Airline Industry

Airline Industry

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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.
According to the Photo Market Association International, the digital imaging market is worth approximately $11 billion worldwide8.

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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
Ć 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 subject¡¦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.

Ć 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:
Ć Megapixel race to slow down
Ć More features being added to hold pricing levels, such as wireless capability
Ć Larger LCD
Ć Larger optical zoom lenses
Ć Orientation sensor
Ć Image stabilization
Ć In-camera flash memory
Ć Dropping prices of memory cards

Five Forces

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 competitive advantages to any manufacturer that introduces a new camera.
Upon first glance, buyers do not seem to have much power since the concentration of this ¡§market¡¨ is extremely dilute: consumers do not collude to buy digital cameras in large quantities but rather, buy them individually in very separate circumstances. We cannot conclude, however, that buyers have little power because they have the option to not buy digital cameras. Clearly, if digital cameras were the only product available that captured still images, the story would be very different. It is precisely because digital cameras are new products that buyers enjoy power in their ability to refuse purchase until digital cameras demonstrate superiority over the traditional cameras to which buyers have easy access. The bargaining power of buyers is thus extremely strong in that they can cause the entire industry to collapse as long as they remain unconvinced of a digital camera¡¦s merit.
The suppliers of digital camera manufacturers
are software companies, technology suppliers, lens manufacturers, battery manufacturers, RAM manufacturers, flash storage cards, etc. Most digital camera manufacturers are likely to prefer cooperating with well-established companies with big names. Secondly, the current standard for image compression is JPEG. Almost all existing software applications support the JPEG file format. This fact will strongly influence the digital camera manufacturers in choosing the storage format for their digital cameras.
New Entrants
The possibility for new entrants is important because it gives a sense of how contestable
The digital camera market is. In a highly contestable market, profit margins can be driven down to almost zero since as long as there is profit to be made, a new firm would enter. Fortunately for existing manufacturers (that are already engaged in intense rivalry), it is relatively difficult for anew manufacturer to enter because of the high fixed and R&D costs involved. However, given the nature of the product, it is possible that other well established electronic companies with deep pockets may enter the market. Specifically, computer companies such as Hewlett Packard may be interested in dabbling in digital cameras to develop imaging technologies that it can later use as a core competency in other products.
Substitute Products
Quite obviously, traditional analog cameras are substitute products. In fact, they are entrenched substitute products. Currently, analog cameras offer superior picture quality over digital cameras. In addition, the price of digital cameras is not yet as competitive that of analog cameras. Because analog and digital cameras are fundamentally cameras, the two will always be substitutable. Digital camera manufacturers need to entice consumers into buying their product by offering not only comparable but superior
price-quality ratios in addition to novel features that analog cameras cannot substitute.



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2. Kodak: History of Kodak: George Eastman (n.d.) George Eastman - the man. Retrieved May 1, 2005, from

3. See Reference #1

4. See Reference #1

5. See Reference #1

6. Hoovers. (2005), Company Overview: Eastman Kodak company history. Retrieved May 2, 2005, from Hoover¡¦s Company Records.

7. See Reference #1

8. Photo Industry 2005: Review and Forecast. (2005). Photo Marketing Association International. Retrieved on May 05, 2005 from

9. Worldwide digital camera revenue to reach $24 billion in 2004InfoTrends Research Group. Retrieved May 5, 2005 from

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ABI/INFORM Global Database.

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18. Nisselson E. (2003, May). Why will wireless camera phones revolutionize the photography industry? The Digital Journalist Retrieved from

19. Digital Cameras: no mobile handset threat posed, yet. Retrieved on April 30, 2005 from LEXIS-NEXIS Academic Universe database.

20. Luff, J. (2004, Aug). New Camera and Lens Technologies. Broadcast Engineering. Retrieved on May 3, 2005 from ABI/INFORM Global Database.

21. United States Prevalence of Consumer electronics technologies and products by Type in number and percentage of households owning them for 2004, and percent change from 2003 to 2004. (2005, Mar 18). EPM Communications. Retrived on May 5, 2005 from Tablebase.

22. Clauser, G. (2004, Feb). Digital Camera Outlook 2004. Dealerscope. Retrieved on May 4, 2005 from ABI/INFORM Global Database.

23. United States Digital camera market by user age group and by gender in percentages from 2002 and 2004. (2004, Jul). Photo Marketing Association International. Retrieved on May 5, 2005 from Tablebase.

24. United States digital Camera Shipment data in units for 2002 to 2004 and forecast for 2005 to 2008. (2005, Jan 10). Lebhar-Friedman Inc. Retrieved on May 5, 2005 from Tablebase.
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