Airline Industry

INDUSTRY BACKGROUND AND OVERVIEW

Industry: Digital Cameras (Photography)

The digital camera industry is, without a doubt, one of the newest industries in the world. With the first electronic camera being invented in 1981 and the first consumer digital invented in 19951, the digital camera actually traces its roots back to the photography industry. In 1888, with the development of the silver halide film slide and the portable camera by George Eastman2, capturing and recording images has always been popular throughout the history of mankind.

As technology improved, color photos were developed and soon video capture devices were developed that was used to record television images. In 1951, the first video tape recorder was made. It captured live images from television cameras by converting the information into electrical impulses (digital) and saving it to magnetic tape. This was the start of the development of digital cameras. A CCD (Charged Coupled Device) is used in both television/video cameras and digital cameras to sense light color and intensity3.

Digital imaging has since been used by the government in the early 1970s. NASA and the U.S. government both used digital imaging to help the progress of space exploration or spy maneuvers. The private sector also began to deliver the technology to the public. In 1972, Texas Instruments patented a film-less electronic camera. In August, 1981, Sony released the Sony Mavica electronic still camera. It was a camera the recorded the one frozen frame from a video image and then storing the image file to a floppy disc. The recorded images can be displayed on a television monitor or color printer. However, the early Mavica cannot be considered a true digital camera even though it started the digital camera revolution4.

Since the mid-1970s, Kodak has lead the way in inventing and developing several solid-state image sensors that "converted light to digital pictures." In 1986, Kodak scientists invented the world's first megapixel sensor. In 1987, Kodak released seven products for recording, storing, manipulating, transmitting and printing electronic still video images5. In 1990, Kodak developed the Photo CD system that allowed digitized photos to be stored on compact discs6. The first digital cameras for the consumer-level market was the Apple QuickTake 100, the Kodak DC40 camera (March 28, 1995), the Casio QV-11 (with LCD monitor, late 1995), and Sony's Cyber-Shot Digital Still Camera (1996). Since then, the digital camera industry has exploded7.

ECONOMIC CHARACTERISTICS

According to the Photo Market Association International, the digital imaging market is worth approximately $11 billion worldwide8. This market includes document management, graphic arts, medical imaging and photography. In mature markets such as the U.S., Japan, and Europe, the industry is at over capacity thus causing slow growth and possibility consolidation within the industry. In emerging markets such as China and India there is opportunity for growth. There is aggressive competition between the many companies that are in this industry. The worldwide digital camera revenue is estimated to reach $24 billion in 2004, and grow to $31 billion in 2009 according to a study from InfoTrends/CAP Ventures9.

Companies in this market are focused on lower operating costs and increasing manufacturing efficiencies. New digital technologies are playing a large role in the direction of the industry. The industry has the ability to simplify the manufacturing process and reduce the sale of high-margin consumables.

The digital camera market is growing quickly in Asia and Rest of World regions (ROW). The digital camera market in Japan has entered the late majority stage of adoption, and the U.S. and Europe will enter this stage within the next few years. Meanwhile, Asia and ROW will keep growing, up from a combined 10% share of worldwide revenue in 2004 to 33% by 2009. The top five worldwide market leaders in 2004 are, in rank order, Canon, Sony, Olympus, Kodak and Fuji. These companies are expected to remain in the top five in 2005, though their rank within the top five may change10.

The pace of technological change is at a very fast pace. Looking at exhibit1, we can see that the increasing amount of megapixels in digital cameras has steadily increased over the last 8 years of digital camera existence11.

Key Success Factors

Ñ"Ь Digital cameras provide consumers with other features.

First, they allow the consumers immediate access to their pictures without having to wait for the film to be developed in the photo lab. They can even view the picture while the subject is still posing to assure the lighting was correct, or that the subjectÐŽ¦s eyes were open through LCD screens built into some cameras. Images are also immediately available to be printed or sent in digital format over the Internet. Finally, the digital format allows users to edit (eliminate "red-eye" for instance), enhance, enlarge their pictures using PC software.

Ñ"Ь Digital cameras use a photosensitive device to capture and process an image.

This innovation allows the image to be saved in the memory of the camera. The clarity and resolution of the picture, measured in pixels, is based on the size of the CCD.

Industry trends and opportunities

According to journalist Bilbro, these are the future industry trends and opportunities for digital camera makersxx:

Ñ"Ь Megapixel race to slow down

Ñ"Ь More features being added to hold pricing levels, such as wireless capability

Ñ"Ь Larger LCD

Ñ"Ь Larger optical zoom lenses

Ñ"Ь Orientation sensor

Ñ"Ь Image stabilization

Ñ"Ь In-camera flash memory

Ñ"Ь Dropping prices of memory cards

5 FORCE ANALYSIS

Five Forces

Rivalry

Several manufacturers (around fifteen) are jockeying for position in this new market. Currently, no company has been able to establish market leadership, as evidenced by the

relatively even distribution of market share. The race to deliver better quality at a lower price is intense indeed, giving rise to very shortly lived