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Canon and the Disruptive shift to Digital Imaging


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How Canon survived and prospered in the shift to digital photography.

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Canon and the Disruptive shift to Digital Imaging

  1. 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  2. 2. As we know, the digitalrevolution has swept throughthe camera industry over the last decade.
  3. 3. It has popularizedphotography in a way that we could never have imagined.
  4. 4. Many cameramanufacturers havesuffered greatly in this shift…
  5. 5. Hasselblad was in deep trouble.
  6. 6. Konica left the industry after trying to survive through a merger with Minolta.
  7. 7. Polaroid is also resting in peace.
  8. 8. And so was Leica.
  9. 9. Agfa went bankrupt in 2005.
  10. 10. Kodak have huge problems.
  11. 11. Contax died.
  12. 12. Bronica died.
  13. 13. When film died, Ilford died.
  14. 14. However, some companies have prospered from theshift to digital imaging.
  15. 15. So far, Canon is one ofthe companies that notonly survived, but also increased their dominance with theshift to digital imaging.
  16. 16. According to the American marketresearcher IDC, Canonsold 12.6 million digital cameras in 2004 and had a market share of 17 percent.
  17. 17. By taking a look at howCanon handled the shift, we can learn a lot about how technologicalrevolutions can be managed.
  18. 18. Let’s go back to the early days of digitalimaging and look at how Canon turned this threat into an opportunity.
  19. 19. The road to the realm of digital imaging has been long and bumpy, even for Canon.
  20. 20. In 1981, the industry was shakenwhen SONY launched their Mavica, a camera that used floppy discs instead of film.
  21. 21. In Japan it was referred to as ’the Mavica shock’. This event put digital imaging on the roadmap.
  22. 22. Many companies invested in and launched their own’Mavicas’ during the 1980s.
  23. 23. Canon formed a task forceto develop a colour Mavicain 1981. It was launched in1986. Fujifilm came up withsomething similar in 1988.
  24. 24. Canon’s RC-701 which waslaunched in 1986 cost 3000dollars. Needless to say, atsuch a price point it did not reach any massmarkets.
  25. 25. None of the Mavicastyle cameras lead to any great success.
  26. 26. The Mavica was simply not theway forward to digital imaging.
  27. 27. But Canon had learnt a lot about digital imaging by entering at this point.
  28. 28. A lot of internal development had been done and with this competence, it became much easier to follow the advances in the field.
  29. 29. Since the required competence wasdifferent, Canon recruited engineers and managers from electronic companies.
  30. 30. They wanted to do things in-house since it was important to obtain knowledge and renew the resource base.
  31. 31. Digital imaging was developed in a separateorganization that was not subject to the daily internal competition for resources.
  32. 32. However, Canon was not the leading company in digital imaging in the early 1990s.
  33. 33. At this point, some of the firstapplications of digital imaging started to prosper.
  34. 34. Leaf and Kodak among others developed digital backs thatcould be attached to medium format cameras.
  35. 35. One of the first digital cameras was aKodak/Nikon product, launched in 1991.
  36. 36. These backs could be attached toHasselblad cameras instead of film.
  37. 37. It looked like this.
  38. 38. Yes, big and bulky.
  39. 39. Canon never entered this segment. It wasprobably too far away from its core segments.
  40. 40. In 1994, Apple launched the QuickTake camera.
  41. 41. It looked like a pair of binoculars, could store 32 photos and was thefirst camera that could be connected to a PC.
  42. 42. The price? 800 dollars.
  43. 43. Thus, while Canon had entered and explored digitalimaging at an early point, thecompany was not very active in the early 1990s…
  44. 44. It seems that Canon started to invest heavily at exactly the right point…
  45. 45. In 1995 Casio launched the QV10.
  46. 46. This is a landmark event in the history of digital imaging.
  47. 47. It had an image qualityof 0,25 Megapixels andrequired 4 AA batteries.
  48. 48. Not the greatest gadgetmankind has invented.
  49. 49. But the concept ofhaving a LCD screen andthis design turned out to be very attractive.
  50. 50. Canon now realized thatthis was the way forward to digital imaging andstarted to invest heavily.
