New Business Model for Camera Manufacturers

[dtcls100]

Despite some new and exciting camera developments, the trendlines for camera manufacturers looks pretty grim. Camera sales are in decline, as more and more folks use their cell phones as their cameras of choice. Development costs continue to rise, with the camera companies locked into a digital arms race of one-up-manship against each other and ever speedy digital obsolescence.

In reading some recent threads, including those about the continuing manufacture of the Nikon F6 and Nikon and Sony releasing significant new firmware upgrades, it strikes me that camera manufacturers need to consider a new business model.

Under this business model, camera manufacturers would come out with new models much less frequently, but would offer owners of existing or future models the option to purchase not only firmware upgrades, but hardware upgrades for a fee for a defined period of time. That option could be paid upon purchase at a discount or at some later time at full price. Under this business model, companies would be incentivized to come out with more regular and significant firmware updates to add significant new features to their camera models. Likewise, camera companies could start offering upgraded hardware -- such as making the Nikon F6 compatible with Nikon's latest E-lenses (with electronic aperture), updated AF modules, etc.

The benefits to consumers would be pretty clear. First, the updates likely would be cheaper than buying an entirely new camera and essentially give you the features of a new camera. Second, consumers would not have to worry about their cameras being rendered obsolete within 2-3 years. Third, consumers' brand loyalty would be rewarded. Fourth, customers would still retain the familiar handling and features of their existing cameras.

Cont'd in next post --

 

[dtcls100]

The benefits to the camera companies also would be meaningful. First, under this model, the market viability of a given camera model could be extended considerably, thus increasing the period of time for the companies to recapture their development costs and earn profits thereon. Second, this new business model would likely decrease development costs, as developing firmware and hardware upgrades for existing cameras would likely be less expensive than developing an entirely new camera model. Third, marketing costs likely would be reduced, as camera manufacturers could better target their marketing of the upgrades to existing owners/users of the cameras in question, as opposed to marketing to the general public (most of whom won't pay alot for a new camera), via email and contact information obtained through warranty registrations.

Cont'd further in next post

 

[dtcls100]

The camera manufacturers would also enjoy increased brand loyalty, as customers would be less likely to switch brands if they know that meaningful updates and upgrades to their cameras will be available in the future on a regular basis. Indeed, by having customers pay a discounted subscription fee to have regular upgrades made available, the camera manufacturers would be following the highly successful business model of Amazon Prime in locking in customers. The manufacturers' revenue streams would be more predictable and stable, as opposed to being based on the uncertainty of how a new model will be received.

There also would be significant environmental benefits, as there would be far less disposal of used cameras as being obsolete.

Potential problems with this new business model? Of course, some exist. Companies would have to reorganize their resources and staff. Certain hardware updates might not be feasible to existing models or to cameras that have been damaged. However, the hardware updates could be limited to specific models that are more amenable to, and cost effective to develop hardware updates for -- being of more modular construction and manufacturers could condition updates on the cameras being in decent shape -- and potentially charge for necessary repairs. This could encourage consumers to opt for more expensive upgradeable models, as opposed to cheaper models. Also, this proposed business model doesn't mean that camera manufacturers would stop developing new cameras -- just that they wouldn't have to do this so frequently.

Cont'd in next post

 

[dtcls100]

The viability of this proposed business model turns on how much customers might be willing to pay for this upgradeability path. For me, I would certainly be willing to pay at least a couple of hundred bucks for such upgradeability. The cost of the upgrade options could be offered ala carte, with specified prices for hardware upgrades, while firmware upgrades offering new features could presumably be included at a much lower price.

Some people will undoubtedly object to the notion of paying for firmware updates, as they typically have been offered for free. However, this ignores that most companies traditionally have offered firmware updates to fix bugs (which would presumably continue to be free), while offering few to no significant new features/upgrades (excepting Fuji and more recently Sony and Nikon). This would incentivize the manufacturers to offer more frequent and regular firmware upgrades adding new features. I certainly would be willing to pay something for this. Others who don't want to pay would be left in no worse a position than before.

Thoughts?

 

[Sumarongi]

Thoughts?

I agree with you, I would even say that planned obsolescence, at least in the forms invented during the 20th/21st century, *is* an obscenity —— and: good old-fashioned sustainability *must* return, if mankind wants to have a future worth living!

 

[Ko.Fe.]

Cameras becomes obsolete in 2-3 years only at forums and only among small group of those who are not capable to take good pictures, but still wants to be noticeable.

To understand and suggest business models for camera manufacturers you need to skip forums bias, because gearheads don't represent significant part of the camera owners.

 

[YouAreHere]

I don't think any of the existing camera manufacturers would buy into your arguments. They are entrenched in their way of doing things which have worked for how many decades now. It would take a new manufacturer to come along set up as you envision it and rattle their core. Think Tesla vs everyone else. Without Tesla would EV be where it is today?

