Ch-ch-ch-Changes… The Industry Faces More Changes

Ch-ch-ch-Changes… The Industry Faces More Changes

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Boy, has this industry gotten complicated. Doesn’t seem like it was that long ago we were talking about the “cash cow” photo industry and about 9,500 photo specialty locations that were all doing pretty well…it was, looking back, quite the cozy little scene.

Seemingly overnight, all that has changed. The technology behind “taking a photo” changed and with it, an entire category was turned on its ear. How the product is sold, to whom it is sold and from where it is sold have all been forever altered.

While all that would make for a pretty interesting story, we’re not here to chat about those details this month. Instead, we’re going to take a look at how this industry continues to change and what specific changes we may be looking at in the next 12 months. Keeping track of the latest trends in both the digital imaging and retail industries is like trying to hit a moving target. Here today and gone tomorrow. But there are, however, those trends that have some staying power and are worth keeping an eye on.

As the gun has just sounded on 2007, we thought it would be the perfect time to take a look at some of the trends we think will be making headlines this year and the effect they’ll have on your business in the years ahead.

Cam phone nation

The future is calling and the call is coming in on a camera phone. And watch out, because the caller has the ability to take your picture, record video, surf the Web, upload and listen to music and send all this content wirelessly to one of his/her many buddies that have the same set up.

What exact effect this product will have on the digital imaging world remains to be seen. Many observers feel the effect will ultimately be a positive one as consumers taking pictures is simply good news for everyone. However, there are those that feel the camera phone crowd won’t be upgrading to a digital camera in the future (as some contend) and aren’t into printing their images – so they see it as a lose/lose scenario.

Perhaps the new technology we are hearing about within the cam phone world will help get more users printing their images…we’ll see. LG Electronics recently signed a deal with German lens maker Jos. Schneider Optische Werke (Schneider-Kreuznach), details of which explained that the two companies have collaborated on optics for the cameras in cell phones.

This partnership is Schneider-Kreuznach’s first with a cell phone manufacturer and comes just after the launch of LG’s “Shine” camera phone. The phone, which was announced in South Korea early last month, contains optics tested and certified by Schneider-Kreuznach. Apparently, a deal was born shortly thereafter.

Add to this news the recent announcement from FotoNation that they have made their “Face Tracker” technology available for camera phone manufacturers. Face Tracker is a face detection and tracking technology that detects the presence and position of a subject’s face at up to 30 frames per second during image capture, enabling the optimal setting of exposure, focus and color balance. FotoNation demo’d the technology at the recent 6Sight Mobile Imaging Summit in Monteray, Calif., showing how the tech simultaneously tracks up to eight faces on a camera phone. In addition to aiding in proper focus, exposure and color balance, the demonstration featured automatic image orientation, face cropping, and face thumbnail generation for use in the phone’s contact address book.

Sanyo also recently announced that they have added image stabilization technology, adopted from Calif.-based InvenSense, to their digital still and camera phone lines for 2007. InvenSense’s single-chip IDG-1000 gyroscope innovation utilizes MEMS technology to provide what they tell us is, “the world’s only integrated dual-axis solution with the smallest footprint at very competitive prices.”

This may clearly be a call you’ll want to take.

Mobile marketing checks in

There is a side to the mobile handset equation that is all positive as this love affair consumers are having with their cell phones has opened up an entirely new marketing category – mobile marketing. There are plenty of experts in this area claiming 2007 will see retailers across all markets and channels tapping into the power of text-messaging shoppers, conducting contests and processing payments through cell phones. We’ve even seen technology that will allow shoppers to zap items on a store shelf with their phones and automatically begin the checkout process while they continue to shop. You can imagine additional marketing applications will likely begin surfacing as well that will firmly cement the cell phone as perhaps the most significant consumer electronic device in history.

Not convinced? Consider this – a company called GPShopper is harnessing the power of the cell phone to drive the on-the-go shopper into local stores. Their systems work thusly – consumers enter the name of the product they want, along with their ZIP codes. The mobile device then displays a photo and description of the item, local availability, store locations, phone numbers and maps. More than 30 million products are already available on the GPShopper system.

The numbers make a strong case as well – more than 200 million Americans and some 2.5 billion global consumers own cell phones today, and Gartner research tells us that over one billion phones will be sold annually by 2009. Cell phones will be the one item that just about everyone will own. Tapping into that fact will be marketer’s gold.

Click-to-chat

It appears as though more and more retailers are recognizing the importance of being able to answer their online customer’s questions immediately and are turning to technologies, such as “click to chat” and “click to call back,” to meet shoppers’ immediate needs.

This browse, click, chat philosophy is a good one as many online consumers still want the connection with a store employee before making an online purchase. One technology being used is called “click to chat,” which lets online customers ask sales clerks questions in real time, using instant messaging. Another service gaining steam is “click to call back,” in which customers tap on an icon that prompts them for their telephone number so a company representative can call them right back.

With the numbers attached to online spending going through the roof – Forrester Research estimates $211.4 billion on retail as a final number for 2006 – it behooves retailers to make sure the experience is a smooth one. Several industry reports indicate online consumers have little patience for technology problems or delays getting product information. When they encounter them, they quickly move on to the next site.

