Disruptive Innovation and Pentax
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Disruptive Innovation and Pentax

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How Pentax survived the shift to digital imaging and then encountered problems.

How Pentax survived the shift to digital imaging and then encountered problems.

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  • Is this a joke? This can't possibly have been produced by a PhD student?

    This is about as scientific and factual as something being said by a guy with a giant tin foil hat at the streetcorner - not to mention that it looks like something put together by an 8 year old with random stuff he found on blogs and homepages on the Internet!
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  • that was really boring...
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  • I guess you feel like an idiot after the introduction of the K-7. Innovative enough for you, sport??
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Disruptive Innovation and Pentax Disruptive Innovation and Pentax Presentation Transcript

  • Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  • As we know, the shift from film-basedphotography to digital imaging has put many former camera giants in some serious trouble…
  • The explosion3025201510 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Number of film and digital cameras sold in the United States
  • Kodak…
  • … Polaroid…
  • … Leica…
  • Konica…
  • … Agfa…
  • … Bronica…
  • Pentax has also been in trouble.
  • Losses and layoffs have become more frequent in recent years.
  • It’s easy to blame the general recession…
  • However, recessions are always particularlyhard on companies with structural problems.
  • The interesting thing with the Pentax story is that the problems seem to have come after the shift to digital imaging.
  • Let’s go back in history and take a look at how Pentax handled the shift to digital imaging and what happened after this.
  • In 1952, Pentax introduced the first Japanese35 mm camera. Ever since, the company has had a strong competence base in optics, producing lenses, binoculars and other optical instruments.
  • The cameraswere exported tothe United States under the name Honeywell Pentax. The company grew just like the entire Japanese camera industry in the period 1950-80.
  • Analogue cameras are a mix of many technologies: optics, precise mechanics and some electronics.
  • Digital cameras are a mix of electronics, optics and some precise mechanics.
  • Having a strong competence base in optics,Pentax chose to focus on this and develop digital cameras together with consumer electronics companies.
  • The first digital Pentax cameras were co-developed with Hewlett Packard, and later on worked with Casio as well.
  • The Pentax Optio was co-developed with Casio. Pentax provided the optics and Casio made the electronic components. Thanks tothe modular structure of digital cameras, this kind of collaborations worked well.
  • The corresponding Casio camera was called Exilim.
  • 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 bigcamera firms with electroniccomponents, and they could instead focus on optics, design and development.
  • Thus, a company like Pentax could survivethe shift thanks to the modular structure and its great skills related to optics.
  • However, the market for compact camerasbecame increasingly competitive over time.
  • Products like Canon Ixus…
  • … And Nikon Coolpixflooded the market.
  • It doesn’t matter if a market isgrowing if it is also becoming fiercely competitive.
  • And from 2003-04 and on,sales of compact camerasactually started to decline.
  • The reasons?
  • Mobile cameras had become good enough.
  • SLR cameras had become cheap enough.
  • Tough competition, declining sales (and prices) of compactcameras implied that Pentax wasin trouble, despite surviving the shift to digital imaging.
  • In July 2005, the CEO Mr. Urano said:"Well shift focus to more profitable single- lens reflex digital cameras, to offset price declines in compact types."
  • Since the market for SLR cameras was still growing, Pentax shifted to this highersegment of the camera market.
  • Once again, Pentax co-developed digital cameras, this time with Samsung.
  • “In the digital era the pace of innovation is so fast. We haveembarked on this joint development to increase our speed.” //Ko Torigoe, Pentax Senior Executive Officer
  • This resulted in the Pentax K10.
  • But this did not really help.Having been outperformed by Canon, Nikon, Sony and the others, Pentax only had 3 percent of the DSLR camera market at this point.
  • Later on, Pentax launched the K20D,another SLR camera aimed for higher segments of the market.
  • The launch was a big PR event…
  • But despite heavy investmentsin developing SLR cameras, Pentax lost market shares.
  • Massive economies of scale and R&D were needed tosurvive in this industry and few companies could keep it up.
  • The SLR segment wassubject to very tough competition as well.
  • Given the competitiveclimate, Pentax sought tofocus more on optics and expand its medical equipment and optical component business.
  • "We want to balance our portfolio by making the imaging systems, medical gear and optical device businesses each make up about a third of sales" // Fumio Urano, CEO of Pentax
  • Due to thesedifficulties,Pentax wasnow bought by HoyaCorporation.
  • After a lot of turmoil and theresignation of Mr. Urano, themerger was finally completed in October 2007.
  • Pentax had been under increasingpressure from its shareholders to accept the offer.
  • In early 2008, Hoya announcedthat Pentax as a company would cease to exist and only remain as a brand.
  • Hoya had bought Pentax in order to enhance its capabilities in optics.
  • Pentax had plenty of knowledge related toendoscopes, intraocularlenses, surgical loupes,biocompatible ceramics.
  • However, the camera business kept generating losses andthings got even worse when the recession broke out.
  • After the huge losses, Hoyahas announced that cuts willbe made, both in production and in R&D.
  • These cuts will lead to evenless competitive products, which in turn implies even lower revenues.
  • Pentax has entered a vicious circle where the problems willgenerate even greater problems.Can such a company survive in the long term?
  • When a company in a competitve digital marketstarts to cut down on R&D, it is usually an indication of a collapse in the near future.
  • Who knows what will happen… Maybe Hoya will keep the optics and sell the Pentax brand to Samsung or another company that wantsto grow in the camera market.
  • So, whatlessons can belearnt from the Pentax story?
  • 1. Surviving a shift to digital technology does by nomeans guarantee success in the long term. On the other hand, such a shift usually implies an increased competition and a furioustechnological development.
  • 2. It is possible to survive digital revolutions bypursuing collaborations.
  • 3. It is never sustainable to lag behind in a digital industry. Given the rapid improvements, second-movers can in the end neither compete on price nor on performance.
  • “A revolution is not a tea party” // Chairman Mao
  • Sourceswww.dpreview.comInternational Herald TribuneThe fotolia blogwww.auspiciousdragon.net
  • Image attributions
  • Find out more:www.christiansandstrom.org