Many cellphones double as camcorders. Both Nokia and Sony Ericsson have cellphones with camcorder capability to yield decent image quality capable of recording up to one hour’s worth of motion pictures. Some 30% of cellphones today shipped worldwide are outfitted with video recorders, up 20% from 2005. An NPD survey shows 73% of respondents are satisfied with their cameraphones. The image quality of the average cameraphone is pretty low, but over time, technology will improve.
The industry predicts that 2006 digital printing revenue will reach about $4.5 billion, only 3% of that revenue will come from cameraphones. Images from cameraphones will keep growing, to over 90 billion in 2006, with only about 3 billion images printed at retail kiosks. It is expected some 500 million units of cameraphones will be shipped to the USA in 2007.
Changing Photo Paper Market with Higher Potential
Machiko Ouchi, executive director
The withdrawl of Agfa and Konica Minolta from the photo trade has brought about a stir in the photo paper and photo base paper markets, but at the same time it is creating a new market potential in line with digital photo prints.
Photo paper shipment on the world market is said to have peaked in 2002 at 1,800 million square meters, which dropped some 30% in three years to 1,300 million s.m. last year, reflecting the transition to digital photography. Photo paper makers all agree that production of photo papers will further decrease in proportion to falling demand that they expect at about 10% less than the previous year. Agfa dropped out and Kodak quickly cut production to cause a temporary imbalance on the photo paper market where demand momentarily surpasses supply, but it will not last long, the makers foresee.
On the other hand, increasing D-cam printing is apparently supporting the demand for photo papers. Dai Nippon Printing (DNP), which takes over the Konica Minolta photo paper business as of October 2006, will keep on making photo papers considering that “the demand for photo paper is showing a steady tone, making it a good business at least for the time being.”
And demand for high-quality printing paper is on the rise for making prints at home or for kiosk use for inkjet printers and dye-sublimation. Such quality papers use resin-coated base paper. Even the Xerography system developed by Fuji Xerox and Fujifilm and is now widely used in the digital kiosks placed in 7-Eleven convenience stores across Japan is built around the technologies that photo paper makers developed.
Only three makers in the world are now making resin-coated (RC) base paper for photo papers, namely, Felix Schoeller, Germany; Mitsubishi Paper, and Fujifilm, Japan. A frontrunner in the photo base paper industry is the Kitakami plant of Mitsubishi Paper. The plant was built when Mitsubishi and Kodak joined hands to supply base papers for Kodak photo and inkjet papers. It spun off in April last year from the parent Mitsubishi Paper and operates as Kitakami High-tech Paper, and the plant is adding IT print papers and special[ty] papers to the mainstay photo base paper.
A paper technology specialist comments, “The photo base paper and special[ty] paper for printing are products in high technology. D-cams are getting increasingly high resolution and high quality, which accordingly require higher quality printing papers. The papers that bring about high-quality print with toners and inks are in the limelight.”
Thus far, photographic paper has been produced only by specific paper manufacturers. But now Canon launched into glossy photo paper in-house production for inkjet printers that they used to buy from outside sources on an OEM basis. Canon buys base paper from outside sources, has it coated in-house, and sells it under the Canon brand. Canon can enter into the lucrative consumables market thus far being shut out, thanks to digital transition of the imaging industry. Fujifilm is expanding its paper business by acquiring IJ-related businesses in the world. As a base paper manufacturer, it is in a position to build a vertical production from the base paper to end products involving consumables including inks and papers. It now focuses on development of next-generation toners and papers cooperating with Fuji Xerox Co.
Kitakami High-tech Paper with sufficient capacity for supplying the photo base paper may get involved in the deals. The print media market that so far consisted only of photo paper now involves inkjet, dye-sub and next-generation toner. Thus the printing media market is beginning to change drastically with higher potential.
Profit Opportunities Abound – Embrace Them
Not only is this not your father’s business, if you’ve been in it for four years or more it’s not your business. Here’s a future forecast beginning with the past. In 2003 the average photo lab got 80% of their gross margin from film developing and 4x6 prints. By 2009 that category will represent less than 20% of the average lab’s gross margin. The bad news for the average lab: in 2009 no one single product will account for 20% of their gross margin.
That’s also the good news as digital technology means mass customization—books, posters, rugs, mugs, T-shirts, cards, calendars, and more.
Embrace the new technology! At PMA 2006 many industry “professionals” scoffed at the introductory quality of the HP Studio prints as compared to silver halide. When Dan’s Camera City (Allentown, PA) unveiled their new HP Studio, a high school senior saw the machine, pulled a media card from her purse, and made $100 worth of customized posters for graduation presents. She was thrilled with the quality and the emotion of the images she bought. Successful operators will use this new type of new business to replace the old D&P revenue. Focus on the emotion and make the sale!
There are changes ahead for camera stores, too. We must learn to sell digital cameras faster and more efficiently (more at DIMA in Vegas!), as well as learning how to sell our knowledge. Learn from Best Buy’s Geek Squad. They charge $159 to come to my home for an hour, solve my technology problem and “train” me. Are you making this service available to your consumers who’re frustrated with imaging technology? Best Buy’s success with my neighbors proves customers will pay that amount. Are you afraid to charge a reasonable price that allows your business to survive and thrive?