  51. 51. Lagging behind bothCasio and Sony, it was time to catch up.
  52. 52. Canon established a ’DigitalImaging Business Centre’ andallocated more resources to it.
  53. 53. The Japanese firms worked jointly in an industryassociation to solve critical technical issues.
  54. 54. Moreover, they made sure that the structure was modular, so that eachindividual component could be improved separately.
  55. 55. Instead of fighting battles about standards, each company could instead focus on theproduct and reducing R&D costs. This created a healthy competition - each one differentiated within the defined settings.
  56. 56. The modular, standardized structure also implied that consumer electronics companies could work on each component.
  57. 57. Memory cards…
  58. 58. Image sensors…
  59. 59. LCD screens…
  60. 60. From 1996 and on, Canon kept launchingbetter and cheaper compact cameras all the time under the ‘Powershot’ brand.
  61. 61. Each component was now subject to rapidimprovement.
  62. 62. Once the cameras were goodenough and cheap enough…
  63. 63. … The digital avalanche came into motion…3025201510 5 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
  64. 64. And Canon was now well positioned to benefit from this huge growth.
  65. 65. Back in 2001-02, virtually all myfriends got a compact digital cameraas a christmas gift. Everyone startedto take, send and share photos now.
  66. 66. At this point, Canon spent a lot of money onmarketing, and given that everyone knew the brand, I guess it had a great impact in the christmas rush…
  67. 67. Canon now got rid of all analogue development and grew their digital camera business rapidly.
  68. 68. As the performance of digitalcameras became better and better, it was now time to launch more advanced models as well.
  69. 69. The Canon 1D was one of the first true alternative for professional photographerswho wanted digital cameras. It was mortal to many of the old camera firms…
  70. 70. Portrait and wedding photography used to be synonymous with Hasselblad, Contax, Bronica and Mamiya.
  71. 71. All this changed within only a few years in 2000-2004.
  72. 72. Hasselblad was in deep trouble.
  73. 73. Digital SLR cameras from Canon and Nikon were cheaper, lighter and easier to usethan a mediumformat camera with a digital back.
  74. 74. Most firms in the medium formatsegment were now collapsing asconsequence of what Canon and Nikon had launched.
  75. 75. As the sensors, optics andsignal processing becamebetter and cheaper, Canonnow started to focus more on a completely newsegment – the ’prosumers’.
  76. 76. Prosumers canbe regarded as advancedamateurs with agreat interest in photography that demand more than apoint and shoot camera.
  77. 77. Canon has been very dominant inthis segment which has grown rapidly over the last years.
  78. 78. People who did not even own a camera in the 1990s had becomeadvanced hobbyphotographers.
  79. 79. Photography has beenpopularized ina way that no one could have imagined.
  80. 80. SLR Cameras grew at a stunning rate of 150 percent in 2004, mainly since those targetedpeople who did not have a ’semi- high-end’ camera before.
  81. 81. By 2005, Canon had become the market leader after sixyears of record profits and a fantastic growth.
  82. 82. Unlike all those companiesthat collapsed in the shift to digital imaging, Canon mastered the shift andemerged as the champion of digital imaging.
  83. 83. Why?
  84. 84. 1. Canon entered early and explored digital imaging. Whilethis did not generate any profits, it was absolutely necessary inorder to follow the developments and be able to enter later on.
  85. 85. 2. Timing – entering too early isdangerous since you might bet on the wrong horse. Canon invested heavily after the landmark camerafrom Casio. This turned out to be a perfect timing.
  86. 86. 3. Canon recruited people fromelectronic companies in order to renew the competence base.
  87. 87. 4. The company separated much of its digital development, thereby giving it freedom and preventing that the initiative would be starved of resources.
  88. 88. 5. Canon kept searching for and created new market segments.Compact cameras were often sold topeople who had not owned a camera before and later on the companycreated the prosumer segment. Themarketing investments seem to have been an important reason why people chose Canon.
  89. 89. Image attributions
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