The digital camera market is defined by growth, innovation and competition - and vendors' and resellers' belief that there is money to be made out of it.
When a decade ago the IT industry got excited about the proliferation of PC users who embraced new technologies in what was then touted as a "desktop revolution in the making", no one anticipated that programs such as Microsoft Word would stop the movement in its tracks by enabling word processing software to serve as one, centralised desktop publishing tool. But, with the advent of digital imaging technology, analysts believe the time has come to revive the idea of democratisation of desktop publishing that is, if cautiously, predicted to put even the good, old photographic camera out of business.
While the digital imaging market is still in uncharted waters, yet to win the popular support necessary to dub it a "revolution", distributors and resellers of digital cameras agree that business is booming.
"We've seen 100 per cent growth in the last 12 months," says Heath Hutchison, sales representative with HE Perry, the distributor of the Olympus digital camera line. "It's been just a few short years since the first generally accepted digital cameras appeared on the market and now we are seeing mega pixel images and a wide variety of 16 and 32MB smart media cards for storage. But more importantly the range of applications to which the cameras are being used is expanding as well."
While the first major application area for digital cameras was in the semi-professional arena of real estate agents, insurance adjusters, car salesmen, Web pages and desktop publishing for in-house newsletters and public relations, vendors have noted a marked increase in the small office/home office (SOHO) market too.
"We've seen tremendous growth in the SOHO market as home users get over their fear of the new technology," says Sony's Andrew Walker. "This is due to the enhanced ease of use for the cameras as well as a better understanding of where digital cameras can be used and the increase of resolutions which means that people can now print out their images on a standard inkjet printer and get photo-quality results."
Vendors have invested significant amounts of money in improving the ergonomics of the actual design of the camera, as well as the availability of zoom lenses and rechargeable batteries in order to make digital cameras a less intimidating product for the SOHO buyer. And when it comes to the semi-professional market, industry insiders claim the quality and resolution are at the point where they can perform just about any task they are required to. Yet, there is no doubt that there is still a lot of room for improvement in the world of digital imaging, as James McGeorge, AGFA product specialist, observes.
"Our new models, for instance, have enhanced LCD displays for better performance in varied light situations," McGeorge reports. "Also, the increased use of USB ports is speeding things up." Which is an important sales point not only in the professional, but increasingly in the SOHO market as well.
However, while the technology is fast approaching the point where visits to the drawing table are going to be needed only for competitive reasons, McGeorge believes resellers' education on the subject of digital imaging still leaves a lot to be desired. "The markets," McGeorge says, "are sure to continue to expand." And that requires all those interested in enjoying the digital camera honeymoon to hop on the train of market introduction now.
"This market is still relatively young and new," says Karen O'Donnell, Epson Australia's product manager, reiterating the point. "And given that there are a lot more vendors around today than there were two years ago, the opportunities for the channel to get a slice of the pie are huge." So, exactly how big is the digital camera market in Australia?
According to managing director of Kyocera's Australian operation, David Finn, that is "hard to quantify" because the market is still maturing. "Potentially, the market is huge, especially for products such as our newly introduced Yoshica Samurai, which is a strong seller in the US," he claimed.
Finn proposes the digital imaging market, which is currently worth around $US200 million in North America, offers an excellent opportunity for a desktop publishing/camera solution push at the high end, which is why Kyocera's new camera comes bundled with the FS-5800C colour laser printer and Adobe's PhotoDeluxe Home Edition.
"Already, 20 per cent of our printer sales are based on the actual camera solution and what we're seeing is new vertical trends that are starting to emerge, supporting the concept," Finn said. "We see companies such as insurance assessors, real estate agents, auction houses and car dealerships especially benefiting from this technology. For example, an insurance company would be able to take a photograph at the scene of an accident or crime, print it out straight away and attach it to the file or send it to a colleague via e-mail."
However, competition for the buyer mindshare is intense and customer loyalty is virtually non-existent.
According to Mike Armstrong, national manager for digital cameras at Canon New Zealand: "In this business, you're only as good as your last model," especially when it comes to the SOHO market.
"The key to success is to get new stock into the retail shops quickly, make sure that the number of units is appropriate to the real potential and endeavour to move the product. With the rate of change and the number of new models coming out, old stock can be a real problem. We work with retailers very closely to help them get the numbers right." Armstrong said the issue is further complicated by the fact that the market is growing and is still largely unsettled.