 

[Mcary]

Cameras becomes obsolete in 2-3 years only at forums and only among small group of those who are not capable to take good pictures, but still wants to be noticeable.

To understand and suggest business models for camera manufacturers you need to skip forums bias, because gearheads don't represent significant part of the camera owners.

Agree!

After all if cameras become obsolete in 2-3 years why is there such a large used camera market? Simple while some people have or feel the need to own the latest and greatest there are plenty of people that don't and for whom a camera can give many more years of use beyond the so called 2-3 year obsolete date.

 

[rjstep3]

@dtcls100

I think you are way too late. It always strikes me when I go on holiday to famed holiday spots around the world, the number of cameras used by people is declining - nearly all of them use their phones, some their tablets, but the point is ALL of them are happy with the results.

They have absolutely no need for anything fancier, or more elaborate, or more demanding. The number of DSLR's I see now is minimal - it is nearly always something minimalist and the DSLR's are reserved for the true enthusiast. Take my wife for example: she just uses an old Apple phone, she knows it doesn't give her much control, not even depth of field, but that's ok for her general needs of recording places she's been to.

As for film cameras - I am always the only one around.

 

[Archlich]

Anyone who had attempted (or dreamed of) building a car from scratch would know that the cost of buying all the parts is easily more than ten times the price of a new car. Double or triple that when you factor labor and logistics in.

I assume it's same for camera, which is even more integrated than cars. Under your model, anyone who want a decent camera would simply end up paying a lot more than buying a whole camera in the long run. You can argue that those who have no need for a "decent camera" could save money, but they would be using phones in the first place.

This aspect will certainly be exploited further. Software companies has been doing this for a while - instead of selling you a complete copy they ask you to subscribe. To constantly tease you with updates. To hint that the next is always the best. To encourage discontent, so they could squeeze the most out of your purse.

Personally I've had enough. Imagine your camera coming that way - updating piece by piece and month by month...being bombarded by ads like "$49.99 to upgrade the highest shutter speed to 1/16000" or "$199.99 ISO booster pack special for the perfect holiday pictures"...

I'd rather have it the simple way.

 

[michaelwj]

Cameras becomes obsolete in 2-3 years only at forums and only among small group of those who are not capable to take good pictures, but still wants to be noticeable.

To understand and suggest business models for camera manufacturers you need to skip forums bias, because gearheads don't represent significant part of the camera owners.

@dtcls100

I think you are way too late. It always strikes me when I go on holiday to famed holiday spots around the world, the number of cameras used by people is declining - nearly all of them use their phones, some their tablets, but the point is ALL of them are happy with the results.

They have absolutely no need for anything fancier, or more elaborate, or more demanding. The number of DSLR's I see now is minimal - it is nearly always something minimalist and the DSLR's are reserved for the true enthusiast. Take my wife for example: she just uses an old Apple phone, she knows it doesn't give her much control, not even depth of field, but that's ok for her general needs of recording places she's been to.

As for film cameras - I am always the only one around.

I think the proposed business model has two problems, highlighted by the two posts quoted.
1. Not many people buy cameras anymore. Their phone is more convenient and easier to take an acceptable photo and then share it with friends.
2. Of those that do buy a dedicated camera, only a tiny fraction care about the next model or updates, and would definitely not pay for updates.

Take my parents for instance (75 years old). They went to Africa, bought a travel style superzoom. On return they took the camera to a printing kiosk and printed everything on 4x6, and then stuck them in an album. They only even look at cameras again when it either breaks or is stolen. At home they use their phones, the travel camera is for travel.

The only way for the camera companies to survive is to diversify into related industries to the point where cameras are a hobby (Fujifilm and a few others (Ricoh?) are in this position), and move to higher end, lower volume products (they're all doing this now). Volumes will continue to drop, new releases will come further apart (they'll need to be significantly better), and it will cost more.

 

[Doug]

Consider whether any camera manufacturers have offered hardware upgrades in the past... internal ones... Would different film/digital backs and alternative finders/prisms count?

I can think of two examples. First, after Leica introduced the M8.2 to replace the M8, they offered to upgrade three hardware items... the frameline mask, quieter/slower shutter, and the LCD glass. Was not inexpensive, though there were discounts for upgrading two or all three items at the same time.

Second example... Pentax brought out a new premium dSLR camera, the K-1. After a few years it was replaced by the improved K-1 Mark II. For a price of about 1/3 the camera cost, and for a limited time of 6 months or so, they offered K-1 owners an upgrade path. I believe the upgrade was just the main electronics package, with significantly attractive improvements.

