When I asked the four participants in this edition of the roundtable to take part, I told them we wanted to find out how they did during the Christmas holidays, what they saw as the chief challenges and opportunities for 2011 and, because all of them attended the CES show in January, what caught their eyes once they left their own booths. It was, I said, a look back, a look forward and a glance sideways. Here’s what they had to say.
Mark Weir
Senior Technical Manager, Digital Imaging Group
Sony Electronics
We look at not only our own results but also data from research providers, and overall things were a little better than expectations in most of the imaging categories. Point and shoots performed a little better than expected; camcorders performed as expected—but there are significant shifts going on there. The real star was interchangeable-lens cameras, which recorded strong growth in both units and dollars. Even during the holiday selling season when ASPs typically erode significantly, we saw something I think surprised everyone: increases in ASP.
You’re referring to both DSLRs and mirrorless cameras?
Yes, both. Mirrorless is growing, too. We’ve been in that business since June 2010, and the category started to grow significantly then. The NEX-3 and NEX-5 cameras we introduced last summer rapidly rose to be the number-one sellers in the sub-category [of mirrorless]. As a percentage of total [sales] it’s probably 20% of the total interchangeable-lens camera business in Asia; here it’s under 10%, but we expect that will change significantly in 2011.
You mentioned shifts in the camcorder market. Are those shifts happening because of the ability to make movies with DSLRs?
There are a number of factors, the largest of which is the growth of the MP4 camera, which has led to a new usage style for video that’s quite different from traditional camcorder use. People capture video for visual communication as opposed to archiving a once-in-a-lifetime event. And other [inexpensive] devices that capture HD video and provide easy upload to the Internet are rapidly growing and represent more than half the unit sales in the video camera business. From the DSLR direction, two-thirds of DSLRs sold include HD or Full HD video functions, and that has a significant effect on the camcorder business. And the video capture capability of compact point-and-shoot cameras is growing. [But] the camcorder business is fighting back with more capable models; we introduced our first interchangeable-lens large-sensor camcorder last summer.
What did you see at CES that caught your attention?
I was expecting more—more imaging companies exhibiting and more significant introductions. The major introductions that we’ll see in the spring were not introduced at CES. The February-March time frame is still probably the norm, and maybe some felt announcing in January was a little too early.
Looking ahead at 2011, what do you see as areas of opportunity . . . or challenge?
I think everyone expects the market outlook to be a little bit better because most everyone is looking for a bit of an economic recovery. I believe consumers are getting better at discerning what they want out of the models they purchase, and manufacturers are doing a pretty good job of assessing how to improve what they offer—a better job of creating products to attract attention by pushing the limits of what technology can do. We’ve done a lot of that in the new cameras and camcorders we’re making. We’re trying to create new and different ways for customers to take better pictures and enjoy more of what they get out of imaging.
For instance?
Well, the reaction to personal 3D content is quite positive. . . . I think that will be a motivator in 2011. And interchangeable-lens cameras . . . [are] poised for significant growth in 2011. I think new and different kinds of cameras are going to add value and drive interest for consumers. It’s a pretty exciting time in imaging, and a great time to be an imaging customer.
Richard Ford
Regional Manager, Digital Capture for the Americas
Eastman Kodak
The largest single area of opportunity in the coming year? Power. The power needed to keep all the electronic devices running is a source of massive consumer dissatisfaction across a lot of categories. If you look at every industry, it’s the one area that folks really grapple with. You go home and the first thing you do is find the outlet to charge your phone, your iPad, your camera. The person, the company, that can solve that is going to do really well.
In the 2010 holiday season, what did particularly well for Kodak?
From a camera perspective, we launched at the beginning of October one of the largest advertising campaigns that we’ve ever had in the U.S., with the theme So Kodak. There was national advertising and an emphasis on 10 key retail markets. During the holidays we saw good performance for all cameras. The EasyShare M530, one of our entry-level cameras, did very well; and we did well all the way up to the advanced-amateur Z981; we haven’t been able to produce enough of those. And we blew the ceiling off with pocket video. We had a runaway product at CES last year with the waterproof Playsport, and it was a huge seller this past holiday season.
