The CAMERA PHONE MARKET: Imaging Industry Continues to Eye a Way In

The CAMERA PHONE MARKET: Imaging Industry Continues to Eye a Way In

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For the past few years, Picture Business has covered the camera phone market to gauge whether or not retailers will ever be able to capitalize on this popular imaging tool. So far, progress remains slow, but there are trends emerging that suggest this category will be an important part of the mix for both retailers and consumers in the years ahead.

According to Lisa Walker, President, International Imaging Industry Association (I3A), one very significant change is the fact that consumers are willing to pay a hefty price for Apple’s iPhone. “Hopefully, that is the first brick that’s come out of the walled garden,” states Walker. “It’s not clear yet how it’s going to turn out, but it’s really the most significant change and step toward improving the whole situation.” “We’re beginning to believe (camera phones) actually have a strong and vital roll in the industry,” adds Joellyn Gray, Director, Customer Marketing and Research, Imaging Division, Fujifilm U.S.A., Inc. “However, we think it will take some time to develop. Right now, there’s a limitation in the marketplace as (carriers) chase other sexier features for their phones. With that said, I think the consumer would embrace camera phones and the use of them both for printing, image storage and even gift-making, if those phones were available.” Apple’s iPhone aside, Fujifilm’s Gray believes carriers are hesitant to offer high-quality, feature-rich camera phones to consumers because they haven’t yet found a way to monetize it for themselves.

Which companies make money from camera phone pictures—and how—is one big reason the market seems stalled. “Carriers want images to come off the phone over the network,” states I3A’s Walker. “They make it obvious for users to send pictures to e-mail but don’t provide information on how to send them directly to a PC. They want users to go to the network so they can charge money for it. It’s in their best interest, not the consumer’s. Someday they’re going to start doing what’s best for the consumer, but I’m not holding my breath.”

“Carriers often use the (camera) as a loss leader to get consumer subscriptions,” continues Fujifilm’s Gray. “If there was a model where the carriers got a cut on the device itself, it might be of more value to them. If they thought more globally about how they could monetize image storage and move beyond taking their penny per print, etc., they might see the revenue potential and embrace the category more.”

Gray would like to see the industry create a universal camera phone that would work via a variety of carriers. “I think that could play an interesting role in the marketplace. But unless there’s some value in it (for the carriers), it will be difficult to implement.”

Brian Marks, General Manager, Mobile Imaging Group, Kodak, notes that handset people don’t make it easy for consumers either. “They slam components together with cheap little cameras that don’t take good pictures. When Kodak got into the cell phone business, we realized very quickly, if you want to find out what’s going on, you don’t look at the U.S. market, you look at Asia, Europe, and other places (then it eventually gets here).”

It all comes down to comfort levels, notes Muzib Khan, Vice President, Product Management and Engineering, Samsung. “Consumers are getting more comfortable using camera phones,” states Khan, “which is the first important trend. Once people are comfortable taking the pictures, then they’ll figure out how to get them off the phone and print them. Eventually things will work. And, as more people want prints, the printer manufacturers will start to pay attention to that. Those technologies are available, but they’re not all integrated. Once they realize there’s a market, manufacturers will work together. It’s a natural evolution,” he concludes.

CamPhones vs. DigiCams

Although camera phones can’t beat (or even meet) the quality of a digicam, they are cutting into sales of point-and-shoots. According to Kodak’s Marks, the company’s research shows that consumers using camera phones want three things—great pictures (1) that are easy to get off their camera phones (2) that they can do stuff with (3)—the same things they want from their digital cameras.

“There’s a certain group of the population that believes in a convergence device—the ‘always on’ camera phone that’s always with me and allows me to take a picture wherever I am and whenever I need it,” continues Marks. “But we’ll never get away from the fact that when consumers have a wedding, a vacation, etc., they’re going to bring a dedicated camera. It’s going to take a long time for technology to be able to do some of the things high-end digital cameras can do. But clearly, as the camera phone market begins to advance it will have, in our opinion, an impact on the point-and-shoot version of the digital camera segment.”

