Mobile Disruption Case Study: Camera Industry. Lessons for all inside mobile disruption from advertising to banking to AR Augmented Realitydown

We just have news from Nikon the Japanese camera giant, sadly, shutting down a giant factory of 2,500 employees in China. That reminded me, that I could do an update to the first-ever case study of what happens to an industry when it is hit by the mobile revolution. It is a severe case of the 'digital' revolution which powers the internet and before it, the PC-related disruption. Mobile also combines obviously the effects of the parallel 'social media' revolution which only gained true power after social media discovered mobile (as chronicled on this 'Communities Dominate' blogsite).

But the camera industry is the first case study of an 'outside' industry being hit by the mobile revolution. We see today dozens of such industries facing similar issues as the camera industry did, from the oldest industries literally like money and payments, to pervasive industries such as media advertising and marketing, to human needs industries from healthcare to education, to various high tech areas including VR and AR (Virtual Reality and Augmented Reality). The relevant point is, that the camera industry faced mobile disruption among the very first (together with the music industry and the messaging industry) and the camera industry has gone 'furthest' into its demise, due to the disruption of mobile. This is why the camera industry is the 'best' case study for ANY other industry to monitor and study, to find possible effects to THEIR industry, and better prepare and deal with mobile disruption than the camera industry was able to. That is why I regularly do the Camera Industry case study in my various workshops around the world, and it is often requested by conference producers for me to include, in my public speaking. It is the proverbial 'canary in the coal mine'. What happens to Nikon now, could happen to Microsoft soon and someone like Citibank in a decade from now...

So lets do an update to one of my most popular items. The Golden Age of Photography....

GOLDEN AGE OF PHOTOGRAPHY

If we take the period from 2005 to 2015 as a ten-year period 'decade' then that is literally the golden age of photography, when the total planetary population of cameras grew 10-fold, and today six out of ten humans alive have access to a personally-owned camera - and take pictures (and often videos) with it. We all know those are not stand-alone Nikon or Canon or Olympus cameras, they are of course Samsung Galaxies, Apple iPhones, Huawei Honor smartphones, and even basic Nokia featurephones that can be 5 years old, but still usable and that have a camera. They are mobile phones, ie cameraphones. Nearly everybody who owns a stand-alone camera like a Nikon or Canon, will ALSO have a smartphone with a camera. And most who own a stand-alone camera, also use the camera now on their smartphone (at least for some random snaps) and for some who own premium stand-alone cameras, they have ABANDONED the use of the expensive camera setup and ONLY use the smartphone camera/s. For over 90% of all people who own a camera today, the ONLY camera/s they own are on mobile phones. Less than 10% of 'camera owners' today have any type of stand-alone camera like an Olympus, Canon, Panasonic or Nikon. And of those 10% less than half use their stand-alone camera as their primary camera anymore.

In the Golden Age of Photography, the planet's camera user population not only exploded, it became only the second technical gadget used by more than half of all humans alive (the first being the 'mobile phone' which includes also those phones from years ago, that didn't have cameras on them). And while 'voice calls' used to be the primary reason for getting a 'mobile PHONE' today voice calls are not even the most popular uses of a modern mobile, messaging is the most used function and the camera has now also passed voice calls, and the camera is used by more mobile owners than placing voice telephone calls, on a 'mobile phone'. Funny, isn't it?

When cameras came onto mobile phones - as mobile phones are always carried (we even sleep with them, as I've been teaching for more than a decade, the mobile phone is the first thing we see in the morning and the last thing we see when we go to sleep) - that revolutionized the USES of the camera. First off, the number of photographs taken exploded - because the camera was always with us. The original uses for most cameraphone users were similar photography situations as with traditional cameras - family meetings, birthdays, beautiful landmark photographs on vacations etc. Then came the selfie. Suddenly a new TYPE of photography emerged, partly because it is far easier to take a selfie with the camera FACING the screen, than on most digital stand-alone cameras, whose viewing screen faces away from the camera. Of course not all early cameraphones HAD a second selfie camera. It was one of the obvious shortcomings of the early iPhones for example. But recent studies have shown that many teen and young adult consumer cameraphone users take one selfie EVERY DAY. The emergence of the selfie stick speaks volumes of how global and massive this new photography sector had become. Nikon, Canon, Minolta, Konica, Olympus etc could not capitalize on the selfie phenomenon.