Yahoo and eBay recently announced they are jointly developing “click to call’’ advertising that would allow customers to select a link in a merchant’s ad and immediately be able to text message or speak with someone from the company.

Other companies getting in on the online retail chat world are Virginia-based Estara and New York-based LivePerson who offer a service that acts pre-emptively, looking over customers’ shoulders as they shop and dispatching the icon invitation if they seem confused or on the verge of making a purchase. There are a ton of others as well.

Well, as the song goes, “People who need people are the luckiest people in the world.” Apparently retail Web sites who provide people will be pretty lucky too.

Digital natives running wild

While we’ve discussed several different demographics and how best to market to them in this space, there is perhaps no demographic that will carry greater buying clout, especially in the tech sector, than the current 12-24 year old group known as “Digital Natives.” They are called such due to the fact they have been raised on digital technology, particularly the Internet, can’t imagine life without it and are taking to wireless communication technology like fish to water.

This generation, at least those in their late teens and early 20s, have been engaged with technology since their pre-teen years. The group just behind them are gaining exposure to tech as toddlers. According to a study of 18- to 24-year-olds released this summer by international research and consulting firm Greenberg Quinlan Rosner, the average age for first Internet use was 12 years, 3 months; 24% of the 1,021 young adults surveyed say they were 10 or younger.

That report also claims they were spending an average of 21.3 hours online each week. Moving onto U.S. college students, data from a recent Educause survey of 28,000 students at 96 colleges and universities shows some young people are spending “literally 10, 12, 14, 16 hours a day online,” the report states.

There are experts in this area that add that these estimates may be light as they claim the Internet has become so interwoven into daily life, “they don’t even realize how much time they are actually spending online with things like hand-helds and wireless laptops.”

“This demographic is always online” reasoned retail analyst Martha Refik. “It has become such a part of their daily routine. It’s no longer an activity unto itself.”

“I’m checking my FaceBook account all the time, sending IMs, e-mailing images and just generally looking for info on the Web constantly,” began 22-year-old Linda Marsicano, of Chicago, Ill. “It would be difficult to say how many hours a week I spend connected because it’s not even something I think about anymore.”

As the digital immigrants among us continue to argue that while this communication revolution we are currently wrapped up in has certainly improved the frequency of communication, it has not necessarily improved the quality of it, no one can argue developing a retail strategy that speaks to it is vital.

“While some may argue that all this technology is creating a generation of people who will grow up lacking solid and basic face-to-face communication skills, what you can’t argue with is the fact that same technology is producing consumers that know exactly what the want and how they want it to work within their lifestyles,” Refik added. “Catering to this and making sure you offer solutions to their tech-lifestyle problems, or maybe enhancements to it – will position you well as they begin walking into your stores.”

Perhaps Marsicano provided the most telling glimpse of the mindset of this consumer of the future. “Technology today defines who I am, I think more so than any past generation was defined by it. I will forever be interested in anything that keys in on that fact and allows me even greater power and enjoyment within that world.”

Video killing the still image star?

In this “Look-at-me” culture we live in today it is worth noting all the recent movement we are witnessing on the video front as companies begin jockeying for a piece of what may be a very lucrative pie.

Microsoft’s recent launch of their own online video service coupled with Google’s mind boggling purchase of YouTube (for a whopping $1.65 billion) would seem to indicate that video may very well be the memory capture medium of choice for a not-to-distant future generation.

Microsoft’s setup is dubbed “Soapbox on MSN Video” and the site will essentially let Internet users watch and post videos, rate or comment on them and share favorites by e-mailing them or linking them to their personal Web pages or blogs.

Rob Bennett, general manager of MSN’s entertainment and video services unit, acknowledged YouTube Inc. who certainly has the early lead in this area but adds there is room for improvement with this model. “There is still plenty of room to innovate, and go beyond what I would say most services provide … just sort of the basics, a very kind of primitive experience that is not that engaging,” Bennett said. “It’s not that fun to use. It just gets the job done.”

Microsoft tells us one of the improvements in their service will involve videos being displayed in slightly larger windows than those competing services offer, and users will be able to expand videos to the full screen while they are playing, rather than having to jump back to the beginning and start over.

The Google/YouTube deal is as much about YouTube’s 34 million visitors a month as it is about the sites’ innovation in the video-sharing realm. In the Internet world “the eyes have it” and this deal clearly was about Google’s attempt to tap into YouTube’s huge and unique traffic numbers. However, those following this deal add that video usage in the U.S. is growing rapidly and that hand-held video devices, such as digital cameras and cell phones with video capability, are allowing consumers to show previously untapped creative talents.

It’s a trend worth keeping an eye on as still and video technologies continue to converge and consumers appear to be just beginning to realize the Internet is their stage …and you just happen to sell the tools they need to perform.

Change for the better

As is the case with any industry that faces the kinds of changes the imaging industry has the last decade, there are inevitable growing pains. For those that have struggled with the transition to digital the pace of change will only quicken in the years ahead. The bottom line here – digital imaging technology is, quite simply, a better technology. In short, it is clearly more reproducible, easier to share and plays much more seamlessly into today’s many forms of communication. Film never had a chance.

As David Bowie sang many years ago…”Ch-ch-ch-changes, turn and face the strain.”

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