"We are just at the very beginning of the product lifecycle and the market is still sorting itself out. Questions such as when will home use start to take off and is there a top end for the market still need to be resolved," Armstrong cautioned. "We can't force the issues and only time and experience will give us answers. In the meantime, we are doing all we can to get the best market intelligence for the channel."
According to Kyocera's Finn, two "market intelligence" points are crucial to the channel's understanding of where the involvement in the digital imaging market could lead them.
"Few players will survive in this market, so it is important for resellers to jump on the bandwagon now that the flexibility and quality of the technology has become acceptable and prices have come down." It is true that the average price of a digital camera is still relatively unattractive at $1200, however, already, users are able to obtain their key to the world of digital images for $600-$700 apiece. Furthermore, when compared to the margins available to resellers in the PC hardware arena, the 20-25 per cent Finn said resellers can earn by selling digital cameras seems quite attractive. And then there is the "after sale" opportunity to sell flash memory cards and card readers, digital storage boxes, special printing paper and cartridges, upgrades and training services.
Even more promising is the fact that the price of a digital camera does not seem to stand in the way of opting for better quality (and ultimately higher margin) products.
"One interesting trend that we are seeing is that many of the mega pixel customers are second-generation buyers, they already have a camera and are looking to upgrade," says Andrew Guyon of Fuji distributor Hanimex. "This reinforces our position that people are most interested in resolution. Interestingly enough, we don't see a lot of price resistance at the mid-range. Sure, the home user is always price conscious, but the light commercial market, the ones who can really get a quantifiable return for their money, appreciate the features and are willing to pay for what they need."
So, does the evidence suggest that digital cameras are becoming part of the communications revolution? Both Finn and Guyon believe that it does.
"One of the main drivers for the SOHO market is the use of e-mail," Guyon said. "It's so easy to attach a jpeg file to an e-mail message and send it to multiple recipients.
"In that case, resolution is not the issue. However, as people print out the files, the resolution issue becomes more and more important."
However, digital photography is not, at least right now, a major threat to conventional photography, even if we are starting to see a convergence of the technologies. For instance, the new film processing mini-labs will be able to (and a significant number of them do) handle digital images as well as traditional film. Most businesses in the traditional photography market now see digital cameras as a significant part of their business and expect it to continue to grow. However, on a strict cost/performance basis, digital is still miles behind traditional photography, but that is changing.
Kodak, a leader in the photographic field for more than a century, is banking on digital to complement, not cannibalise, its market share.
"We are providing an easy path for the conversion from film to digital," said Julian Pinfold, national sales manager, digital and applied imaging, for Kodak Australia/New Zealand.
"People can now get their film images transferred to digital at the corner pharmacy. Surveys show that close to 60 per cent of the people who use digital still print out the results. So even though the technology is changing, the actual use of the technology is remaining the same for the time being."
Right now, vendors are still spending a lot of time educating the marketplace. As image quality continues to improve, storage capacities keep abreast with the added requirements, and ease-of-use issues sort themselves out, they expect to see the digital photography marketplace become a significant part of both their and your business.
Digital film - AKA flash cards
In order to take pictures with a digital camera you need to store the images somewhere. Earlier models of cameras had internal storage, but they could only hold a few low-res images. But the current crop of digital cameras tend to use Flash technology as the storage and transfer medium.
Flash technology combines the speed of a hard drive with the portability of a floppy. Flash has been around for a decade or so, but only recently has the price become competitive. Also, the emergence of digital cameras and PDAs has spurred development and growth of the technology.
Flash is ideal for digital cameras: they feature fast speed for quick transfer (a key factor for battery life), especially when used with a card reader; they are rugged, with a high tolerance to shock and movement; and they use low power, usually either 3.3 or 5 volts.
There are three major types of flash cards: ATA cards fit directly into Type II slots and can carry up to 224MB of data; Compact Flash Cards, half the size of the ATA models, and can store data close to what ATA flash supports; and Smart Media Flash Cards, about 1/3 the size of a credit card.
These have a current limit of 16MB of storage. Different camera models take the different types of cards. There are adapters for reading compact flash and smart media cards in a type II slot.
