But Our Cameras Survived

The shift from film-based photography to
digital imaging has put many former
camera giants in deep trouble…

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

Kodak…

… Polaroid…

… Leica…

Konica…

… Agfa…

… Hasselblad..

But some
old camera
companies
survived
the shift.

Canon…

… Nikon…

… Olympus.

In other slideshows
I have explained
why so many camera
companies encountered
problems.

Some companies like Kodak lost the
value of their position and
distribution network.

Agfa made money on film and
with the shift to digital imaging
they lost their revenues.

Another explanation is that cameras
used to be all about precise
mechanics and optics and that the…

… the shift to electronics rendered
all this competence obsolete.

But Canon, Nikon and Olympus also
encountered many of these challenges,
and they not only survived but also
prospered in this shift.

So why did they succeed in this shift
when so many other firms have
suffered so greatly?

By looking at how the Japanese
camera firms handled the shift we
can learn, and maybe avoid the
destruction of huge companies.

So let’s go back to the early days of digital
imaging and look at how the Japanese
companies handled the digital threat.

In 1981, the industry was shaken
when SONY launched their Mavica, a
camera that used floppy discs
instead of film.

In Japan it was referred to
as ’the Mavica shock’. They
feared that something like
this would happen.

Therefore, many
companies invested in and
launched their own
’Mavicas’ during the 1980s.

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.

None of them lead to
any great success.

The Mavica was simply not the
way forward to digital imaging.

But the Japanese companies
had a high learn on investment.

Some companies like Canon
did a lot of internal development.

Since the required competence was
different, Canon recruited engineers and
managers from electronic companies.

They wanted to do things in-house since
it was important to obtain knowledge
and renew the resource base.

Initially, Canon and the others targeted niche
markets such as photo journalism, where
digital imaging could be nurtured.

Digital imaging was developed in a separate
organization that was not subject to the daily
internal competition for resources.

Eventually, the
dominant design
emerged.

In 1995 Casio launched the QV10.

It had an image quality
of 0,25 Megapixels and
required 4 AA batteries.

Not the greatest gadget
mankind has invented.

But the concept of
having a LCD screen and
this design turned out to
be very attractive.

Now the big Japanese
dragons like Canon,
Nikon and Olympus
invested a lot in
developing this concept.

The Japanese firms worked
jointly in an industry
association to solve critical
technical issues.

Moreover, they made sure
that the structure was
modular, so that each
individual component could
be improved separately.

Instead of fighting battles about standards,
each company could instead focus on the
product and reducing R&D costs. This created
a healthy competition - each one
differentiated within the defined settings.

The modular, standardized structure
also implied that consumer electronics
companies could work
on each component.

Memory cards…

Image sensors…

LCD screens…

… could be developed by
companies like Sanyo.

Sanyo provided the big
camera firms with electronic
components, and they could
instead focus on optics,
design and development.

Each
component
was now
subject to
rapid
improvement.

Once the cameras were good
enough and cheap enough…

Products like Canon Ixus…

… And Nikon Coolpix now
flooded the market.

Soon after, AgfaPhoto was in
deep trouble…

And Kodak was in deep trouble…

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…

It put Hasselblad in deep trouble.

And Leica was in trouble.

The Japanese camera
companies help us to
understand how a firm
can master a digital
revolution:

1. Enter early and
explore the technology.

2. Separate the
development from your
mainstream business.

3. Recruit people who
have extensive
experience of the
technology.

4. Find a nursing market
which can tolerate the
high price and the low
performance.

5. Collaborate with
others and find a
common standard.

6. Create a modular
structure where other
companies with
expertise can make
improvements on a
component level.

Image attributions

Christian Sandström is a
PhD student at Chalmers
University of Technology in
Gothenburg, Sweden. He
writes and speaks about
disruptive innovation and
technological change.
www.christiansandstrom.org
christian.sandstrom@chalmers.se