera phone has been that if it has any impact, it will be on the lowest tier of stand alone DSC. Has anything changed the way you view this market?

Giordano: Interesting story. Last week, my son Christopher, six years old. He graduated kindergarten. So you have 90 kids on stage. You have 300 screaming parents and grandparents in the theater. They’ve got all kinds of cameras and video camcorders. I didn’t see a single camera phone. I didn’t see a single camera phone.

If you were going to capture the most important events of your life - and that’s what photography does - you’re not going to take out a camera phone on your Mediterranean cruise and take a picture. Or your child’s first steps. They’re great communication devices. They are fun, but I think they have a long way to go to really capture the passion. I really think that’s important. If you’ve got a passion for photography, there’s going to be the right product for you, and today, the camera phone doesn’t do that. What it does is it opens up digital photography to lots of people. I mean, it’s hard to compete with free. But what it comes back to is trust: are you’re going to trust that picture and that moment, to a camera phone, or do you want to pull out a Nikon?

Muller: I don’t know that you could ever make a true imaging device that captures the passion of photography in a camera phone without significantly changing the form factor of it so that it’s not really a camera phone or a phone that someone wants to carry around every day, every where. You’re not going to get the highest quality lens in a very compact camera phone or a very high-quality flash. So you can throw 3, 4, 5, 8-megapixel CCD or image sensor into a camera phone, but you’re not going to put the lens and the flash and the whole package together without significantly changing the form factor. So I think people will own camera phones and own digital cameras.

Also what’s interesting is how much room there is for growth in this business. Whereas household penetration of film cameras probably peaked well above 80 percent, we’re only in the 40s right now as far as household penetration. On top of that, people bought film cameras once every seven or eight years, whereas they’re buying a new digital camera every two or three years. And on top of that, just like cellular phones, families own more than digital camera, whereas maybe they had one film camera, they own two and three digital cameras.

So there’s plenty of room in this US market and all of the Americas for a tremendous growth in both camera phones and true digital imaging digital camera devices.

Scott: I think I have to agree with these gentlemen on two points. One, certainly these devices don’t do justice to picture-taking activity. We all understand that. At Kodak, we think it’s great, because more images captured by any means - that’s a good thing. If we can get people printing more of those picture and sharing more of those pictures, perfect, best-case scenario for us.

However, where there might be some impact is on cameras under $100, that are delivering something that is certainly not optimal, probably far from optimal in the consumer’s mind. I’ve seen ads out there for $29.95 digital cameras. If the impact is going to be anywhere, it’s not the people sitting in this room. It’s probably to those brands that are ‘B brands’, if you will. Way below $100.

Gazzola: I think the opportunity with cell phones, as Phil said, there’s more and more prints out there, and at Fujifilm that’s an opportunity for us and our retailers, to help customers translate those images into prints.

Desmond: I would say that I also see it strictly as augmenting the business, not replacing it in any way, shape, or form. But I think it can be very important as an indicator to us all in the industry as to what the consumer is doing with the images and how they’re sharing them. Number one, they’re sharing directly on their LCDs on their phones. Then they’re also, of course, electronically sharing them over the Web. And this, I think, is a future trend that we as an industry can focus on, because those are two key points that the consumers are looking to be able to take advantage of.

I think that if we can take successful trends from other businesses, cell phones being one, to more direct our product towards customer satisfaction.

Zakrzewski: Camera phones are a great introduction [to digital imaging]. Somebody with a camera phone gets introduced to digital imaging and then suddenly it’s like well, I’m not completely satisfied with the results, but I know to step up and to move onto a true digital camera that is going to make that experience much more enjoyable. I think it actually is a benefit that will drive more people toward a true digital camera.

The Camera of the Future

TWICE: Is the consumer happy with the camera they’re getting now? Is there still room for improvement?

Westfall: I think we’ve been dancing around the idea that archiving is really one of the most important things to being able to access in the future and also the ability to repurpose those images. Although the technology currently exists and is fairly easy for somebody to manually upload images to some kind of a storage service on the Web, I think that the potential is there - and people have alluded to the idea - that if there’s a way to automate that, in terms of technology that maybe even as you snap a picture that it’s stored somewhere in cyberspace and indexed automatically on various different things like metadata in the file. There’s a tremendous opportunity there for growth in this industry.