 

[al1966]

The problem with such an approach is the sheer amount of large scale integrated parts in the cameras. The makers would have to make the internals in such a way as to speed up the replacement of boards and it is questionable that the cost of having a new board would be worth it for the end user. It would more than likely end up that the cost of upgrades would be close enough to the final cost if the older camera was sold and subtracted off the cost of the new model. It does not take into account those that are quite happy to buy last years tech considering most recent 5+ years cameras are exceptionally capable machines. The main reason I sell off a camera and replace it is the number of shutter actuations is within 10k of what seems to be its life span, I then get another recent body to use. The K1 is an example of this, people were able to sell the mk1 and get the new one for near enough the upgrade cost, they then got new everything. I am not sure users would be too pleased paying for firmware unless it was offering something radically better or different from what they already have. The makers need to be making the models a longer term proposition and perhaps integrate updates into the pricing of them. They will not be able to get round the shrinking market 10 or so years ago the jumps in quality were significant now its much smaller between generations, its a pretty mature product.

 

[ruby.monkey]

The trend for all digital devices (Apple is a pretty extreme case in point) is to design them for cheapness of manufacture, not serviceability or upgradeability. Adding major manufacturing costs to a camera in the vague hope that the owner will do something other than just replace it wholesale a couple of years down the line, is a great way for a company to go bust.

 

[rjstep3]

I very quickly got fed up with the digital marketing model - photography was taken over by IT, and that means shifting kit.

I come from the days when an entire family only had one camera (we were lucky enough to have an Oly 35RC as our last camera), now the manufacturers can only make money by pumping out new cameras year after year, with exciting new features (higher ISO's, yet more megapixels).

The market needs to settle down - we will see some go out of business, no doubt about it. We will also see camera phones get better and better until a proper camera will be the preserve of the prosumer or professional only, and will be priced accordingly.

 

[jsrockit]

This model sounds like a camera geek’s dream and not something manufacturers would be interested in. The technology is moving too fast still...

 

[Out to Lunch]

A realistic proposal today? No. Unreasonable? Not at all.

All of the major camera producing companies are listed on the stock market and all of them will have to show short-term gains, or lose value.

If you are able to convince the market that a long-term vision will yield higher profits than a short-term vision, you're in business...maybe...don't count on it.

 

[willie_901]

Firmware yes; hardware not so much

Firmware yes; hardware not so much

...
Under this business model, camera manufacturers would come out with new models much less frequently, but would offer owners of existing or future models the option to purchase not only firmware upgrades, but hardware upgrades for a fee for a defined period of time.

...Likewise, camera companies could start offering upgraded hardware -- such as making the Nikon F6 compatible with Nikon's latest E-lenses (with electronic aperture), updated AF modules, etc.

This business plan's benefits for manufacturers, consumers and the environment are significant.

The problem is hardware upgrades are not feasible with existing design, engineering and manufacturing processes. One exception is lens compatibility.

The primary candidates for hardware improvements are sensor assemblies, CPU speed and assembly language based menu systems.

CPU speed is important for improving AF performance. More sophisticated AF algorithms that increase accuracy and versatility are only useful if AF speed remains high. CPU performance is a key component of AF speed. Very few devices, if any, sort support consumer replaceable CPUs. Advances in lens AF motor technologies also increase AF performance. Is it practical to design lenses with upgradable AF motors?

Replaceable sensor assemblies have been discussed for years. I have no idea if consumer replaceable sensor assemblies could be practical.

Cameras already use assembly language. So, increasing the efficiency of assembly language code is possible and it is inexpensive to implement these improvements via firmware updates. Some brands offer these improvements for free.

In principle, I think it could be practical to offer factory installed hardware upgrades. There is no reason a just-in-time upgrade process could not be used. Consumers would place a deposit for the upgrade(s). Shortly before their slot opened the factory would send a shipping kit to the consumer. This would minimize the inconvenience of being without the camera for extended periods of time. Compared to consumer-installed upgrades, factory module upgrades would require less investment in camera system and manufacturing redesigns. But the costs would still be high.

It seems implementing this business plan would require significant investments in camera design and manufacturing infrastructure. More critically, it would also require a major change in corporate cultures. Look how long it took Nikon and Canon to develop competitive mirrorless interchangeable lens cameras (MILC). Would manufacturers have to hire design and engineering staff with the skills required for replaceable hardware modules?

This business plan is a forward-looking idea. I think it is at least a decade ahead of its time.

 

[jarski]

... The technology is moving too fast still...

This was my thought as well when reading op. There was one camera where sensor&lens module was swappable from rest of the body, iirc it wasn't huge success.

 

[DHK]

It’d be nice to have modular parts- ie a back that can be swapped with a newer sensor/ black and white sensor, Bayer, etc.