Imaging Opportunities in a Connected World


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Examination of changing dynamics of the camera and photo industry from smart phones, social networking and cloud services.

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  • Thank you very much for inviting me and my colleagues from InfoTrends to share our perspectives with you at the CP+ event.I enjoy coming to Japan to see the latest technology, visit with clients and friends, and meet some interesting people.I must say that I have been a bit nervous about coming to Japan to speak with many of the imaging industry’s leading engineers and executives – the companies and people responsible for so many important innovations.I hope you find my perspectives helpful as you consider your business strategy.
  • We all grew up in analog era of the imaging industry. That era had a 100-year run with many important innovations but the basic business drivers were the same – capturing images on film and creating prints.The Digital Era arrived in the late 1980’s with the advance of image sensors, memory, PC editing software, and digital printing. That era only lasted about 20 years, but it was very disruptive. During that time we experienced the virtual elimination of film, significant consolidation of camera makers, photofinishing equipment vendors, and photo printing service providers.We also saw significant changes in market share and the growth of new companies such as on-line print service providers and new types of printed photo books and other products. It was an exciting time, butI believe the digital era is over. Of course we will continue to have digital products, but I believe we are now in theConnected Era. Anera when we can instantly share pictures and video.We are experiencing major ramifications throughout society at personal and global level. We are also experiencing major changes throughout the imaging industry with new types of devices defining the customer experience. Traditional cameras are often a second-level option and 10x5 prints are often a third-level option.Just like we saw a big shift in industry profits during the transition from film to digital, we are seeing another shift during the transition to connected. From my viewpoint, the shift generally has not been good for many of the traditional manufacturers.I also see the early signs of another era emerging – the Intelligent Era. An era that I believe will be driven by meta data and “smart devices” and “smart services” that make it simple and fun to capture and share life experiences.
  • The Traditional forces of the imaging industry have primarily been about capturing light and converting it into a picture on a screen or printed page. It is the essence of photography.We continue to see many important advances in the areas of sensors, image processors, optics and prints.There continue to be improvements in light sensitivity, sensor design, pixel arrays, imaging algorithms, and use of materials and manufacturing methods for optics and other components.These forces a fundamental to the industry and I expect them to be part of every era in the imaging industry.
  • There has been a flurry of product development activity over the last couple years based on advances in sensors, processors and optics that has resulted in some important new product categories.The compact system cameras are providing more convenience for consumers and advanced amateurs without sacrificing much quality compared with bulkier DSLRs.I was at the Consumer Electronics Show in Las Vegas a few weeks ago and saw the new Canon G1X large sensor compact camera and the Cinema EOS interchangeable lens professional video camera. These are very impressive products that I believe will do very well in the market because of the price, performance and form factor.At CES there were also many Hands Free or Action video cameras that people can mount on their bicycle or helmet or even their glasses to provide a first-person point of view of what activity they are doing. They are becoming very popular especially among young adults who are into outdoor activities such as skateboarding, skiing, or hiking.I also saw the Lytro light field camera. The technology comes out of Stanford University and is very different than traditional imaging systems.
  • The Lytrodevice requires an entirely new kind of sensor called a light field sensor. The light field sensor captures the color, intensity and vector direction of the rays of light. This directional information is lost with traditional camera sensors, which simply add up all the light rays and record them as a single amount of light. The light field engine uses powerful software to process the full light field and unleash new ways to make and view pictures.I am sure there are engineers in this room that could do a much better job than I can explaining this technology, but some of the benefits of this technology include increased speed of picture taking, capturing better pictures in low light, new form factors, and the ability to focus on elements within a picture after the picture has been taken.Here is an example of how you can focus on different areasThe product has won several awards including the Best of Innovations Award for Digital Imaging at the CES show.There have been rumors that the CEO of Lytro met with Steve Jobs about 18 months ago to discuss potential uses of the technology in the iPhone and other Apple products. So we will keep a close eye on this company and technology.
