Practically every portable device, from mobile phone handsets to hand-held digital assistants, now feature a digital camera of some kind. The phenomenon of being able to take photographs at any time has fuelled everyone’s interest in digital cameras, and the market has truly taken off.
Manufacturers have responded by releasing a steady stream of slimline and digital Single Lens Reflex (SLR) cameras. Some of these boast up to eight megapixel resolution, while others are ultra compact and little bigger than a pack of cards.
Yet as the consumer market has proved highly profitable, little of the digital camera celebration seems to have filtered its way through to the channel. However, some within this sector believe there are opportunities to be had.
“I don’t think the channel fully recognises the opportunity for digital cameras,” said Phil Williams, divisional head of imaging at manufacturer Pentax.
“The reason I say that is because most resellers and VARs are selling packages. I don’t think digital cameras offer them a solution. However, a revenue stream such as a projection system fully networked and cabled with support services might.
“There are many resellers and when you look at their business in isolation, they sell solutions to corporates and SMEs. However, they don’t sell digital cameras to corporates, they sell those to the internet space. I think the reason for this is that if you are selling a corporate solution to somebody, you could be talking a six-figure solution, and corporates might want only 10 digital cameras.”
Small-scale demand is not the only reason that this particular tree does not currently bear fruit.
Channel strategy is largely driven by the type of product being sold. In this instance, many manufacturers offer a range of products in addition to digital cameras to try and tempt VARs with upselling opportunities. For example, Hewlett-Packard (HP) and Canon offer printers and a range of accessories.
“It has always, in my opinion, been an issue that involves add-on features,” Williams said. “I think there are channel opportunities that perhaps some VARs and resellers haven’t really looked at or tried to tune into. These include some of the vertical markets, such as traffic wardens [traffic wardens are using digital cameras to photograph illegally parked cars], building surveyors and estate agents. Those are opportunities to sell, and I think the likes of Olympus and Canon are currently going after such opportunities.”
Williams added that there are solutions available as well. However, the problem with those is that users need to be educated in how to use them. These solutions typically include Adobe Lightroom software post-processing services.
“I think there is a huge opportunity for audiovisual resellers in the education and local government markets,” he said. “Those are huge opportunities. Most schools in this country tend to buy their digital cameras from a local retailer.”
However, the schools require only a handful of cameras, a prospect which is unlikely to excite most resellers.
Mark Thackara, marketing manager at Olympus, said: “On the other hand, there’s a limit to how many accounts we can deal with, so some of that would have to go through distribution.
“Having said that, we deal with some distributors – such as Midwich and DirekTek - that are used to selling into the sector so it’s not impossible for resellers to get behind the product without having to buy direct.”
However, it seems that even high-street trade is not without turbulence, and this is indicative of behaviour in the channel.
“In terms of product, I think most people will agree that the market is pretty much saturated now with compact products,” Thackara said. “This year probably marks the end of the substantial growth. I think there will be a decline in value this year, and I’m sure most people will tell you the same thing.”
The digital camera market is still relatively new, and it is now reaching the point where even people who are uncomfortable with technology are becoming au fait with digital cameras and picking up on certain buzzwords. It’s becoming very similar to the traditional camera market of years ago, which had a clear definition of the customer linked to the capabilities or features of specific cameras.
Stewart Hayward, commercial director at WStore UK, said: “The main buzzword on the high street is megapixel. The awareness of this term has been partly driven by the adoption of cameras in mobile phones, which are now reaching the level where they can adequately compete with the digital cameras of two or three years ago.
“The cameras are great for sharing pictures on phones, but if they are sent by email or transferred to a PC, people see how absolutely rubbish the picture quality is once it’s removed from the walnut-sized screen. Potential customers are aware that this is because of the device’s lack of ‘megapixels’. Quality equals megapixels.”
Williams said a good example is that today users can pick up a six million pixel, 3x optical zoom digital camera for £99. Three years ago, the same would have cost about £400.
