Recent Trends in Technology-Driven Companies -Part 4-

By Hajime Yamada (GLOCOM)

Conversion from film cameras to digital cameras is moving ahead rapidly. In this issue I will report how some companies have dealt with this sharp transition toward digital cameras.

In Japan, the scale of the market of digital cameras overtook that of conventional cameras in the first half of 2000. This trend has been continuing since then. According to a survey by Japan Camera Industry Association, the domestic and exporting shipment of cameras amounted to 122 billion yen for the first half of 2001, and that of digital cameras totaled 221 billion yen for the same term.

The reasons for such a sharp expansion of the digital camera market include better quality images, a great variety of accessories including printers, and spread of personal computers and the Internet.

In 1997, when the conventional camera market was still thriving, a little more than four million compact cameras were shipped domestically. Twenty-three percent of the shipped compact cameras were manufactured by Fuji Photo Film Co., Ltd., and the rest of the market was shared by those made by Canon Inc., Olympus Optical Co., Ltd., Minolta Co., Ltd., and Konica Corporation, in this order. In the same year, about 800 thousand single-lens reflex cameras were shipped out. The market share of 37 percent by Canon was the largest, followed by Minolta, Nikon Corporation, Asahi Optical Co., Ltd., and Olympus Optical.

In 2000, the domestic shipment of digital cameras numbered a little less than three million. Fuji Photo Film had the largest share of the market, 28 percent, followed by Sony Corporation, Olympus Optical, Canon, and Casio Computer Co., Ltd..

A comparison between the camera market in 1997 and the digital camera market in 2000 shows that such companies as Minolta, Nikon and Asahi Optical got a late start. However, Sony and Casio Computer are becoming successful in the digital camera market.

The companies stagnating in the digital camera market such as Minolta, Nikon, and Asahi Optical are the leading companies of the camera industry in Japan for a long time. After World War II the camera industry in Japan had grown rapidly, and these companies are the ones that had established the status of world brands. On the other hand, Sony and Casio Computer are not camera manufacturers but electronic appliance manufacturers. That means, in accordance with the shift from conventional cameras to digital cameras, camera makers are retreating and electronic appliance makers are on the rise.

Around 1996, the changeover to Advanced Photo System (APS) started in the camera industry. The main characteristic of APS is a simplified way of loading films, which was quite complicated with the previous type of cameras. Also, a service called index printing, which prints all the pictures of a film on one sheet of photographic paper, was started. In short, APS was a new product that improved cameras. The camera industry hastily followed it. Each company marketed new products, and in 1997, the ratio of APS to the domestic shipment was said to have reached as much as 37 percent.

On the other hand, technical innovation of digital cameras had rapidly progressed in the same period. In the beginning, digital cameras had only a limited number of picture elements (pixels) and could produce only rough images. They were sometimes called toys. Since then, however, technology development has advanced to create digital cameras that have more than two million pixels, and people can enjoy digital pictures as fine as the conventional ones. Moreover, it became possible to store photographed images in personal computers and to edit them freely. Exchanging images with friends through the Internet also became possible. In short, digital cameras have brought about a product innovation in the camera industry.

In the camera industry, those companies that failed to follow product innovation suffer and are deprived of their market by the newly joined companies who took the advantage of this opportunity.

For example, Sony joined and succeeded in this trade, and regards a digital camera as an input unit to share images with family members and friends by connecting with the network, rather than as a tool for taking photographs. Sony also put a kind of device on sale that captures pictured images into a game of Playstation. In this case, a digital camera works as an input device for entertainment.

In contrast, Asahi Optical, for example, is taking a different strategy. According to one of the directors who shared views in a newspaper interview in March of 2001, Asahi Optical is considering marketing digital products that are light weight and easy to handle just like the compact cameras that used to be popular once, a high quality type with more than three million pixels, and a single-lens reflex type as well. That means that for Asahi Optical, digital cameras are a new tool for taking photographs. Minolta also reportedly has announced that in order to gain a certain status in the digital camera market they will develop and market a variety of types of digital cameras.

Thus, Sony has a basically different strategy from Asahi Optical or Minolta. Companies having been successful in the camera industry regard digital cameras only as new types of cameras. The demand of the market cannot be captured in this way. Only such companies that can propose a new concept as Sony can compete and win in the market. The case of digital cameras is a management lesson at a period of rapid technology innovation.