  • Sony, one of the leaders in imaging sensor technology, recently announced it has perfected a new backside illuminated stacked CMOS image sensor.You can see from Sony’s conceptual diagram that the pixel section of the image sensor can be layered onto a chip containing the circuit section for signal processing without the need for a base substrate. According to Sony the benefits include improved image quality in a smaller chip size with faster speeds and lower power consumption.I am sure there are people from Sony here that can provide many more details.We think innovations like this one from Sony as well as Lytro and other companies will continue to lead to improvements in imaging quality as well as new types of imaging devices for many years to come.
  • However, while we continue to see innovation in the traditional areas, many of the biggest advances and innovations have occurred. Some of the new improvements in these areas aren’t having as much impact as the early days of the digital era. Image quality and processing speeds are already very good, and the camera manufacturers have driven down prices about as low as they can.Now, in the Connected Era the new forces that are driving the imaging industry include mobility, social media, cloud services and apps.In many respects, companies like Apple, Google and Facebook and many independent programmers are having more impact on the direction of the imaging industry than Canon, Nikon and Kodak.We are seeing a dramatic shift in how people capture, share, view and store images and video.
  • We can see many examples of “smart” devices. Of course there are the smart phones and tablets, but at CES there were many smart TVs. Sony was showing a miniature display that can be used like a smart watch that connects with its Xperia smart phone. There are new smart health care products for monitoring blood pressure, heart rate, weight, and other information.We have also seen smart appliances along with Google’s “driverless” car technology that they have been developing for future intelligent cars.We think many of these smart devices will become common over the next few years.
  • For the imaging industry, as the quality gap narrows between traditional cameras and smartphones, convenience and instant sharing are driving consumer photo and video behavior.Apple in some of their advertising positions the new iPhone 4S as “maybe the only camera you need”. It is a powerful message and for many consumers their smart phone is becoming their primary camera for everyday photo activity.A recent article from ARS Technica shows the dramatic improvement in image quality in the iPhone over last few years.With continued advances in image sensor and processor technology like what we see from Sony, we expect smart phone image quality will continue to make steady improvements.
  • It’s not just Apple, that is emphasizing the imaging functionality and comparing against traditional cameras.Here is a screen shot from T-Mobile about their myTouch Android-based smartphone.They have a link that provides side-by-side comparisons of key specificationsagainst traditional cameras.
  • Of course, here in Japan there are many good examples of smart phones with special imaging functionality.Recent introductions from Sharp, Sony and Panasonic have important features such as12MP sensors, 13.3 MP for the Panasonic device.Image stabilizer technology3G, 4G, WiFi, DNLA connectivityPicture scene selection optionsAs well as access to third-party cloud-based services such as SugarSyncsynching and storage
  • One of the big advantages that the iPhone and many Android-based smart phones have over traditional camera is the ability to run 3rd-party apps that provide additional functionality and improve the customer experience.There are literally thousands of Photo Apps available. Here are a few interesting ones including one from Instagram for easy sharing and storage. Instragram claims it has 15 million iPhone customers who uploaded over 250 million photos in the first 18 months after its release last year on the Apple app store. Instagram is also launching an API so customers can print pictures like postcards and photobooks. This app was picked as the iPhone app of the year in 2011Microsoft has an app called Photosynth that enables stiching together multiple images for a Panoramic or 360 degree composite image. Adobe recently introduced its Photoshop Express app for editing.
  • Here are some screen shots from a few interesting photo apps.Picture Effect Magic is a an app to add special effects to an image like making it look like it was drawn with a pencil or adding color to certain objects like the leaf in this picture.Pro HDR brings high dynamic range photography to an iPhone by enabling you to capture an image exposed for the highlights and another exposed for the shadows. It then automatically aligns and blends the images, giving you a composite HDR image of up to 5 megapixels.Filterstorm is a photography workflow app that provides an easy to use interface for adding meta data and doing editing on an iPhone or iPad.I know that some traditional cameras have this type of functionality built into the camera. However, I think the big difference between the built-in features from the camera vendors and the apps from 3rd-party developers are:The consumer has more choices – not just what is pre-installed by the camera vendorThe apps are regularly updated providing new capabilities and a better user experienceThe user interface is often much easier and intuitiveI think camera companies need to figure out how they can enable third-party developers create apps that can be run on traditional cameras.
