Digital Camera Schizophrenia

Monday January 28, 2013 – Stewart Wolpin

At the recently concluded CES, every major digital camera maker expanded the number of their point-and-shoot SKUs endowed with Wi-Fi. Many product managers told me all their point-and-shoot SKUs would include Wi-Fi in just a couple of years.

This connected feature addition is obviously a reaction to the termite-like affect smartphones are having on the digital imaging business.

About 687 million smartphones and tablets (a majority include cameras) were shipped worldwide in 2012, and DTC predicts there will be 1.5 billion shipped in 2017.

DTC estimates fewer than 135 million digital cameras were shipped worldwide in 2012, projected to drop to below 100 million by 2015.

Particularly vulnerable are point-and-shoot models, shipments of which DTC expects to drop from 94 million this year to just 66 million by 2017.

This sales deterioration could easily speed up; in the U.S., as smartphones plummet in price, smartphone owners are expected to top 60 percent of all mobile phones by mid-year.

To compensate for this digital camera collapse, camera makers have turned in force to higher-margin compact system models, a tactic which seems to have staunched their overall sales and revenue hemorrhages.

On the point-and-shoot end, however, manufacturers are flummoxed on how to compete against enhanced smartphone camera capabilities. This year, all top-line smartphone models are expected to offer 12 or 13 MP images, resolution expected to become the new normal, with more advanced camera-like face-recognition, zoom, HDR and editing features.

Hence the expanded number of connected cameras. Camera makers figure adding smartphone-like Internet connectivity, or even models with the Android OS, will help their point-and-shoot models compete against smartphones.

Except in most cases, digital camera Wi-Fi does not necessarily provide a link to the Internet for instant sharing. Instead, camera Wi-Fi provides a direct Wi-Fi link to a smartphone, to which photos can be automatically transferred and from which can then be shared.

But this is a Catch-22 point-and-shoot Wi-Fi inclusion strategy.

A point-and-shoot camera with Wi-Fi would only appeal to the owner of a smartphone. Except a smartphone owner already owns a camera with Wi-Fi – their smartphone, which takes photos that are "good enough." Or, a standalone digital camera doesn't take photos that are vastly superior enough to warrant carrying around an extra device and performing an extra step for sharing snaps.

Conversely, Wi-Fi in a digital camera would be largely useless to the largest population of potential point-and-shoot purchasers – feature phone owners.

So what will happen to the digital camera business? Mainstream makers may decide to completely abandon the low-end of the point-and-shoot market to drug-store brands such as Vivitar and Polaroid and concentrate instead on the more lucrative CSC product. While overall digital unit sales would continue to drop, profitability would at least stabilize.

At CES, a TV Disconnect

Monday January 21, 2013 – Greg Scoblete

The Consumer Electronics Show isn't known for producing cognitive dissonance (sore feet are another story). But walking the show floor and keeping half an eye and ear tuned to the media frenzy that follows in its wake, it wasn't hard to find it in abundance -- at least around television.

Take what was arguably the show's biggest trend: the emergence of 4K (aka Ultra HD) televisions. From the established TV leaders like Samsung, LG and Panasonic to newcomers to the North American market such as Hisense, enormous 4K TVs dominated the show floor. Sure, they're priced for the one percent (Sony's, for instance, will set you back a cool $12,000), but TV manufacturers are clearly banking on 4K to generate another upgrade cycle now that 3D TV has stalled out. 

Yet when it came to pay TV providers and the companies, like Cisco and Akamai, tasked with actually delivering video content to the home, 4K was not on anyone's lips. In fact, the discussion wasn't about how to ram higher quality video into the home but how to shrink down and disperse existing HD video to multiple, lower resolution, mobile screens.

Dish's big CES news, for instance, was the addition of its Sling transcoding technology to the Hopper DVR, allowing subscribers to access live TV and DVR content on mobile devices away from home. Cisco's introduction of Videoscape Unity -- the next iteration of its video delivery infrastructure and service platform -- focused exclusively on personalized content and "second screen" functions.

If 4K is the next big thing, in other words, someone forgot to tell some of the key players.

There were several exceptions, of course. Broadcom announced its first ever chip to support the HEVC/H.265 codec -- compression technology deemed essential for 4K broadcasts. European satellite firm Eutelsat also unveiled its first "demo" channel broadcasting 4K content.

Yet it was evident that the immediate future of TV has nothing to do with huge, ultra-crisp displays but how to incorporate those tiny, less-than-optimal LCDs on smartphones and tablets into the viewing experience. 

CES Coming-Out Party for UHD

Monday January 14, 2013 – Stewart Wolpin

"What did you see that was cool?" is the per usual post-CES question posed to show-goers by both fellow show-goers making sure they didn't miss anything (I missed the female body painting at the iWare booth, for instance) and by non-attendees who apparently haven't read any of the terabytes of online coverage.

The question usually implies what cool gadgets one has seen. After all, this week at CES there will be 20,000 new gizmos unveiled, both on the show floor and at satellite events and in off-campus hotel rooms.

But the "cool" things at CES may not be new products but the emergence of two disruptive trends:

• large screen ultra-high definition (UHD) 4K TVs

• connected – everything

Neither of these trends are necessarily new. Major TV makers have been exhibiting UHDs for the last couple of years as prototypes. At last year's IFA, every major TV brand exhibited some variation of 84-inch or larger 4K or 8K set.