Zakrzewski: The format is also very important. Picture archiving and sharing standards have to be put in place so that that capability can be there. It’s a standard that, no matter where you go, you can take that picture, and it moves to that other medium. That standard has to exist. Again, multiple platforms, multiple standards, is going to cause problem: you’re compatible in one place but not in another. So I think it’s incredibly important to get some standardization so that can move forward.

Scott: I read yesterday that AT&T was announcing a test of WiMax technology. That just alludes to what’s coming. WiMax will allow you to take an EasyShare One and take a picture and wirelessly transmit it and have them organized immediately for you. I mean, that’s the kind of stuff that’s going to come because of technology. And I think anyone that’s not paying attention to that is missing a huge opportunity.

Desmond: One of the things that’s been brought up is that people want to enjoy their photos without having to wait. They want instantaneous gratification. There’s going to be a mandate soon that’s going to dictate that all over air broadcasting is going to move to the digital domain. And that’s going to make a huge opportunity for digital television sales. And then there’s going to be a display device mounted in all consumers’ homes that can be used to share photos. So being able to draw the dotted line to that solution, I think, is a huge opportunity.

Giordano: I think you’ll see a lot more in-camera software. Things that are invisible or transparent to the end user. They want this—it’s a Kodak phrase: push the button and we do the rest. Well literally, this camera technology will do the rest. The cameras already can find and focus on a face, fix red eye, and automatically brighten pictures.

We’re just at the very beginning of this and the possibilities are really exciting and unbelievable. I mentioned before, my son Christopher, who is six-years-old. He was born the year we introduced the Coolpix 990 camera. So I look at him, and I see the growth of this industry. It’s only six-years-old. We’re talking about what’s going to happen in 2007. There’s going to be some exciting things happening in 2007.

Scott: I can’t resist the opportunity to capitalize on ‘you push the button, we do the rest.’ And there will be Kodak cameras in the future that deliver on that promise. You push the button. We do the rest.

I think wider angle, longer optical zooms, and compact bodies are going to evolve and get better. I think certainly wireless technology will take us to new places. I think we’ve delivered on size that’s good enough for most consumers. And I really believe that there will be a continued self-selection of segments. Now there will be a lot of consumers that want that performance camera. There’s going to be consumers that just want simplicity and ease of use. And I haven’t mentioned also the convergence of video.

TWICE: Could it potentially serve as a replacement for a camcorder?

Scott: I would believe that it has the potential to do that. Someone like Canon or Sony may disagree with that. But if you think about it, most people would love to be able to carry around a camcorder the size of a camera, right?

Adams: We were almost there before television technology got better. We were there at VGA quality video capture at 30 frames per second, before HD. Pretty much everybody at the table has got that technology in their camera. The quality of the TV has exceeded that now but I think we’re certainly chasing it.

I think you’re going to see a demand by the consumer for a unique product. Something that’s waterproof, like our OptioWP product line, and certainly the larger LCD to share with their friends and family. I think optical zoom is going to become a factor, but keeping that optical zoom in a small, sexy package.

Money Beyond the Print

TWICE: How consumers use their images, and how manufacturers and retailers can profit from digital images, has changed with the flowering of digital cameras, but it’s still a print-based market. Are there other opportunities for turning a buck off these digital images?

Desmond: There is definitely another way of sharing photos. We look at DVD recorder as one method of storing and sharing photos. And with the absolute explosion of high definition plasma television, there’s an opportunity for viewing them there.

Adams: It’s interesting how digital has changed the landscape of the finished product. It used to be, you’d take your pictures, you drop them off at the store, you pick up your pictures, and then you might put them in a photo album. You probably stuck them in a shoebox.

Today you can put them on a website. You can blog them. You can e-mail them to people. You can create a DVD, as Bert said, and share them. We’ve made it real easy to share your images. I think digital has also created a lot of shooting fanatics. I think people probably are taking quite a bit more pictures than they ever have before, and certainly keeping more pictures than they ever have before. I remember getting rolls of film back, and you’d throw away the blurry ones, but I’m not so sure that people are even deleting all of these blurry pictures.