  • We are slowly seeing some advances from camera companies related to smart technology and connectivity. Here is a picture of the Polaroid Android-based camera. The device is manufactured by Altek who originally showed the device over a year ago.It is a 16MP camera with 3X optical zoom, touch screen display and Wi-Fi connectivity. It runs a version of the Google Android operating system and can connect to the Google Marketplace for apps as well as social media and photo storage websites.We think the approach is interesting, but it will take a more prominent brand to really develop this category of device.
  • At CES Samsung announced 5 WiFi cameras that can connect to public and password-protected WiFihotspots thanks to a proprietary log-in browser. We like this approach, though I think Samsung is making a mistake by limiting the cameras to only interfacing with other Samsung smartphones and tablets.Fujifilm also showed several new WiFi-enabled cameras, however in my opinion the user interface was not very elegant and the upload speed was slow. It may have been because of the conditions on the show floor. I also think the Fujifilm product has limitations in that it only transfers images to a smartphone instead of using the smartphone as a gateway to post pictures directly to social media sites or send them to friends. Also, you can’t connect to a local public or password protected WiFi network.Kodak may come the closest with its Easyshare M750. This 16MP camera can share images through a public or password protected Wi-Fi network. You can have your pictures automatically sent to Facebook, e-mail, KODAK Gallery, and more locations directly from the camera. You can also send images to an Apple, Android or Blackberry mobile device using the Easyshare app.CanonI believe WiFi connectivity, especially the ability to connect to password-protected networks and mobile phones, needs to become a standard feature for most cameras. Otherwise, people will just use their smart phone more often to take pictures.
  • If we think about positioning of various consumer cameras, three of the most important factors are quality, convenience and sharing. DSLR cameras have the highest quality but generally are not very convenient and have limited sharing capabilities.The new compact system and large sensor compacts have very good quality and provide more convenience. None of them today have any sharing capabilities.Point & shoot cameras provide more convenience and pretty good quality, but until recently have limited sharing options. Hands Free cameras are very convenient, but have limited quality. Smartphones are all about sharing, but have limited quality capabilities.We see the Point and Shoot cameras and smartphones coming closer together and we expect the sharing circle to become larger relative to quality and convenience. In fact, owe think that sharing is some important that over time we believe most cameras will have some type of wireless sharing capability.
  • We are seeing an impact on US sales. This chart shows units on a logarithmic scale on the x-axis and the five year projected growth rate on the y-axis. We estimate that approximately 30 million traditional cameras were sold in the US last year and that the 5-year growth will be flat at best. We expect growth in certain categories such as the new compact system and large sensor cameras as well as in other regions of the world, but the overall market is mature in the US.Tablets and smartphones are already larger market and projected to grow at 20 to 40%. We believe part of what is happening in the market is that some consumer spending is being diverted from traditional cameras to smartphones and tablets.The other area we look at is the number of pictures taken and printing activity. We estimate consumers took 100B images in 2011 and that the activity is growing at 10% per year - which is 10X population growth. Much of this additional photo activity is being driven by smartphones.However, 4x6 prints have peaked and are declining at a rate of 3% per year. We are seeing growth within photo books, cards, and other products, but from a relatively small base.Again, we are seeing a shift in consumers’ imaging spending away from prints and towards to social media, tablets, smart phones.
  • With growth in images comes new issues, and I believe the seeds for the next era in the industry.We are taking over 100B images per year and most of those picutres reside in multiple locations.I am sure that everyone in this room has each of these devices.Most of you also probably use several of these cloud-based services to share or store your images.In many cases an image will be captured with a camera or smartphone and then end up on a PC, external storage, Facebook, maybe a cloud-based storage service, and on Google or Bing servers.The result is trillions of images and eons of video.Facebook claims that over 250 million images uploaded per day on its site.Google reported earlier in the year that 60 hours of video are uploaded every minute.On, the iPhone 4 has surpassed the Nikon D90 and Canon EOS 5D as the most popular camera used for photos uploaded to the site.The challenge becomes finding the best images to tell a story.