I3A’s Walker believes camera phones will eat into the lower end point-and-shoot camera sales. “I also think they will make more photographers—there will be market expansion because people that normally wouldn’t carry a camera will have one and start taking pictures.” If they can easily get photos off the camera, make quality prints, etc., perhaps they’ll become photo enthusiasts. “And, if retailers can someday make money off it,” adds Walker, “it will be better for everyone.” However, Walker also believes most people will continue to purchase and use a dedicated digital camera and not replace it with a camera phone.

Even the 18-20-year-old demographic, she notes, which tends to use camera phones more often, will purchase a “real” camera when they get old enough and start having children. At the moment, notes Walker, that market segment sends pictures to friends and online sites like MySpace and FaceBook. “All they care about is sharing with friends, but that’s because they aren’t grown up enough to have serious memory-keeping needs; but they will eventually.”

Turns out, according to research conducted by Fujifilm, that consumers even prefer the one-time-use camera to digital and camera phones as a backup for important occasions when they’re afraid their battery will run out or the memory card will get full. They also prefer single-use cameras for use by kids and for what they perceive as risky occasions such as boating, the amusement park, etc. “That’s because they don’t see the camera phone as a replacement yet,” states Gray, “and so that third choice of volume for one-time-use cameras is still pretty strong.”

As the “camera-as-a-fashion-accessory” trend continues, Gray sees some parallels between camphones and digicams. “Camera phones and digital cameras have a very interesting kind of intersection in this whole notion of being a fashion accessory,” continues Gray. “In the old days of film cameras, the market, at its peak, was about 16 million units, and the average consumer turned over a film camera every 5 or 6 years. Last year’s market in digital cameras was 36 million units, and people are replacing them every 2 to 3 years. They’re really treating them more like a fashion accessory. They’re looking for colors, new features, and more megapixels. I think the things that motivate them to turn over a digital camera are very similar to what will get them to turn over their camera phone.”

New, Smaller Products/Printing

“The bottom line is, after consumers have taken a picture, then what do they do? Their options include printing, e-mail, and online sharing—but none of these options are convenient,” states Samsung’s Khan. “For consumers to really adopt and use these devices there needs to be awareness and common denominators with other users. As more people upgrade, sharing will be easier and more ways to share will be available—but I do believe this is already happening.”

Kahn would like to see user-friendly printers where consumers can attach a camera phone to a printer and automatically get prints. “I believe printers can be improved,” says Kahn. “Even if you have a good quality camera image, it’s horrendously difficult to print. There has to be some initiative from different groups to figure out how to make it simple.”

According to Kodak’s Marks, kiosk, printer and frame manufacturers are all working on ways to make communications from camera phones seamless to the output device. “Not just printing,” he says, “but outputting from one device to another such as a phone to a frame. Each one of those product businesses is working hard to make that almost seamless for the consumer. That being said, from a global standpoint, we’re looking at ways to tie all those resources together.”

So how do you tie in all those aspects to the camera phone user? “When (consumers) use a phone with Kodak technology in it, they have instant access to all of those aspects,” says Marks. “For instance, if I take a picture at a party, I can pick it up on my way home at a retailer because as soon as I took it, it went directly to the retailer. Or, there can be camera communication between a kiosk and a phone. For example, if I walk into a supermarket and pass a kiosk, it actually pages me and asks ‘Do you want to off-load those pictures, print and/or send images to someone, while you’re shopping?’ because it knows I have a Kodak technology phone.”

“We do have a mobile phone service with Sprint, Verizon and AT&T, as well as Microsoft Windows XP Vista,” notes Fujifilm’s Gray. “We’ve created a network where consumers can send their images to be printed (via the company’s “Get the Picture Service,” carrier Web sites and handsets). We hear very good comments from retailers on the large volume of images they’re receiving. Could it be bigger? Absolutely,” says Gray. “In the meantime, Fujifilm continues to research and monitor the trends as it’s an area of focus for us.”