Most people who buy flash cards do so to improve the storage capacity for their digital cameras, as cameras generally come with standard 4MB cards. Resellers report seeing more people using external card readers that plug into the parallel port for quick downloads, which helps conserve battery life. While the end-user price point seems to be around the 16MB models, resellers can expect to see this market take off as consumers start to get a better grip on the technology and the opportunities it provides.
What's new from . . . Kyocera
A multifaceted business image of Kyocera is about to be converted into a digital format, following the launch of its first optical product -the Yashica Samurai 1300DG digital camera in the Australian market. Fully owned by Kyocera, the Yashica brand is well established globally and its first steps towards recognition down under represent "a step in Kyocera Australia/New Zealand's evolution from a laser printer vendor into a diversified IT&T company", the company claimed. Initially, Kyocera's new digital imaging product will defend its Samurai honour in conjunction with Kyocera's colour laser printer, the FS-5800C and Adobe's PhotoDeluxe Home Edition software. However, as its technological virtues become obvious, it is expected that the market will see a lot more of a Samurai 1300DG solo act.
Yashica Samurai 1300DG
Application: Photographs for family album, personalised Christmas cards and e-mail attachments for family and friends around the globe. Company brochures, newsletters and flyers in paper and online.
1280 x 960 resolution
1.8 inch colour monitor that allows the viewing of pictures on screen, so that unwanted shots can be erased to free up more memory3 x optical zoom, 7-21mm8MB Compact Flash CardPAL and NTSC Video Playback for viewing on TV screenOptical viewfinderPrice: Bundled with Adobe PhotoShop Deluxe Home Edition software and Kyocera FS-5800C laser colour printer, the RRP of the Yashica Samurai 1300DG package is $4999.
Tel (02) 9888 9999, (03) 9296 2081, (07) 3876 2032, (08) 9480 0448What's new from . . . CanonAs one of the world leaders in camera-based and digital imaging technologies, Canon draws on 60 years of photographic market experience in its quest for the crown of the digital imaging arena. The company's frequent product upgrades allow it to maintain a firm hold on the market and remain the darling of SOHO users. According to Canon, its recently released PowerShot A5 digital camera is another step towards offering its customers "superior image quality and a wide range of functions for increased flexibility". The camera has been described as "the smallest in its class" and it comes with a broad range of standard equipment and software to allow immediate use.
Canon PowerShot A5
Application: This camera was designed with a broad range of users in mind as it offers fully automatic use for beginners, as well as a host of features for semi-professional and business use.
1024 x 768 resolution
4 selectable flash modes that range from 0.2 to 3.5 metres8MB Compact Flash Card Windows 95 and NT 4.0 and Mac compatibleHigh-speed image data processingTFT LCD viewing screenErase control for deletion of unwanted shots5mm focal lengthFully "collapsible" breakthrough lensPrice: An RRP of $899 includes a full version of Ulead PhotoImpact 4.0, PhotoStitch, TimeTunnel, Zoom Browser and SlideShow Maker software, as well as cables for serial connection to a PC, a charger and an adaptor.
Tel (02) 9805 2720
What's new from . . . Kodak
Photographic market specialist Kodak was an early adopter of digital imaging technology, which accounts for its rich family of digital imaging products, that consists of cameras, flash cards and card readers, batteries, digital imaging paper and cartridges, for all levels of the market. As a "total digital imaging solution" provider, Kodak has applied its years of experience in the photographic market to its new passion for digital images expecting its reward to be a lion's share of the digital imaging market pie. Part of its extensive range of megapixel cameras, Kodak's DC200 SOHO market cameras and DC220 Zoom camera for professional use are both big sellers that offer users flexibility and great quality, according to the company.
Kodak DC200 Plus
1152 x 864 resolution
26 to 120 image storage capacity
TFT LCD screen for review and preview
37mm focus-free lens
Auto exposure with auto white balance and exposure lock4 flash modesUp to 3 metre flash distanceWindows 95, 98 and NT 4.0 compatible, Macintosh connection kit optionalJPEG file formatPrice: RRP $849Kodak DC220 Zoom1152 x 864 resolution26 to 100+ image storage capacityJPEG and FASPIX file formats2 inch TFT LCD colour screen for review and previewAuto or manual exposureUp to 3m flash distanceWindows 95, 98, NT4.0 and Macintosh compatibleFocus free 2x optical zoom lenseRange of software includedPrice: RRP $1799KodakTel 1800 674 831