Digital camera industry’s environment analysis

1. Key factors of effect

 Economic environment - because so much of the digital camera industry can
be automated. Having human employees is a luxury in many consumer
electronic fields. If it becomes too expensive, the industry will reduce the
number of senior employees, increase the automated process, and gradually
rehire at lower wages so that the human customer service experience isn't
impacted.
 Market environment - According to the market environment dynamic change,
some companies (include Canon Sony Nikon and Kodak so on) promptly
will provide the accurate market information to the business agent, the
business agent more effective development terminal sale work, the gain
biggest market profit. The creation altogether wins!
 Development of future - While future digital camera progress probably will
tend to be evolutionary refinements rather than revolutionary inventions, the
field is beginning to become very interesting. Most trend watchers and
technology prognosticators predict that digital photography will become, in
an astonishingly short time, as ubiquitous and commonplace as Bird's
Nest/Olympic Stadium, Water Cube and other modern miracles.

Until recently, the primary purpose of a digital camera was to imitate and emulate the
film experience. But just as movies could do and show so much more than a live
theatrical play, digital camera capabilities have gone far beyond film. Their intended
use isn't just to produce static hardcopy prints and transparencies, but to be active visual
communications devices. Within minutes (or even seconds!) of recording a digital
image, a photographer can print a picture locally, use it in a presentation, share it on the
Web, and transmit it over the telephone (even wirelessly).

2. Condition of environment

According to a new study from InfoTrends(is a market information website), the

worldwide digital camera market continues to demonstrate a strong year-over-year
unit growth rate. 2006 sales are expected to reach nearly 89 million units, representing
a 15% increase over 2005.

Even though worldwide unit and revenue figures are on the rise, shipments are
expected to peak soon in North America and Western Europe. Growth in the Asia-
Pacific region, Eastern Europe, and Latin America will offset these declines and
continue to drive growth through 2010. In fact, the Asia-Pacific region is expected to
become the leading region for digital cameras by the end of the forecast period.
The maturation of the Japanese, North American, and Western European digital
camera markets will likely set off a chain reaction of other trends, such as an industry
vendor shakeout, an increased number of repeat buyers, and the practice of designing
and marketing digital cameras for late adopters. Lower camera profit margins will
prompt many digital camera vendors to seek monetary opportunities after the point of
capture, sparking additional interest in viewing, editing, sharing, preservation, and
printing.

3. Industry structure analysis

1) Demand

The worldwide consumer digital camera market is expected to grow dramatically,

from approximately 77 million units in 2005 to about 89 million units in the year
2006. Growth will come from three distinct areas: digital cameras replacing
conventional camera functionality, digital cameras being used in applications that
cannot be handled with film, and the use of tethered digital cameras for home and
desktop communications. Applications that are unapproachable with film include
commercial and general use in such circles as insurance, real estate, education,
diagnostic medicine, security, event photography, e-mail postcards, and so on.

For this obvious growth rate to occur, the industry must apply to the digital camera
market proven principles that have worked in the past. Those consumer demands
entail high image quality, ease of use, flexibility, performance, and low power
consumption all at a price point that is acceptable to the consumer masses.

2) Resources

Almost every company has manufactured, and currently manufactures, a variety of

unique imaging equipment at its Japan facility. More specifically, they are actively
involved in the manufacture of motion picture cameras, lenses, high-speed image
instrumentation cameras, image analysis devices, high-speed video equipment, rugged
video instrumentation recorders, specialized optical instrumentation equipment and
eye-mark recorders. They continue to expend significant R&D efforts, developing
even newer technology in all these product areas.

Fine Precision Processing and Assembly – To achieve the highest marks in product
performance, quality and reliability, the advanced companies have developed a variety
of precision processing and assembly technologies. The latest numerical control
systems are employed to maintain a consistently high level of product quality.
Environmental Testing Facilities – High quality, high reliability and customer safety
are important issues for their technology, especially since their products are used all
over the globe. Some Japan Factories have environmental testing facilities including
temperature-chambers, humidity-chambers, centrifuges, and vibration tables. The
Factories also utilize machines allowing for measurement and inspection at each step
of the production process.

