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The State of the Imaging Industry 2004



There's an old Chinese expression that's part blessing and part curse: "May you live in interesting times." While there's been some dispute over the true source of the expression (some Chinese scholars have argued it's not even Chinese at all), there's no disputing the notion that the most fascinating parts of life are not always the most pleasant. No where has that been more true than in the photo industry which continues to ride the bumpy roller coaster known as "The Digital Express."

To help make sense of all this turbulence, PTN has once again turned our ears to the imaging industry's leaders for our annual "State of the Industry" report. Where in the past we've left the format wide open, letting analysts, trade association officials and manufacturers opine freely about the current State of the Industry—this year we tried to get them to be more focused. Some topics we asked them to address include:

• What's the best advice you could offer our readership of photo dealers and minilab owners to better compete in today's volatile photo market?
• How will political considerations such as the war in Iraq and the upcoming presidential election affect the photo industry?
• What new products are on the horizon in this photokina year?
• What should the imaging industry be doing, if it's not doing already, to prosper in today's marketplace?

Well, while we'd like to say that all our submitters addressed those topics, that's not exactly how it turned out. In fact only a few attempted to address those issues head on, which is fine. This is, after all, an election year and it's almost as important what people say as what they do not.
Having said that, please take a look at what the nearly 40 industry leaders here have to say about the imaging industry. These are, after all, interesting times but we hope to make them pleasant ones for you as well.

BUCKMAN, BUCKMAN & REID
Service Is the Name Of the Game

by Ulysses Yannas
Analyst, Buckman, Buckman & Reid Success in the digital imaging world will have the same characteristics as in the 35mm world. Service has always been the differentiating characteristic between photo specialty dealers and mass retailers and is likely to remain such—in spades.

The dominance in the 35mm film SLR world should extend to higher priced, higher megapixel, digital SLR cameras because they are more complex and less price sensitive than lower megapixel cameras.

The output side of the equation is what can make the specialty photo retailer dominant and very profitable.
The newest additions to the minilab like memory card readers and drop-in film cartridge scanners can enhance speed and profitability as can the ability to accept, store and print images over the internet and from camera cell phones.
In short, service was and still is the name of the game and is what creates customer loyalty, the golden rule in retailing.


PRO
Lack of Profitability Challenges Industry

by Mike Worswick
President of Photographic Research Organization Inc. (PRO) Public excitement about picture taking and camera buying has never been higher and digital cameras today have reached their full stride as a mass consumer category. Two major challenges have resulted from the rapid sales expansion of digital cameras. Shrinking gross margins on digital cameras is a major concern and so is declining digital printing revenue.

When compared to the growth spurt in home computer sales a dangerous parallel can be seen. Many large and small retailers suffered as margins on computers, software and accessories fell so low that stores could not profitably remain in business. Today we see some leading camera vendors squeezing margins on digital cameras to levels that cannot sustain profitable existence in the retail channel. The use of MAP programs has brought some marketing stability. But when those MAP prices serve as barriers to intelligent pricing at retail, profit margin problems magnify.

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