Shared technologies give convention new dimension

DSN Retailing Today, Feb 5, 2001 by Laura Heller

Something interesting is happening in the camera market: convergence. Beyond simply adding new bells and whistles, manufacturers are now beginning to incorporate digital-camera features into film units, printers into digital cameras and even elements of a PC into photo quality printers. And all this innovation is hopefully leading the way to greater consumer acceptance and adoption rates of emerging imaging categories.

One area in the industry that could really use a boost is the Advanced Photo System (APS). "APS has been on the market for five years now, and it's not growing as much as it was," said Gary Pageau, associate publisher/editorial for the Photo Marketing Association (PMA).

But Kodak's Advantix Preview camera, which adds the option of viewing photos on a LCD and ordering multiple prints directly on the film through an imprinting technology, may help give the category a boost. By incorporating a popular and useful feature of digital imaging into a film camera, Kodak has hit on a way to make the APS format more meaningful to the consumer market.

"APS suffers from a lack of awareness," said Pageau. According to a recent consumer study from the PMA, 65% of U.S. households are aware of digital cameras, although less than 5% owned one at the time. But only 40% cited awareness of APS, although the format boasts a 10% ownership rate.

According to Pageau, Kodak has been leading the charge into APS. The introduction of the Preview camera bodes well for category growth if additional manufacturers make products utilizing the technology. When Kodak announced the camera at last year's PMA convention, Kathy Rauschenberg, public relations manager for consumer imaging, said the company was looking for additional manufacturers to adopt the function. While this hasn't happened, Kodak is still hopeful an announcement will be forthcoming, perhaps when PMA gathers on Feb. 11, 2001.

Given the amount of attention the Preview has gotten in the press, additional units coming to market should be a given. None other than the Queen of Daytime TV Oprah Winfrey featured the product on her recent showcase "high-tech breakthroughs." Oprah and her technology expert selected the unit for its versatility, and each audience member received a Preview camera. The power of Oprah to propel sales of little-known products can not be underestimated, just look at the book publishing industry.

Almost every imaging product featured on the show was a combination unit of some sort. The Olympus Camedia C211 also got a plug on the show. It incorporates Polaroid instant film and print technology, allowing users to take a digital image and print it on the spot directly from the camera. The camera began shipping five months ago with a $799 price tag and was targeted to the prosumer market: real estate agents, police officers and investigators who might benefit from the dual functions on the job.

But with a price drop to $599 on Feb. 1, 2001, and a plug from Oprah, the Camedia may be propelled more into the consumer consciousness. But according to John Knauer, digital product manager for Olympus, the unit "is really designed for a vertical market. ... We played with it some in the consumer area; they really want something smaller."

The trick, say those in the industry, is to combine the functions of digital, film and instant cameras into small, easy-to-use product that will produce good quality prints for a reasonable price. Sound like a shopping list for a dream camera? Perhaps, this hardly seems unattainable given the rate at which technological advances are taking place.

"If you take the Preview and go one step further, actually getting a picture digitally and on film, that's a real benefit," said Ed Lee, analyst at Lyra Research. "There's a significant challenge [technologically] in doing that."

There's also a significant conflict of interest. With film sales still the bread and butter of powerhouse manufacturers like Kodak and Fuji, there is little interest in enabling consumers to bypass the processing stage. There's also little profit.

With combination products that allow for instant printing, "we don't lose out on the photofinishing end like a lot of our colleagues or competitors would," said Chris Baker, group marketing manager for consumer digital products at Polaroid. "[However], it's immensely difficult to make money on the hardware end."

To date, no digital-imaging company has publicly announced profits from the category, although rumors abound that Sony is in or moving into the black. And "some are close or on the cusp," said Baker.

The secret behind Sony's success is the digital Mavica, which incorporates a floppy disk drive to store and transfer photos. It has long held the top spot for sales of digital cameras across all channels largely because of this feature, although sales are beginning to shift to those models that use Sony's new Memory Stick media. In fact, according to Baker, the inclusion of the floppy drive added little to the cost of the camera yet allowed Sony to charge a premium upwards of $200 per unit for the convenience.