The landscape for output has changed significantly. It’s more exciting for the consumer. It’s more exciting for us as manufacturers, because we do get to provide our consumers a lot more opportunities to share their photos, whether it’s providing Web-site space or blogging space or providing an easy way for the consumer to print their images or share them on a DVD.

Scott: We at Kodak absolutely believe there’s huge opportunities still untapped, opportunities for monetizing digital images. I don’t believe you can easily monetize storage. It’s the combination of storage with easy-to-use archiving and easy-to-use retrieval. So that if I had a picture of my daughter that I took five years ago, being able to find that picture five years from now will be of value to me. And I think there is ways to monetize that.

We just announced the Picture Viewer pocket viewer, so you can carry that with you. That’s not a capture device, but that’s just another way of allowing people to share their memories. And I think that’s what it really boils down to. That’s the important part, we’ve got to find ways to make it easy for people to share and relive their memories. And if you can do that and find their memories easily, people will pay for it.

Desmond: I think that we’ve all got a great opportunity in our industry via the SD card, which the majority of us are using. That’s a very, very easy way for the consumer to transport all those memories into multiple devices. We see this as a really great avenue for being able to shift your memories, or whatever you want to share, to multiple devices, simply by taking the SD card out of the camera and directly into one of our plasma televisions or again into a DVD recorder that has an SD slot built into the front of it.

TWICE: So the focus is outside of the computer then?

Desmond: The computer’s there, so we’re looking for new opportunities.

Westfall: The commonality is that you’re looking at various forms of display technology. It really has been very much a print dominated medium for decades if not more than a century. But gradually, with the advent of digital, we’re shifting away from print-only and getting into various other things. That’s one of the reasons why Canon is expanding into display technologies right now. We’ve made a lot of investments, we’re on the cusp of introducing our SED flat display panel. There’s a tremendous range of opportunity for manufacturers based on display technology as a way to monetize images.

TWICE: There’s an industry awareness that more has to be done to ensure digital photographs last through new computers, hard disk crashes, etc. but are consumers aware? Are there revenue opportunities here?

Adams: I think it’s filtered down to the consumer level. I don’t know that we’ve heard too many horror stories of individuals’ hard drives crashing and losing 10 years of memories. I think it’s definitely in the minds of the consumer, but I don’t know that anybody’s come up with the one catchall solution.

I mean, quite frankly, with the shoebox I can still go back and find my film. I can find my negatives. I think data migration’s going to become an issue. People who have images on a 3.5-inch floppy are going to find a tower in their household that doesn’t have a slot for it any longer. And as we move forward, who knows? DVDs may become obsolete 10 years from now. I think that that catchall is going to be the real winner.

I don’t know that the consumer is necessarily going to want to pay to store their images. It’s going to have to be somebody with the ability to back it all up and keep it and make it easily accessible from anywhere, from any point and any place. You almost need to be the Google of images. Google almost has to take it on and keep everyone’s images in its platform. There’s no connection to any specific platform and it’s accessible from anywhere, anytime.

Scott: That is exactly what we believe. And the reality is, people don’t want to pay just for storage. In fact, most people would say, ‘What, I’ve got my print.’ Now that printing is becoming so ubiquitous, that becomes the archival method for a lot of people, right? They can just take that print and put it in the shoebox.

The benefit of digital, however, is in giving them access to much more information to be able to find that picture sometime in the future and do more with it, like make photo books. But the golden nugget here is in allowing a consumer to be able to easily find that picture and perhaps even do it wirelessly, so that no matter where they are, if I’m visiting my mother in Tennessee, I can somehow and go find my pictures that are stored someplace and share them with her without going back to my PC to do that. There is a tremendous untapped opportunity right in that.

Now, there’s a huge consumer awareness and education component, because most people will revert back to that which they know best, which is a print, or perhaps storing that memory on a media card they file away someplace. Today, I don’t believe there have been a lot of people that have experienced the negatives of the PC crashing or losing all their memories, but those stories will filter up as it happens more and more.

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