Tuesday, August 13, 2013

Who's killing camera companies?

The Wall Street Journal Tuesday noted the financial difficulties faced by the world’s two leading camera makers, Canon and Nikon, sold 44% of the world’s cameras last year — pocket cameras, point-and-shoot, and SLRs. For these Japanese makers, Q2 sales of “compact digital cameras” (presumably all non-SLR) are down 26% and 30% respectively. Revenues from SLR systems (cameras, lenses, accessories) are also down, but less sharply.

Author Aaron Black are right to say “there may be more pain to come.” I particularly worry about Nikon, and not just because 20+ years ago I switched from Canon to Nikon after my insurance company (with the help of a burglar) gave me a chance to replace my manual focus system with an autofocus one.

Nikon was once the pre-eminent maker of SLR cameras for professional press (newspaper and magazine) photographers, of which I was briefly a member. You don’t need to a front page headline on a dead tree paper to know that this is a declining market that’s never coming back.

More seriously, Nikon is far less diversified: for it, the WSJ says that cameras make up 78% of revenues for Nikon (which also provides semiconductor lithography equipment) but only 40% of revenue for Canon (which makes copiers, laser printers and medical imaging). So if stand-alone camera revenues go to zero, then there won’t be much of Nikon left. This may be delayed by attrition of its Japanese camera rivals — Olympus, Konica Minolta, maybe Sony — but the end result is the same.

My UCI students predicted 11 years ago that cameras would supplant video cameras and smartphones would supplant cameras as digital convergence took hold. But there’s more to this story than just smartphones. I think the camera makers bear their own share of responsibility, since they seem to have stopped the wave of innovation that drove camera sales for at least 50 years.

In the 1960s, interchangeable lens SLRs supplanted the earlier rangefinder designs, due to their inherent accuracy (particularly for wide and telephoto lenses). In the remainder of the century, it was computer-aided automation that made (technically correct) photos nearly effortless, as SLRs acquired zoom lenses while adding auto-exposure, programmed auto-exposure, auto flash, auto-advance and auto-focus capabilities. Ease of use both broadened the market to the average consumer, although the zoom point-and-shoot cameras gradually offered most of what people need for a fraction of the price.

In this century, sales were driven by the shift from film to digital, and then the increasing quality of the digital image. My first digital SLR, the (Nikon-compatible) Fuji FinePix S1 Pro, had a 3 megapixel sensor. Last week, a houseguest showed me his 36MP Nikon D800, which exceeds the detail provided by National Geographic’s 20th century benchmark, Kodachrome 64.

Most people don’t need better resolution, or at least won’t spend $500+ to supplant their 10MP camera with a 20, 30 or 40 MP one. Camera resolution seems to be increasing faster than the size of “hard disks” (i.e. solid state disks) on computers, fueled in part by a shifts from desktops to laptops, laptops to notebooks, and notebooks to tablets (and thus a reduction or cap on storage space). And smartphones will always be better for emailing, texting or tweeting photos than cameras are.

So what can camera makers do to cause people to purchase a stand-alone device instead of a smartphone? Or if they can’t beat ’em, can they join ’em, e.g. as a lens supplier to smartphones (as Zeiss has done in providing lenses for Nokia and soon Sony).

Over the next decade, I think it should be possible to drive one more round of upgrades. I predict than in 10 years, one (but not both) of these two companies will still be developing new products to sell to loyal (i.e. locked in) customers of its SLR systems.

Saturday, August 10, 2013

To overthrow liberty, start with free speech

Excerpted from a post Friday at the Cato Institute blog:

Cato Makes Dick Durbin’s Enemies List
by Ilya Shapiro

As reported on the Wall Street Journal’s editorial page and picked up by the Chicago Tribune among many others, Senator Dick Durbin (D-IL) has been sending out letters to anyone he has determined to have funded the American Legislative Exchange Council since 2005.

Durbin … is now seeking to shame anyone ever associated with ALEC.

That includes Cato. Earlier this week, we received a letter from Durbin [similar to those received by companies] …

Our president John Allison has responded to Durbin with a letter that I’ll quote in its entirety:
Dear Senator Durbin:

Your letter of August 6, 2013 is an obvious effort to intimidate those organizations and individuals who may have been involved in any way with the American Legislative Exchange Council (ALEC).

While Cato is not intimidated because we are a think tank—whose express mission is to speak publicly to influence the climate of ideas—from my experience as a private-sector CEO, I know that business leaders will now hesitate to exercise their constitutional rights for fear of regulatory retribution.

Your letter thus represents a blatant violation of our First Amendment rights to freedom of speech and to petition the government for a redress of grievances. It is a continuation of the trend of the current administration and congressional leaders, such as yourself, to menace those who do not share your political beliefs—as evidenced by the multiple IRS abuses that have recently been exposed.

Your actions are a subtle but powerful form of government coercion.

We would be glad to provide a Cato scholar to testify at your hearing to discuss the unconstitutional abuse of power that your letter symbolizes.


John Allison
The article says Sen. Durbin is a graduate of the University of Chicago Law School. It seems like he slept through constitutional law, or at least skipped that part about what the Founders intended when they created the Declaration of Independence, the Constitution and (especially) the Bill of Rights.

There are dozens of quotes available to illustrate the original intent of the Constitution. Here’s one from Ben Franklin (suggested by DaveG) as reported by Sourced Quotes.com:
Without Freedom of Thought, there can be no such Thing as Wisdom; and no such Thing as public Liberty, without Freedom of Speech; which is the Right of every Man, as far as by it, he does not hurt or control the Right of another …

This sacred Privilege is so essential to free Governments, that the Security of Property, and the Freedom of Speech always go together; and in those wretched Countries where a Man cannot call his Tongue his own, he can scarce call any Thing else his own. Whoever would overthrow the Liberty of a Nation, must begin by subduing the Freeness of Speech…
— Benjamin Franklin, July 9, 1722
Note to regular readers: due to the crush of work, I’m behind on blogging on key topics but hope to catch up soon.