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Disruptive Innovation and the Camera Industry

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How digital imaging disrupted the camera industry.

Veröffentlicht in: Business
  • Fascinating history of innovation- some non-sustainable- in the camera industry. I was hoping to see a discussion of the failed APS system.

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Disruptive Innovation and the Camera Industry

  1. 1. What’s this?
  2. 2. A warzone?
  3. 3. Well, kind of. It is what remains from Kodak’s building 65 in Rochester (NY).
  4. 4. It was demolished…
  5. 5. Many Kodak buildings have been blown into pieces…
  6. 6. The explosion 30 25 20 15 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Number of film and digital cameras sold in the United States (guess which one is digital!)
  7. 7. Not anymore.
  8. 8. Many large and profitable companies in the camera industry have died or suffered.
  9. 9. How and why did this happen?
  10. 10. Let’s go back in history and take a look…
  11. 11. The camera industry remained stable during most of the 20th century.
  12. 12. An infrastructure emerged with global standards…
  13. 13. Film could be bought everywhere…
  14. 14. … and be used with any of the established camera brands…
  15. 15. Most companies had a stable position in the global camera family
  16. 16. The professionals and photo lovers often used Leica…
  17. 17. …Hasselblad..
  18. 18. Contax…
  19. 19. Mamiya…
  20. 20. Amateurs mainly used Kodak…
  21. 21. Fuji…
  22. 22. AGFA…
  23. 23. Canon…
  24. 24. Nikon…
  25. 25. Olympus…
  26. 26. Polaroid had their own niche in instant photography.
  27. 27. The camera industry used to be a kind of happy and stable family
  28. 28. And No one was happier than the film manufacturers…
  29. 29. Photos required film…
  30. 30. So for each ’CLICK!’…
  31. 31. Agfa, Ilford, Kodak, Konica…
  32. 32. … Fuji…
  33. 33. … and Polaroid…
  34. 34. … made a good profit.
  35. 35. Just like Gilette made great money by selling razor blades, these firms made great money by selling film. The main source of profit is not the razor or the camera, it was the continuous consumption of blades and film.
  36. 36. So, the more photos you took, the more money they made.
  37. 37. No wonder film could be bought everywhere
  38. 38. A fantastic business model.
  39. 39. With fantastic profits.
  40. 40. So, the competence base in the camera industry was built upon precise mechanics…
  41. 41. … And chemistry.
  42. 42. In 1981, the industry was shaken when SONY launched their Mavica, a camera that used floppy discs instead of film.
  43. 43. Many companies feared that this technology would eventually substitute analogue photography.
  44. 44. In Japan it was referred to as ’the Mavica shock’. They feared that something like this would happen.
  45. 45. Therefore, many companies invested in and launched their own ’Mavicas’ during the 1980s.
  46. 46. Canon formed a task force to develop a colour Mavica in 1981. It was launched in 1986. Fujifilm came up with something similar in 1988.
  47. 47. But none of them lead to any great success.
  48. 48. The Mavica was simply not the way forward to digital imaging.
  49. 49. Though some threats could be identified, the camera industry remained stable through the 1980s.
  50. 50. Some of the first digital imaging technology came from Leaf Systems.
  51. 51. In the early 1990s they produced digital backs, which could be attached to Hasselblad cameras instead of film.
  52. 52. It looked like this.
  53. 53. Yes, big and bulky.
  54. 54. But the business utility was great. Many film photos were digitized sooner or later anyway. With a digital back, one step in the production of photos could be removed.
  55. 55. The first digital backs were expensive and had a moderate performance. The first one by Leaf had 4 Megapixels and Kodak launched one with 6 Mpixels.
  56. 56. The performance was good enough for some applications.
  57. 57. Press and Studio photographers loved it and NASA was very interested in the Kodak sensor.
  58. 58. The following quotes illustrate the dawn of digital imaging.
  59. 59. ”The quality of high-end digital studio cameras is good enough to replace film for most catalog and magazine needs.” MacWEEK 94-05-13
  60. 60. 6 million pixel resolution is good enough for most applications. The perception of colour is more important than the perception of sharpness. Kodak, 1996
  61. 61. Notice how both sources use the term ’good enough’.
  62. 62. Digital imaging had other attributes which made it attractive.
  63. 63. An infinite amount of photos could be taken and then be replicated, manipulated and sent, at a very low cost.
