Strategy Sessions: Fujifilm

Strategy Sessions: Fujifilm

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Fujifilm North America Corporation was formed on January 1, 2010 by merging Fujifilm USA, Inc., and Fujifilm Graphic Systems USA. The merger will bring together five operating divisions: photo-imaging products and services; consumer digital cameras; motion picture films; graphics systems products and services; and, effective April 1, 2010, the Canada division.

I spoke with Ray Hosoda, the newly appointed president and CEO, as well as with Manny Almeida, vice president and general manager of the Imaging and Electronic Imaging divisions, and John Meyer, vice president, Marketing/Equipment for the Imaging division, about what this means for the company, the commercial pro labs and the photo specialty network.

JG: Ray, what does this merger mean for Fujifilm?

RH: Fujifilm products and services are increasingly being leveraged across categories and regions. This merger will allow us to be a stronger solutions provider by tapping into a common product portfolio and diverse workforce.
A big advantage is the skills our people can bring to our customers, regardless of where they are—or if they are a printer, commercial lab or a retailer. We have many talented people with diverse technical and marketing skills, working in each of our businesses. A good example of this is John Meyer, who came from the graphics business to the photo business six years ago.

I want to point out that our new company is not being established to reduce our staff size. Our purpose is to strengthen our presence and to take advantage of the synergies that makes us effectively and efficiently serve our customers. However, we will continue to look at the most cost-effective way to run our business.

So, how does this merger affect the global company ?

RH: It doesn’t affect the global organization; in fact, the move is reflective of a global shift throughout the world. The company recently stated that during this fiscal year, Fujifilm would be aligned by region in Europe, North America, China and Asia. When we faced the tough economy in the last couple of years, we saw it as an opportunity for change. We are going to integrate more in the United States to create more synergies. We saw the North American region as being more effective if we took down the walls and became more closely aligned.

John, can you explain what the product grouping for the graphics systems division is and how those products will be brought into the fold?

JM: The market segment where we can really see the greatest synergies is the commercial pro lab market. On this side, our customers have continued to do more printing. They’ve been doing a lot of wide-format inkjet printing. So if there is a commercial pro lab looking for an iGen, for example, we call the graphics partner in that region and we go in together. We’ve been selling the DocuColors and Xerox 700s into those commercial pro labs, but they want to expand a bit. It’s the same with wide-format inkjet; Fujifilm has a very strong presence in this space, and we’re able to bring that expertise together, and offer new solutions to our photo pro labs.

So will the pro labs be offered a different product mix now?

JM: From today, the product mix will not change; what’s available to graphics is available to our commercial pro labs. But moving forward, the synergies between our divisions when we introduce new products and solutions to market will be evident. There was typically a bit of a lag getting new print technologies to the pro labs. We’ll now be able to bring those products to these customers more quickly.

MA: Also, if you look at the commercial and portrait labs, in the past silver halide was their exclusive domain. Today, more and more not only use silver halide, but they may also use inkjet or xerography or they may even use ink to print. Why? Because they’re offering a much more varied range of products; they’re no longer just offering prints. They may be printing yearbooks or baseball trading cards. As the labs have expanded to offer more products, Fujifilm can bring those products to them and we can go in together with one solution.

Does this affect the pro event photographer who is also trying to expand his business in the field?

JM: What we’re seeing right now is a lot of up-sell in printed products, like baseball cards or team photos as an example, or school packages that now include a package of bookmarks and magnets for your locker. We are seeing that going on for all types of photographers out there. In addition, commercial labs are printing things like banners on vinyl, so they’re also expanding into other areas—primarily due to technology.

MA:
I’ll give you an example. At PMA, we’re introducing a new xerography-based product that has an automatic finisher on the back end of it that allows retailers, photographers or labs to create small photo books and folded greetings cards automatically. If an event photographer is looking to expand beyond a 5×7 or 8×10 print, those folks need good production speed. What we’re able to deliver now is a new printer that has an automatic finisher; cards come out folded and books come out stapled and ready to go to the consumer.

How does this new organization help the photo specialty channel?

MA: You bring up something that’s very near and dear to our hearts: by merging the two divisions, we’re now working much closer together. Let me give you an example of how we will be able to help in increasing sales of an already popular product, photo books. We’ve been doing some research, and some very interesting facts about photo books have emerged. For example, producing a photo book (on average) takes a consumer almost five sessions, and usually at home in front of a computer. And many end up walking away from the project before it’s complete because it’s somewhat difficult. So, as an example, we will be putting technology into our digital cameras that allows the tagging of individual images so as you’re reviewing pictures on the back of your camera, you’re tagging images you like for a photo book. When you come into the store, the Fujifilm kiosk will be able to recognize those tagged photos and produce a photo book automatically. All the consumer has to do is choose a theme, and a book will be “suggested” for them. We think that doing synergistic technologies such as this is a way for consumers to print more and to create more products.

Will that be exclusive to Fujifilm cameras and kiosks, or will that eventually be more of an open architecture?

MA: It’s still a little early to tell. Our goal is not to constrain technology; we believe there’s a consumer need in the market, and we would like to see it resolved. This might be just one solution.

As you well know, the photo specialty network still hasn’t fully recovered the printing profits from years past. What kinds of new products, beyond photo books, can they market?

MA:
Our belief is that the photo department is evolving pretty rapidly into a personalized publishing center. A photo specialty retailer who offers prints and enlargements should also be offering folded greeting cards and posters. This can be dramatically profitable for the retailer. Those who have installed systems that enable them to produce these products have given their customers the ability to become more creative. For example, planning a child’s birthday party could include folded picture invitations, a poster at the party, and a photo book as a memory. There are multiple opportunities for photo books alone. We typically think of the leather-bound beautiful 100-page book, but how many of those are consumers going to produce over the course of a year? However, there are other aspects of photo books, such as creating an index photo book for a DVD that contains an image archive. Mini books, softcover books—there are many opportunities in addition to the $80 hardbound book.

It seems there’s some competition in the consumer printing market, between commercial printers, pro labs and photo retailers.

JM:
We believe there’s an opportunity for photo dealers in higher margin products if they think of themselves, and market themselves, not as a photo printer but more as a full-service creative printer. The technology and equipment is available to them, both online and in the store, but in many circumstances they need to reinvent themselves. The same goes with commercial printers; they may be looking to expand their business beyond letterheads and business cards into photo books, because they’re already printers. The retailers who are the most aggressive in staking out their place in their local market will be the winners.

So given the evolving structures of both your company and the retail printing landscape, what is Fujifilm’s advice to capture this new revolution in printing?


MA:
First, Fujifilm has been in the imaging industry for a long, long time, and that includes the graphics arts and the photographic side, and our intent is to support this industry for a long, long time to come. We think it’s important because there is so much turmoil within the industry. We’re fortunate that our company is very strong; we’re a $25 billion company and we spend over $2 billion in R&D. We’re one of the top 25 companies in patent grants. We’re in a very strong position.

Clearly, the imaging segment is challenging, but the second message is that it’s not over. There are special opportunities for photo specialty dealers and the pro labs, but you have to think outside of the box. The customer doesn’t have to process 4×6 prints to see their pictures; they can see them on the back of their cameras. So in order to get them out of the camera, and turn those pictures into profits, we have to be much more creative in the products we produce and sell. The winners will be those who understand the potential and take strides to educate their customers about the new, creative products that are available at their fingertips.

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