Thackara said: “The sophistication will continue going up and that’s one thing that has helped unit prices. That’s just like PCs. It really depends on the strategy. Some companies are going for the most specifications they can pack into a product, some are going for style and some are going for specific features.
“For example, we’ve got a camera that can be dropped or taken under water without any special cases – and that’s a new niche that’s opening up, but that’s a consumer product, very much a high street camera.”
Thackara added that he believes the biggest opportunities lie in digital SLRs, because they are well suited to a mixture of business and consumer customers. They represent a better proposition.
“Estate agents are a classic example, as they were the really early adopters of digital because it allowed them to put property on to web sites,” he said. “Other examples include architects and the scientific arena. The thing with SLRs is that they are flexible. You can put attachments on them and this allows you to tailor them.”
However, Thackara claimed that the compact market is declining on its over-value. He said that resellers need to keep in touch with what customers are after: style and size. There is no point in buying into products that don’t keep up with the trends, he warned.
So it seems there is in fact light at the end of the tunnel for the digital camera channel.
Hayward said: “The other side of the coin is the people that had SLR cameras and actually used the facilities to manipulate their pictures. For them, six or more megapixels is probably the minimum, but more important will be things such as shutter speed capability and ISO settings. The attraction of things like a Carl Zeiss lens or preferably true SLR capabilities to re-use existing standard lenses is also a consideration.”
Hayward added that there is a lot of opportunity in this market, which is not driven by megapixels, despite the continued push in this direction.
“Most people that use a digital SLR camera would prefer a camera that can produce 12 shots per second, has a quality optical zoom, and can take pictures in low light – one of the main failings of a lot of digital cameras,” he said. “These customers will still look only at cameras that start at about £200, and will be less likely to buy a BenQ or HP offering, instead preferring the Sony Cybershot or Canon Powershot brands.”
The opinion that the digital SLR sector holds potentially good rewards is a point of view shared by many across the channel.
“The other opportunity is at the higher end of the digital camera spectrum, and that’s digital SLR,” agreed Williams. “These range in price from £300 anywhere up to £5,000. Again, there may be an opportunity there, but most business-to-businesses and SMEs and small-office/home-office [SoHos] are looking for a complete solution, and as yet, not one single manufacturer has come up with a complete solution that’s designed for business. There is a consumer solution, and Kodak has that, which is a printer complete with a printer dock.”
So, will this change?
“Yes, I think so,” Williams said. “Manufacturers will look for complete solutions. The reason for that is the picture format that pictures are captured in. If, for example, a user took 200 images with a digital SLR in RAW format, they’ve got to be post-processed before the user can even output them. So until such time, resellers might find it difficult to justify how they would sell a solution to their customers.”
Williams said that the first firm to say, “I’m not going to sell a solution, I’m just going to sell the hardware”, potentially has the opportunity to steal a march on the competition.
“There is no reseller, I don’t think, that is really targeting SMEs or SoHos with digital cameras,” he added. “It’s not going to make anyone a millionaire overnight. What is going to make the difference is the added value service they can offer. There is definitely an opportunity for someone to step in and offer this as part of a bundle or a package.”
Marketing accessories for digital SLR cameras is a critical consideration. For VARs, the low-end digital camera sector has become a commodity, although the margin can be improved by adding memory, since most cameras come with an inadequate amount of memory as standard. For higher-end cameras the opportunities with additional lenses, cases and tripods can be much more lucrative, and, for now at least, resellers can retain more margin on the hardware itself.
Thackara said: “Many people who bought digital compacts a few years ago and spent £500-plus are thinking about replacing them. They can now get digital SLRs for that sort of money. And the advantage to most VARs, manufacturers and retailers is that SLRs by their very nature should hopefully lead to people buying accessories, which the compacts don’t. This means that in theory resellers should get a great deal more regular customers.”
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