  • So I think we can see some of the traditional and new forces that are driving the industry through my experience.Advances in sensors, image processors, and optics have made it possible to take more pictures and better pictures than ever before.We can also see the important role of smartphones, social media and cloud-based services.You can also see some of the limitations of these devices and services. It is still very challenging to find good pictures and tell a story. I think the future of the imaging industry will be driven by technologies that help address this issue.One area is semantic search. Semantic search enables improved search accuracy by understanding searcher’s intent and the contextual meaning of terms as they appear in the searchable dataspace, whether on the Web or within a closed system, to generate more relevant resultsAnother area is natural language user interface, basically the ability to verbally tell a device what you want to do vs. clicking buttons and adjusting settings.There are many important companies investing heavily to develop these technologies including Nuance, Microsoft, IBM, Apple, Google and some of the Universities (Stanford Natural Language Processing Group)These technologies, combined with mobility and social we will have intelligent images that seem to know where to go and make themselves accessible or stay private
  • There is already quite a bit of meta data that exists or can exist about an image. Of course there is EXIF data captured by the camera that include important technical details as well as time and date. There are also more cameras that are capturing GPS data about where the picture was taken. We are also seeing new cameras and smart phones that can provide facial recognition, not just detection. Here is a photo taken with the Panasonic LUMIX smartphone that has the ability to …There also is also data about pictures from social media where people are tagging photos and adding contextual information. Facebook announced last year that they have implemented facial recognition technology to assist with the photo tagging process. Google has similar technology. All of this information can be associated with other data on the web to enable better semantic image search of images and video.Of course, there are growing concerns about privacy and I think it will be important to have appropriate controls in place. However, as it becomes easier to gather, share and analyze data and images I think there is the potential for many benefits over time.
  • There were two important innovations in 2011 in the field of natural language processing.One is Watson, IBM’s Massively parallel distributed computing system with natural language processing.The other is Siri, Apple’s intelligent personal assistant that they introduced back in October 2011 as part of the new 4S iPhone. It is device and cloud-based natural language UI that connects to various web services to find information or complete various tasks.
  • You might have seen Watson in action last year during the American game show Jeopardy! Jeopardy! Is a trivia show where contestants are given answers and have to respond with the appropriate question.Back in February 2011 IBM challenged two of the all-time greatest Jeopardy! champions to a match and won.Watson had to interpret the question, find potential answers, assign probability of accuracy, reply after accessing and analyzing terabytes of data in fractions of a second.The Watson system was tuned specifically for the “game” Jeopardy!IBM plans to bring to the technology toareassuch as financial, medical, legal. Why not imaging?
  • In the new Apple 4S the intelligent agent Siri asks “What can I help you with?”You might reply “Places to eat”Siri knows you are in Las Vegas and provides recommendations that are relevantAlong with connections to Maps, reviews, and contact informationBoth Watson and Siri are still in their early stages. Apple has positioned Siri as a beta product – which they seldom do. My sense is we will likely see Siri in other Apple devices as well as an API for third-parties to build new applications and expose data and other services in the near future.Just like virtually every mobile phone now has a camera. I believe virtually all smartphones will some day have a natural language UI and access to all kinds of web services.
  • There are plenty of things that the imaging industry could do to leverage these future driving forces.For me and, I think, many other consumers a Natural language UI would be a great improvement over the traditional camera interface.I hate all the buttons and menus . I just want to blur the background of the picture. Is that some kind f-stop, aperture, ISO setting? Honestly, I really don’t care and I don’t want to know.How about just saying “tag picture Hannah Norwell High School Graduation 2011” Actually, I shouldn’t have to say any of that. The camera should know who is in the picture, where the picture is being taken, what the date is, and what event is going on during that time and location – tag it for me.I’d like to say “text the picture to grandmother” and “post it on Facebook”How about just saying “make a photo book” that I can then view on my tablet, TV or have printed?All these things are possible and I think coming.
  • So in closing, I think it is important to keep investing in the Traditional forces of the imaging industry. Imaging is about capturing and manipulating light, and future advances in sensors, processors and optics will help create the next generation of products.However, I believe you must align your business with the New industry forces of:MobilitySocial mediaCloud servicesAppsConsumer behavior has been fundamentally changed by these forces, and much of the imaging industry’s profitsare being affected by these forces. You also need to think very deeply about the potential impact and opportunity from Future forces of:Semantic searchNatural language processingIntelligent imagesTogether, these technologies will help make it simple and fun to capture and share life experiences and generate growth and profits for many years to come.
