The dpreview Interviews

dpreview has been running a series of interviews with Japanese executives that were made at CP+. For a change, these short interviews are illuminating some interesting things. Either the Japanese opened up more than usual, dpreview asked good questions, or both. Kudos dpreview.

I generally don't bogart other sites' content and just point to it if I consider it interesting or useful, but given my recent posts on the state of the camera market, it seems appropriate to make some comments about what some of the Japanese execs told dpreview.

Here's the full set of interviews so far. Go read them on dpreview and then come back for some commentary.

Let's start with the Panasonic interview. One thing you should know about the comment on the "limits of resources" remark. This might not be what you think it means. Panasonic earlier this year acknowledged that users had asked for focus peaking capability on the GH3 and they promised to look into whether they could offer it. We now have the answer: no. But "limits of resources" could mean simply space in firmware. Internal memory is not infinite. The firmware usually goes into a flash EPROM, and you generally leave yourself a little extra room so that you can provide updates. Adding new features takes up more space than just fixing an error (especially simple errors like wrong words or values). In one case, Nikon had to remove a feature to add a feature in a firmware update. So it very well may be that the way Panasonic would have to implement focus peaking wouldn't fit in the space they have left in the GH3 memory. 

This, of course, brings up the prioritization of features problem. The Japanese camera makers prioritize feature lists based upon their thoughts and that's what's in the firmware. But what if you're a user that doesn't need and will never use the X, Y, and Z features but would like focus peaking? Well, you're out of luck. Your feature got prioritized too low. Canon cameras are a little unique in that they can execute "firmware" out of storage cards, which is how all the Canon hacks are happening. Maybe it's time we demand more extensibility in firmware and the ability to have external storage additions.

I was a little disturbed by the "if we can sell 100,000 or 200,000" comment about large sensor compacts. Hmm. Fujifilm sold way more X100's than that at a much higher price than Panasonic hypothesized they'd have to charge. Frankly, if they don't know if they can sell 100,000 units of such a camera, they have bigger problems than they think (e.g. marketing, distribution, and sales). 

Link that last bit with "Our first thought was that the people who would want our [mirrorless] cameras were step-up users from compact cameras." The Japanese centric view of the world is hurting the camera companies. Europeans like different things than Americans, who like different things than the Japanese. The Japanese auto companies eventually figured this out (as did the Europeans), and tackled the American market by establishing real subsidiaries that talked to and designed for Americans. I've long written that the camera companies are far too isolated from their customers, and this remark was just another example of it. If you know your customers, you can figure out what they'd really respond to. 

Take, for example the line "But we also sell many camera bodies to step-up users and they don't buy other lenses." Doh! Is someone at Panasonic doing a head slap after seeing the "if we can sell 100,000" comment and the "they don't buy lenses" comment? They should be. Those thoughts are connected. Why would you try to sell an interchangeable lens camera to someone who doesn't buy lenses? Far simpler to sell them the large sensor compact: take a GF5 and put the 14-42mm X lens permanently in it as a retractable lens and you have the camera that step-up user really probably wants. Given that we're seeing the GF5 and lens selling for US$400 and less these days, and you have another head slap. 

I also have to take exception to the "selling image quality to users is complicated" statement. Why does a smartphone user (or a compact camera user) look for something "better"? Those customers know what sucks: focus, low light performance, printing large, can't see small subject 100's of yards away because I'm sitting way up in the stands. If you can't market the solutions for those things, you don't belong in the camera business. Just saying.

I thought Terada-san's remarks (he's Olympus' product planning manager) were more focused and to the point. He is indeed right that the OM-D E-M5 is a strong topic of conversation amongst serious camera users in the US and Europe. Maybe the buying hasn't been a boom, as he notes, but people are aware and that's the first step to selling them. I also liked that he recognized that "other manufacturers aren't targeting…those people." He's right (well, the GH3 sort of does, but that's an allied partner, not the enemy competitors). 

The talk about the 45mm as a step-up lens at the low end was a bit confusing to me. I'm not sure that's happening because it is 45mm, but because it's the least expensive of the fast lenses. People are still sampling and beginning to build mirrorless systems, so cost is definitely a factor in something's success at the moment. You don't drop your DSLR system and buy an entirely new system all at once: too much cash-flow out. Give the mirrorless user some affordable enticements (and the 45mm f/1.8 is definitely that), and they'll sell. 