People want to take pictures everywhere, no limitations.
They do, and the cool thing was this success wasn’t just in the U.S. It was a healthy product for Latin America as well.
And other than cameras?
What’s been phenomenal for us is frames. We started in the digital frame business at the end of 2006 with an agreement with a large U.S. retailer, and we launched our first frame in March 2007. We did huge business that year. Then a lot of me-too frames came into the market and it became a tough business. So at the end of 2008 we took a step back. We put a lot of resources into understanding what folks wanted in the way of displaying pictures in the home. We looked at what we found out and decided there was no need to have a whole lot of features in the frames. We did the research then designed a product for 2009 launch that was a $100-plus frame that reflected the things we found out: people want fresh content on their frame and they want it to be easy to put there. If a feature didn’t achieve one of those two things, we dropped it. We launched the 7-inch Wi-Fi Pulse frame, and it was a great success—number one in revenue and unit market share across the U.S. And folks haven’t stepped back. We had a chain retailer who had a million-dollar week this past December on that one SKU.
A million dollars in one week? One chain?
Right. We did a lot of research and a lot of analysis and gave people the things they really wanted. You asked me before about CES, and one of the big things at the show was tablets. I’m asking myself if we’re going through the whole frame phenomenon with tablets, where you had countless brands within a year of the beginning of the business. It was a free-for-all; you could buy frames at Pep Boys. The thing about CES is that it’s the place where you want to show what you have that’s new, but you have to put everything in the perspective of what problem are you solving.
Areas of opportunity for Kodak in 2011? Mirrorless cameras maybe?
All I can say is that we are one of the largest patent generators; we have a strong foothold in the imaging business and we understand image quality. Whatever we have to do to ensure that consumers, the large market, can take better pictures more often, automatically—we’re going to be investing in that to make sure it happens.
Interesting that you mention image quality . . .
One of the measures of quality on many cameras and for many people is the digital camera’s display. It’s the first mechanism for sharing, so you can have a 5 or 6 megapixel camera with a great 3.0-inch high-res display . . .
And that becomes the definition of the image’s quality?
It could potentially be deemed better by the average consumer than an 18 megapixel backlit CMOS camera. We are putting higher resolution displays into some of our cameras because people take a picture and look at the back of the camera and that’s their first measure of quality.
Richard Simone
Vice President
Panasonic Consumer Electronics
For us, 2010 was a great year overall. We invested a lot in terms of advertising, and it certainly paid off in brand awareness and market share.
How is the Lumix G line doing. . . . the mirrorless cameras? Some major suppliers say they’re waiting to see how that market develops before jumping in.
Right now it’s a small contribution to the total market, but it’s still a focus for us. We feel that consumers want smaller, lighter cameras, and at the same time they want ease of use and all the features of a typical DSLR, just not as bulky. The G is a big focus for us going forward.
I was wondering about the response to HD movies as a feature in your cameras. Do you see a lot of consumer interest and enthusiasm?
HD movies are definitely a key focus point for us. It’s a great feature to have.
It fits in with your ability to offer connectivity.
Consumers can take the SD card out of our cameras and camcorders, pop it into a television or Blu-ray player or a Blu-ray home theater and view everything instantly. We try to show and offer the consumer the complete end-to-end solution.
Was “connectivity” still a big buzzword at CES? And what caught your attention at the show?
Last year CES was all about 3D, and this year there was still a lot of 3D focus, but tablets were huge at the show, along with the whole connectivity concept. Obviously, with the iPad’s success, there were a lot of tablets shown at all different levels, with a lot of different applications and uses. And apps were everywhere.
Looking ahead in imaging, what do you expect to be the big opportunities this year?
System cameras are an obvious area of growth. The mirrorless interchangeable-lens cameras, any cameras that are smaller and more compact. And, personally, I think long zooms will be a feature that will continue to resonate with consumers.
Eliott Peck
Senior Vice President, General Manager
Imaging Technologies and Communications Group, Canon USA
I know you were at CES . . . what did you see that caught your eye?