  64. 64. So the business utility of a digital back which cost maybe 30 000 dollars was still big.
  65. 65. And the image quality was Good Enough.
  66. 66. A couple of attempts at smaller, simpler digital cameras were also made in those years.
  67. 67. One of the first digital cameras was a Kodak/Nikon product, launched in 1991.
  68. 68. Kodak had developed a digital back, which was built in to a Nikon camera.
  69. 69. Kodak A sensor with 1,3 Megapixel, an internal harddrive of 200 megabyte at a cost of 13 000 USD (about 21 000 USD today!)
  70. 70. It was marketed to photo journalists, hoping they’d be willing to pay for being able to view images instantly , take a lot of photos and removing the long process of turning film into a digital format.
  71. 71. In 1994, Apple launched the QuickTake camera.
  72. 72. It looked like a pair of binoculars, could store 32 photos and was the first camera that could be connected to a PC.
  73. 73. The price? 800 dollars.
  74. 74. Eventually, the dominant design emerged.
  75. 75. In 1995 Casio launched the QV10.
  76. 76. It had an image quality of 0,25 Megapixels and required 4 AA batteries.
  77. 77. Not the greatest gadget mankind has invented.
  78. 78. But the concept of having a LCD screen and this design turned out to be very attractive.
  79. 79. Now the big Japanese dragons like Canon, Nikon and Olympus invested a lot in developing this concept.
  80. 80. The Japanese firms worked jointly in an industry association to solve critical technical issues.
  81. 81. Though firms like Kodak knew this would cannibalize on their film business they still went in.
  82. 82. They thought that the shift was inevitable.
  83. 83. Around 2000, the digital cameras were cheap enough and good enough.
  84. 84. An avalanche of growth in digital imaging now occurred. 30 25 20 15 10 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
  85. 85. Products like Canon Ixus…
  86. 86. … And Nikon Coolpix now flooded the market.
  87. 87. Film sales now decreased rapidly.
  88. 88. Those who had a razorblade business model making money on selling film now faced shrinking revenues.
  89. 89. Kodak had to fire thousands and thousands of employees.
  90. 90. Many buildings in Rochester, NY, were blown into pieces.
  91. 91. In Munich, Germany, AgfaPhoto was demolished.
  92. 92. Konica left the industry after trying to survive through a merger with Minolta.
  93. 93. Polaroid is also resting in peace.
  94. 94. But film manufacturers were not the only ones in trouble.
  95. 95. The Nikon D1 from 1999 was the first true alternative for photographers who wanted digital cameras. It was mortal to many of the old camera firms…
  96. 96. With the rise of digital imaging, the competence base shifted from precise mechanics to electronics.
  97. 97. Many old camera companies had little experience in electronics.
  98. 98. The competence base of those firms now became obsolete within a few years.
  99. 99. Hasselblad was in deep trouble.
  100. 100. And so was Leica.
  101. 101. The Agfa cameras could not make it.
  102. 102. Kodak’s compact cameras were not really competitive either.
  103. 103. As large consumer electronics companies entered the industry, competition became even fiercer.
  104. 104. Massive economies of scale and R&D were needed to survive in this industry and few companies could keep it up.
  105. 105. To make things even worse, mobile cameras started to disrupt the compact cameras.
  106. 106. The reason: Mobile cameras had reached a point where they were good enough.
  107. 107. Summing it up:
  108. 108. Digital imaging destroyed the film market and all those companies who tried to keep making money on film.
  109. 109. At one time there must have been dozens of companies making buggy whips. And I bet the last one around made the best buggy whips you ever saw. How’d you like being a stockholder in that company? // Danny Devito, Other people’s money
  110. 110. Those who owned stocks in Kodak or Polaroid are painfully aware of the relevance of this quote.
  111. 111. In addition to this, digital imaging turned the camera industry into a chaotic warzone of fierce competition and rapid development.
  112. 112. Many old companies with a competence in precise mechanics failed to renew their skills and could not keep up with the pace of development.
  113. 113. During the shift, some companies claimed that digital imaging could never produce as good photos as film.
  114. 114. Technically they may have been right about this.
  115. 115. But that did not matter, because digital imaging was good enough, and had so many other advantages.
  116. 116. Image attributions
  117. 117. Christian Sandström www.christiansandstrom.org