"we have to provide a product for users with SHG and HG lenses." No, it's worse than that: there's a lot of hanging SHG and HG inventory at cameras stores (and I suspect on Olympus' own shelves). Moreover, some of those SHG and HG lenses could solve things for some of those DSLR type users moving over to mirrorless. I'm happy to hear that they realize that and want to do something about it. That 90-250mm really appeals to me, for example, but not as things currently sit. 

I suspect that the statement from Casio that "penetration rate of compact cameras is already very high" is a Japanese-centric view of the world. Over the last ten years, 814 million compact cameras have been sold. Less than a billion. There were more cell phone contracts than people on the planet in that time frame. That's market penetration. The problem is that cell phones now include competent cameras in them, meaning that to sell a standalone camera you have to do more than make a competent one, it has to distinguish itself in some way.

The smartphone market itself is rife for a "Quickcam" entry, too, which is just going to make the camera company's problems worse. What do I mean by that? Well, when we designed the Quickcam one of the key phrases in my marketing requirements document was "the fewest number of parts to get the image sensor data into the [at the time] Mac." The computer had plenty of computing power to do the pixel level stuff. We just had to get those pixels over there. As it turned out, the answer was 28, which was why the Quickcam was able to be sold at US$80 when it appeared. 

The same thing is possible with smartphones, too, as I've described previously on take a larger image sensor (say 1/2.3"), add a lens, and now what's the minimum number of parts you need to have the smartphone do all the heavy lifting? Not many. A connector to the dock connector, some basic sensor support circuitry, the communications circuitry, and that's it. Add a case that swivels in the dock and then the rest is software. So when Nakayama-san says "smartphones can't offer the image quality of a compact camera" he's wrong, at least in the future tense. In the past, his statement would be true. But there's almost no barrier to stop the smartphone makers from moving forward and taking that little "protection" away from the camera companies. 

I do like that Canon tried a different idea for future compacts (the PowerShot N). Maeda-san is very correct in saying that "new concepts are needed." The problem is that the PowerShot N wouldn't manage to compete with the Smartphone Quickcam I just described: the PowerShot N still needs the smartphone, but it also needs its own CPU, imaging ASIC, battery, and more. And it's still just a 1/2.3" sensor with a lens, which is what the concept I described is, too. In other words, the PowerShot N costs more than the Smartphone Quickcam. That's how you disrupt a major player in a market undergoing change: undercut them.

One area where I would disagree with Maeda-san is in his comments about DSLRs. The notion that APS-C is the right architecture for low light performance (in compacts and EOS M) but not in a serious DSLR is making an incorrect distinction, I believe. There are plenty of semi-pro (prosumer) folk that want APS sensors in a pro-caliber product for two reasons: size and price. It will always be true that a full frame sensor costs more than an APS sensor (which in turn costs more than a m4/3 sensor, which costs more than a 1" sensor, which costs more than a 1/2.3" sensor). Thus, you have a hard time pulling the serious camera price down to the US$1000-1500 mark with full frame sensors. But we know for sure that there's absolute elasticity of demand in cameras: the higher you price it, the fewer will buy it. About US$1500 is the top point of any strong volume in DSLRs, and you'd really want to be closer to US$1000. Thus, by not making pro caliber APS cameras, you arbitrarily reduce your unit sales. 

The danger, of course, is that the "image quality bar" for 90% or more of the market might be able to be served by 1/2.3" or 1" sensors in the future (Panasonic just announced a sensor innovation that gets rid of the Bayer filtration, which portends a full stop gain for any given sensor size). Full frame will have a hard time staying price competitive when that happens, and yes, Virginia, there will be demand for pro 1" sensor cameras, which even Nikon is slowly starting to realize. Bottom line: you build consumer to pro at all viable differentiation points. That's what Apple does with its products (though we have to modify the word "pro" a bit; say instead "entry" to "complete"). It's the right thing to do. Customers actually welcome being able to choose the right product for their needs/wants.

Again, kudos to dpreview. Those interviews produced a good selection of comments from the Japanese executives about how they think about the camera market, something that we non-Japanese don't see every day. 

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