  • Imaging Opportunities in a Connected World

    1. 1. Imaging Opportunities in a Connected World Jeff Hayes President February 10, 2012© 2012 InfoTrends© 2012 InfoTrends 1
    2. 2. Agenda 1 Traditional industry forces 2 Explosion of smart devices 3 What can I help you with? 4 Closing thoughts© 2012 InfoTrends 2
    3. 3. Imaging Industry Evolution Value Intelligent Connected Digital Analog Time© 2012 InfoTrends 3
    4. 4. Imaging industry driving forces Traditional • Sensors • Image processors • Optics • Prints© 2012 InfoTrends 4
    5. 5. New Camera Categories Compact SystemLarge Sensor Compact Light Field DSLR Video Hands Free© 2012 InfoTrends 5
    6. 6. Lytro Lightfield Technology Lightfield Camera sensor lensSource: Lytro© 2012 InfoTrends 6
    7. 7. Stacked CMOS Image SensorSource: Sony© 2012 InfoTrends 7
    8. 8. Imaging industry driving forces Traditional New • Sensors • Mobility • Image processors • Social media • Optics • Cloud services • Prints • Apps • Books, cards, etc.© 2012 InfoTrends 8
    9. 9. Explosion of Smart Devices© 2012 InfoTrends 9
    10. 10. Apple promotes the iPhone as a primary camera “Maybe the only camera you need is the one on the most amazing iPhone yet.” -Apple iPhone 4S TV commercial 3 3G 3GS 4 4S Image quality dramatically improved since iPhone 3© 2012 InfoTrends 10
    11. 11. © 2012 InfoTrends 11
    12. 12. Recent Smartphones Sharp AQUOS Phone 102SH Sony Xperia Ion Panasonic LUMIX 101P© 2012 InfoTrends 12
    13. 13. Thousands of Photo Apps – Developers enhancing the smartphone Instagram Photosynth Photoshop Express Picture Effect Magic Pro HDR Filterstorm© 2012 InfoTrends 13
    14. 14. Picture Effect Magic • More consumer choices • Regular updates • Easy to use interface Pro HDR Filterstorm© 2012 InfoTrends 14
    15. 15. Polaroid SC1630 – Android-based Camera© 2012 InfoTrends 15
    16. 16. New Wireless Cameras at CES Samsung WB850F Fujifilm FinePix Z1000EXR Kodak EASYSHARE M750© 2012 InfoTrends 16
    17. 17. Imaging Device Positioning Quality DSLR Compact System Large Sensor Compact P&S>10X P&S<10X Smartphone Hands-freeConvenience Sharing© 2012 InfoTrends 17
    18. 18. N. America Imaging Industry5-year 40M, TabletsCAGR 35% 30% Smartphones 95M, 20% 20% 70M, Photo books, cards, calendars, etc. 14% Images 10% 100B, 10% Cameras 30M, 0% 0% Prints 15B, -3%Units 10M 100M 1B 10B 100B© 2012 InfoTrends 18
    19. 19. Where are the pictures (and video)? Trillions of Images© 2012 InfoTrends 19
    20. 20. Imaging industry driving forces Traditional New Future • Sensors • Mobility • Semantic search • Image processors • Social media • Natural language UI • Optics • Cloud services • Intelligent images • Prints • Apps • Flexible displays • Books, cards, etc.© 2012 InfoTrends 20
    21. 21. EXIF GPS Web Semantic Image Search Facial Recognition Social Media© 2012 InfoTrends 21
    22. 22. Two important innovations in 2011© 2012 InfoTrends 22
    23. 23. Watson beats the best at Jeopardy!© 2012 InfoTrends 23
    24. 24. What can I help you with?© 2012 InfoTrends 24
    25. 25. You can help me with this …© 2012 InfoTrends 25
    26. 26. Closing Thoughts • Keep investing in the Traditional imaging industry forces • Align your imaging business with the New industry forces • Think deeply about opportunities & impact from Future forces • Make it simple and fun to capture and share life experiences© 2012 InfoTrends 26
    27. 27. © 2012 InfoTrends 27