As the market develops, continues Gray, there might be more demand for storage, printing, and gift items produced from camera phones. “We did some research on our Your Stamps Product (postage with consumers’ images), and the group of people classified as camera phone users had a higher purchase interest. I think it’s because they easily translate a small picture to a small product. So, I think there’s a world of new products that could develop as people develop more ease-of-use with their camera phones.”

According to Kodak’s Marks, educating the consumer is the biggest hurdle. “It always is,” he states. “My pictures stink, I can’t get them off my phone, and they’re really hard to work with,” are the three major complaints Kodak hears from consumers about camera phones. And so, solving these problems is Kodak’s main focus.

Some help is already here in the form of an easy consumer guide. Retailers can download The Camera Phone Print Guide at www.pmai.org, which was distributed by the Photo Marketing Association and Moblico, at PMA. Retailers can print the guide for customers, which tells consumers what features to look for in a camera phone such as Bluetooth, in order to get the best picture quality. It also explains megapixels and PictBridge functionality, and makes unique print suggestions such as having images made into mouse pads, keychains and the like.

Little Action for Retailers

“Photo retailers still aren’t making money on this market,” states I3A’s Walker. “But as it matures (and with the older market), there is opportunity for retailers to offer services for storage and image management. People don’t have the time or inclination for that but they really need to do it if they want to have their images in 15-20 years.

“I would suggest retailers offer a bundle of services to consumers—on a monthly basis—the opportunity to back up images (storage space), print favorites, make CDs, photo books, etc. Consumers will have something tangible to take home and will feel good that someone’s taking care of them and their photos. It’s something people need help with and they don’t know it; retailers need to make them aware they have a problem and once they’re aware, offer them solutions.”

Retailer Tony Frontera offers prints from camera phones via his Web site, which utilizes LifePix for its online printing service. “It has a section to upload camera phone pictures,” states Frontera, who does not get a lot of customers using the service. Very few customers that visit his store want pictures from their camera phones. “Occasionally,” he admits, “a customer comes in with a removable card, which we can print from our kiosks using an adaptor. It’s a special case—a rare picture or rare occasion—not a regular thing.

“So far, at least in our experience, (the volume) is almost insignificant in terms of the market for it. I’m finding our demographics (the younger generation) that use picture phones typically don’t print. They want to take a picture, e-mail it, and look at it on a screen. It’s rare that someone wants a print. They’re not printing with cameras, why would they do it with cell phones? So, I don’t see it growing to any significant business,” concludes Frontera.

Retailer Todd Fitzgerald has a Bluetooth-enabled adaptor in his store’s kiosk solution. “Any available print on the kiosk that their image can substantiate we can print. The majority of the people that come in have camphones that are under 2 megapixels, so the image quality is usually rather poor.” Fitzgerald doesn’t get that many print requests and has had maybe 20-30 orders from January through March. “At the end of the year, (the service) may pay one of my guys’ weekly salaries, but it’s not something that’s going to be a door buster in the next few months.

“The majority of people that use (camphone photos), at least from our experience, aren’t really using it for photo sharing unless it’s electronic media or a source to be seen on a computer. I’ve had a few lawyers use it because of an accident where the plaintiff or defendant used it to take pictures at the accident because it was the only source of imaging they had. Normally, I’d blow those up to 16x20s for court; but a cell phone image maxes out at 8”x10”.”

Despite lackluster sales, Fitzgerald is the only retailer in his town that provides the service. “Everyone knows to come to us because they can’t do it anywhere else. We put the word out to local drug stores that we have the capability. And (business has) come to us that way. If we hit 5 megapixel camera phones then it will be a viable media where we can make 8”x10”s that are printable and frameable. Until then…I’m waiting and hoping.” yy

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