I don’t think it was possible to walk around CES without getting some kind of suntan from the reflections from all the TV sets. It was pretty obvious, the amount of interest in large panel TV displays, whether 2D, 3D, LCD, LED, plasma. You couldn’t walk into some of the larger CE manufacturers’ booths and not be overwhelmed by the size and high quality of their TV panels. And it was impossible not to take notice of the displays of 3D technologies. There’s a tremendous interest from manufacturers to have consumers interested in 3D television, [but] whether that’s possible with consumers [needing] to wear glasses or not, that could take a long time to find out. Also, you certainly couldn’t escape the amount of tablets being shown by . . . well, by everybody. From the consumer side there’s tremendous interest, and I found the number of manufacturers getting into it very interesting.
Looking back on the 2010 holiday season, how’d you do?
There was tremendous interest in DSLRs. We saw very strong double-digit growth in December both in units and, what’s more interesting, in dollars. It’s sort of atypical to see an increase in value. For the whole year we saw tremendous growth in units, and in December that held up nicely.
And driving that growth was . . . ?
Essentially consumers want to step up. They love photography; they understand the benefits of a DSLR camera, and they do want to add lenses and accessories . . . [and] one of the driving factors for the DSLR segment is the ability to capture Full HD video. It’s becoming a more important feature for consumers who really understand what a DSLR can do. They understand the still capabilities and they’re starting to embrace the capabilities and high quality of Full HD movie capture; it drove the whole category. We saw consumers recognize the value [of] more megapixels, higher features, more capable movie functions. And they’re looking to see what professionals do with [DSLRs].
Like in the old days when the pro was the height to aspire to, so they checked out his equipment?
Well, it’s a little different. Back in the film days everyone looked to see what the sports photographer was shooting. We used to look at the sidelines and count the number of white lenses . . .
Still do, right?
Still do, and it’s still a very important segment, but there’s a whole new industry that’s evolved in the last couple of years, particularly in the last year, and that’s professional moviemakers. Take the 5D Mark II, for example—professionals who make films and TV have discovered the capabilities of the full-size chip in that camera and are using it entirely or in part for major motion picture production. That’s creating a whole new industry. We never had any business in that segment before, and now we see pictures being made with 5D Mark IIs and 7Ds and 1D Mark IVs.
Which motion pictures?
Part of Iron Man 2 was shot with Canon DSLRs. Parts of Black Swan were shot with EOS cameras. The entire 2010 season finale of House was shot with a 5D Mark II.
So now we can all be moviemakers.
For under $10,000 you can outfit yourself with everything you need to shoot a motion picture.
Imaging dealers should be thinking of the accessories for this moviemaking market—auxiliary viewfinders, microphones, tracking and panning devices . . .
The camera itself almost becomes a small part of the rig. A lot of dealers are already involved in this [accessory market].
You’re looking at this market as a growth opportunity in 2011?
Let’s say it’s an area of continuing interest. We have a few things we’d like to do, and one of them is Web-based and live education to get our products in front of the end users for film and stills. And the educational effort we make with our dealers continues as well.
Anything you’d like to say about mirrorless cameras and your attitude toward that market?
The actual market for mirrorless cameras, or detachable-lens cameras or whatever you want to call them, is rather small in the U.S., and primarily driven because of the smaller size, not necessarily because of any enhanced features the cameras may have. Right now our perspective on this is that for those entry-level price points, our Rebel lineup does quite well and consumers are very happy with that [line] as their first step-up DSLR. We watch the market for consumer trends, but in terms of the U.S. market, the customer says, “You know what? I’m very happy to buy a DSLR camera.”
And your take on the compact camera market?
The size of the market continues to decline a little bit. One reason is every household has two or three compact cameras already, and all their handheld devices do everything, so the market is a little bit commoditized and somewhat cannibalized by Droids and iPhones and just about every other device that can capture some kind of image.
And mirrorless cameras can eat into the market as well.
Yes, I think they do. People stepping up may go to those to be able to add lenses.