But at this year's CES, the TV expectation was the fulfillment of last year's OLED promises by LG and Samsung. (Only LG was specific about specifics – March, $12,000, starting in Korea.) Both Panasonic and Sony surprised show-goers with "oh, yeah?" "world's biggest" (by an inch) 56-inch OLED models, and both LG and Samsung claimed "world's first" status for their curved OLED displays (the purpose of which escapes me) but none noted any intention to actually manufacturer and sell either.

As a result, the OLED thunder was stolen by the proliferation of slightly more definitive 4K UHD plans.

LG, Sony, Toshiba and even Vizio not only unveiled 3840 x 2160 pixel 4K 3D LED smart UHD models, they unveiled them in three sizes; LG and Sony in 55, 65 and 84 inches, Toshiba in 58, 65 and 84 inches and Vizio (using panels from Sharp, which ironically did not announce any definitive UHD plans of its own, just its own 70-inch UHD prototype) in 55, 65 and 70 inches. Samsung plans on selling just one UHD SKU, a "world's largest" 85-incher, although they exhibited a 110-inch model.

All have said they'd start selling their UHDs in the spring – and with each exhibiting UHDs in different sizes, it's a more believable claim than those made for OLED.

True, the 84-inch UHD models will run in the pricy $20,000-$25,000 neighborhood. But the smaller models may not be any more expensive than the first round of flat panel 720p HDTVs back in the late 1990s, which experienced healthy sales from the same "look what I have!" crowd likely to be attracted to 4K now that everyone has a 60-inch flat screen. Vizio swore it would offer its UHD at more friendly prices.

Perhaps given the price competition now devouring the current 1080p world, it shouldn't be surprising to see manufacturers drooling at the prospect of higher-margin UHDs.

On Sunday, CEA analysts projected UHD sales would reach 23,000 in the United States this year, 1.5 million by 2016. Considering the start these sets will get this year from a variety of brands, these projections may be spectacularly low.

To me, what I saw at CES was the shocking coming-out party for UHD.

Next time, I'll discuss the CES coming out party of universal gadget connectivity.

Predictions for the New Year

Wednesday January 2, 2013 – Greg Scoblete

No tech writer worth his or her salt can let the year end without throwing out a few predictions for the future. As a firm believer in the "fox" style of analysis (which you can learn about here) I offer the following less as boastful declarations and more as heavily caveated presumptions, subject to revision if they prove horribly, embarrassingly wrong.

So, with your expectations properly calibrated, let's take a glimpse at what the new year may hold, shall we?

1. While the crest of over the top Internet services will continue to rise, the more widespread use of bandwidth caps by cable and IPTV providers will begin to slow growth: Cable TV may not be able to stamp out Netflix, but it has the ultimate trump card against any prospective cord cutter: the ability to jack broadband internet rates to recoup lost pay TV subscription fees. Expect to see more cable and IPTV providers institute bandwidth caps or tiered pricing regimes to dampen consumer enthusiasm for "all you can stream" competitive internet video services.

2. Amazon’s original programming initiative flounders:  Several marquee internet video providers began to invest in original programming in 2012, including YouTube, Netflix and Amazon. The idea is simple: lure cord cutters with original content not available on the major networks. While Netflix will likely continue this investment into 2012, Amazon may sour on it (yes, they’re still shelling out cash as I write this). But Amazon has a few problems: its financials are hurting and it has no particular skill in this area. Unlike Netflix, which has no choice but to strengthen its video offering, Amazon has the flexibility to abandon vanity initiatives.

3. 4K and OLED fail to ignite the TV market: The same hype machine that went into overdrive to sell consumers on 3D TV is dusting itself off to promote 4K and OLED in the wake of 3D’s failure to catch. While both technologies deliver a superior viewing experience, 4K will remain too expensive with far too little content to generate much consumer traction. OLED, too, may take much longer to catch on given the expense and consumer's preference for big screens on a budget. If TV sales have any hope of lifting over a steadily eroding base in 2013, it will be due to a general recovery in consumer spending – not a technological breakthrough.

4. Cord cutters continue not to materialize: Like the Mayan end-of-the-world, the long-rumored wave of cord cutters will not materialize and traditional pay TV providers will continue to add subscribers. Cable TV is clearly under stress in North America and Europe, but IPTV and Satellite pay TV subs will continue to grow. We'll hear more about "cord nevers" but they too will not be a significant factor in pay TV subscription trends in 2013.

5. An Apple TV arrives – and underwhelms: No company in the tech world elicits rumor-mongering like Apple, where speculation has run rampant all 2012 that the company would shake up the broadcast TV world with an Apple TV (or iTV). Enough leaks have trickled forth from suppliers and from CEO Tim Cook himself that it's safe to say the company is cooking something up, so let’s assume that an Apple iTV does arrive in 2013. It’s likely that the broadcast deals required to deliver “tv as apps” won’t be hammered out, certainly not with a substantial number of content providers. The TV product itself is likely to offer an innovative and engaging user interface and content discovery features, but it won’t work the equivalent revolution on video content that iTunes did to the music industry.