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Tuesday, May 29, 2007

The Road Ahead

With the staggering number of recent changes in the camera industry, professionals are suddenly looking at a shifting group of manufacturers who will be producing the tools of the trade

The Road Ahead Shakeouts, sell-offs, curious partnerships and bankruptcies—what in hell has been going on in the photo industry? Over the last five years, beginning in 2002 with the forced liquidation of Polaroid's assets, we've seen some strange realignments, consolidations and collaborations. For example, in January 2003, Konica acquired Minolta Corporation. Three years later, the newly formed company completely withdrew from the camera industry (although it's thriving as a business equipment manufacturer). So what's really going on?

Even more dramatically, in 2004, Kodak announced plans to stop film camera sales in the U.S. Take a moment and deeply think about that—Kodak discontinuing the sales of film cameras. That's like a razor-blade company announcing that it will no longer sell razors. One year later, Kodak discontinued its professional D-SLR cameras, the SLR/n and SLR/c, and this year turned all digital camera manufacturing and distribution over to Singapore-based Flextronics International.

But not all of the news is bad. In early 2005, Olympus and Panasonic made known their plans to collaborate on digital SLR systems. Midyear, Sony and Konica Minolta revealed that they, too, planned to work together to produce a D-SLR. By fall, Pentax and Korean giant Samsung announced their engagement—or more correctly, that they would begin to collaborate on digital SLR camera models. Then, in early 2006, the other shoe fell, and Sony acquired all of the old Minolta camera patents and intellectual property, plus 200 former Konica Minolta employees, and within a short gestation of only eight months, delivered the first Sony D-SLR to the marketplace.

What do these business maneuvers mean to the pro photographer? At least for now, these alliances and transformations mean good things for pros and serious amateurs. But trouble is in sight for some camera manufacturers. Here's why I think the future is filled with both bright horizons and dark chasms.

Vertical Integration

It's not simply a matter of electronics companies aligning with traditional camera makers. Sony, Panasonic and Samsung all produce imaging sensors. Formerly, most camera makers (except Canon) were entirely dependent on the electronics companies for imagers and support chips. Product development was difficult and somewhat inhibited. Camera makers had to create product road maps without full information regarding the development progress of CCDs and CMOS sensors. (Yes, imager manufacturers shared information under NDA, but there was always a certain amount of secrecy and guesswork for competitive reasons.) It's inconceivable that Konica Minolta could have introduced a 10.2-megapixel digital SLR in the same time frame as Sony—and ludicrous to think that they could have done it at a $999 price point. Who wins from vertical integration? Everyone.


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