As Selfies are rather 'obvious' visually clear uses of cameraphones - you can spot a selfie shooter from literally a mile away, because of how he or she holds the camera, vs people who take a 'tradtional' picture using the same kind of cameraphone. You know, with the hand held out, and aiming the phone at yourself, with your back facing the particular landmark etc. The 'selfie pose' type of photography session. But selfies are only the START of the vast range of new types of photographs that people use their cameraphones for, that traditional stand-alone cameras were (usually) not used for. So lets take 'scanning'. The popular phenomenon of taking scans of receipts or documents or invoices or travel itineraries etc, and storing those 'scanned' images on the phone. We could of course use a 'flatbed scanner' to scan such documents but most consumers do not have flatbed scanners at home (or even at the office) and that is tedious later use of the tech, while the cameraphone is instantly available, in your pocket. Lets do that now.

A related use is to scan photographs. If your relative has old paper photographs, for which the negatives are long-lost, but they are pictures of you as a child, what do you do? You don't take the pictures to a photography services company to process into digital images. No. You take out your smartphone and place the paper pictures onto the kitchen table at your relative, and you make sure the light is good, and you snap copies of those photographs onto your own phone. Instant photo-replication. Instant digitalization of old photos. Then the old paper pictures can be thrown away! You already HAVE the digital image that you wanted to keep. Why bother with the old paper... Yes, this was technically possible with stand-alone cameras too, but VERY few truly mad photo nutters would have their digital cameras WITH THEM when that random relative found the old picture of you as a 2 year old with the great-grandma... But everybody has their smartphone in their pocket now.

This leads us to MEMORY ENHANCEMENT. Then come all the issues of taking pictures to help your memory. Not intended ever to be permanently stored and shown to relatives, but simply as a memory technique. Where did I park the car? What is the temporary arrangement of the bus parking when the bus station is under reconstruction? What do I need to buy from the store? A million uses of the camera because it is in our pocket always, to just help remember things. This is camera use that Nikon could never even become part of, but literally BILLIONS of people are doing daily.

Then it gets to the near future. Facial recognition like with the new iPhones. Augmented Reality AR like Pokemon Go. Various radical new uses of the camera function, that were not in any way viable 'photography mass market opportunities' for the traditional camera manufacturers like Canon, Nikon or Olympus.

That is what happened during the Golden Age of Photography and how massively the planetary photography hobby expanded not just in owners of cameras, but in photographs taken per camera, and then leading into whole new USES of the camera in ways traditional camera makers could not hope to even participate in.

WINNERS AND LOSERS

So then winners and losers. The camera industry giants (Nikon, Minolta, Canon and Konica the four biggest) in year 2001 were based in Japan. In year 2001 Nokia and Samsung didn't make ANY cameraphones. Apple didn't even make mobile PHONES in year 2001 (the first iPhone would not be released until six years later). Year 2001 saw the first introduction of the cameraphone, in Japan, by electronics giant Sharp, who already made mobile phones. The cameraphone was such a weird curiosity, that the two biggest Japanese mobile operators/carriers NTT DoCoMo and KDDI both said no to the idea, and only the smallest carrier, J-Phone (now Softbank) dared to explore this idea. With one model. That was ONLY 16 YEARS AGO. The world's first cameraphone. Only 16 years ago.

Then the revolution started rolling. Soon Nokia, then world's largest mobile phone maker, introduced cameraphones; and within a few years was doing N-Series super cameraphones. In under five years, Nokia had become the world's largest camera manufacturer. Under ten years from launching its first cameraphone, Nokia was selling more cameraphones than all stand-alone camera makers (Japan plus rest-of-world) combined. Samsung was already heavily into cameraphones well before Apple got into the act and today of the three most popular camera brands in use worldwide, Samsung is number 1, Nokia number 2 and Apple's iPhone is number 3. Nikon, the world's largest stand-alone camera maker doesn't fit INTO THE TOP 10 !!!