3) Technology

Image Instrumentation technology, the recording and analysis of image data generated
by bodies in motion, has evolved from a film-based camera technology, through
video-based camera technology to a digital camera technology. Some producers
continuously working to improve its capabilities with respect to capturing images of
fast moving objects with constant improvements in frame rate, light sensitivity and
image resolution

4) Development of economy

The Japan Camera Industry Association (JCIA) has published a report on the
shipment of digital cameras for the first half of the year 2001 (Jan - June).

Compared to same period last year

Camera shipment in the first half of 2001 (January - June)

Domestic - Japan Export Total

Digital camera 2,059 (185.5) 3,852 (134.4) 5,911 (148.7)

77,910 (153.8) 142,607 (117.9) 220,517 (128.5)

Top row:’000 of units Bottom row: value 1,000,000 YEN

Figure in (brackets) is ratio % compared to same period last year.

Approximate value per unit (based on figures above):

 Domestic digital camera: 37,800 YEN (US$ 303)

 Exported digital camera: 37,000 YEN (US$ 297)
4. Competition

The exodus of Japan's top camera makers from film to digital is nearly over, leaving
fans of the former astonished at the speed of the transition.

Three major Japanese makers either halted production of film cameras this year or
sharply reduced output to change their focus almost entirely to digital.

Recently, Canon, the world's largest camera maker, said it would stop developing new
models using film. Earlier in the year, Konica Minolta Holdings said it would not only
stop making film cameras, lenses and film but also announced it was making a full
retreat even from the digital photo business and selling its assets to rival Sony.

Stunning the industry, Nikon, a world leader in high-quality camera products, said in
January that it would stop making most models of film cameras to focus solely on
digital. Nikon now makes only two film cameras, the F6 for professionals and the
FM10 for beginners.

What happened next became known as the "Nikon shock". Panicked by the end of an
era, photographers snapped up most remaining models of Nikon single lens-reflex
film cameras

"The shift from film to digital was way faster than we expected," said Kakushi
Kiuchi, an executive in charge of professional photography for Fujifilm at Photo
Imaging Expo in Tokyo.

Market share

Digital-camera market, with sales of 2.15 million units in the first half of 2005 and a
22.1 percent market share. Next up is Canon, with sales of 2 million units and market
share of 20.6 percent. Sony is third, with 1.78 million digital cameras sold and 18.3
percent of the market.

5. Opportunity and threat

For now, Japanese companies are basing their R & D functions and manufacturing of
high-level products, such as the DSLR camera, domestically. Canon, for example,
manufactures its DSLR cameras in Japan. Some companies keep digital camera
production at home to safeguard intellectual property. According to Takatoshi
Yamamoto, assistant director of the Industrial Machinery Division at the Ministry of
Economy, Trade and Industry (METI), the Japanese strategy has also involved the
management of a global-supply-chain, which includes factories in China.

Other companies have divided roles in the production process between Japan and
China. Moving the assembly operations to China is a way to reduce costs. Fujifilm,
besides downsizing its domestic operations, decided in 2006 to shift its entire digital
camera production to China. Up until now, the company had produced over 70
percent of its digital cameras in China. Establishing a mass production system in
China is part of Fujifilm's cost-minimizing structural reform of its electronic-imaging
business. By 2005, Taiwan had secured around 41.8 percent of the global DSC
market. However, 90 percent of its production was on behalf of Japanese camera
makers. Japanese companies are starting to outsource production of low-end models
to Taiwan.

The Japanese domestic market for the digital camera will soon reach saturation.
Market growth is slowing down and the drop in prices is changing the landscape of
digital photography. This presents a challenge for many Japanese companies as they
decide where to invest from now. Until recently, there were rapid advancements in
technology, necessitating huge investments for the development of the digital camera.
But with too many products available in major retail outlets in Japan, consumers have
a hard time selecting a camera.