So while Nokia, Samsung and Apple disrupted the camera market and utterly up-ended it, what happened to the camera giants? This was the GOLDEN AGE of photography, when global camera user base EXPLODED to ten times its previous size. What happened to 'the giants'? Minolta? Quit the camera business. Konica? Quit the camera business. Kodak? Went bankrupt. Polaroid? Went bankrupt... twice. Correct that: now three times. The remaining giants saw their stand-alone camera markets shrink at catastrophic rates. Nikon just reported its results for last year. They saw a 24% drop in their total camera business. Nikon gave an even more dire projection of their next year to come. They expect 28% drop in their camera business now for the next year! And Nikon is the LARGEST of the remaining former giants, who control a massive 30% out of this collapsing stand-alone camera market. (Third percent of nothing is still nothing.)

LESSONS TO THE OTHER INDUSTRIES

So what do we learn from this? Some stand-alone camera makers of year 2001 like Sony WERE in the mobile phone handset business, and were able to participate in the market. Sony's smartphones were briefly even ranked third-largest global smartphone maker a few years ago. Sony has had its troubles, but at least they remained in the game, because they saw the future and participated in it. Minolta. Konica. Polaroid. Kodak. Their mighty camera-related businesses collapsed. Nikon and Canon were able to 'retreat' to the 'professional' segment that only prolonged the pain. Their downfall was only delayed. Now Nikon is firing 2,500 staff at their giant China factory because there is no way forward if last year your market fell 24% and this next year it falls another 28%.

Total newcomers who had NEVER MANUFACTURED A CAMERA, like Nokia or Huawei can come in and take most of the growth. Companies who had SOME camera background but did mobile phones like Samsung and Apple, could build a HUGE market capitalizing on this disruption. What is Apple's iPhone market today, could just as easily have been Canon or Nikon or Olympus, if they had had as forward-thinking an executive in charge as Steve Jobs was when he saw the Sony Walkman musicphones gobbling up the market for the iPod music players. Steve Jobs thought that if anybody is going to cannibalize his product's market, ie the iPod, then it better be another Apple product hence the iPhone. And while Apple was very reluctant to get 'serious' about cameras on the iPhones, they did include them and therefore Apple was in the game, while most traditional camera makers like Minolta, Nikon, Konica, Olympus etc were out of the cameraphone game. Look who is standing now? Same story goes with Samsung. Where is Philips? Where is Panasonic? Where are the other big home electronics brands? Sony made its play but most other home electronics giants utterly failed the cameraphone opportunity - even when most HAD done some types of cameras, at least via the VCR-era 'camcorder' video camera-videorecorder systems, which were digital by the end of that technology evolution path. Great global electronics giants failed their future, even as they HAD done mobile phones (like Philips and Panasonic) before. Samsung saw the future and took it.

I want to also mention GoPro. It is NOT that 'any digital camera' invention will succeed in this space. MOBILE always wins. We saw this with so much evidence that it is undeniable. iPod the music player lost to Sony Walkman music phones. Tom Tom GPS navigators lost to smartphones with GPS. And  yes, GoPro the brilliant niche camera geeky gear, lost out to .. cameras on smartphones. It is NOT ENOUGH to be digital. You have to be MOBILE. And by 'mobile' I do not mean portable (like GoPro) I mean 'cellular' mobile. Permanently connected omnipresent mobile ie cellular. 2G or 3G or 4G (or 5G) cellular. Look at Apple's iPad vs iPhone. Look at Apple's Apple Watch vs iPhone. Having WiFi or other wireless is IRRELEVANT. You HAVE to have 'mobile' tech which from practical technical definition means 'cellular'. Having WiFi is NOT ENOUGH (proof? Apple iPod Touch !!! vs iPhone. Which one is left standing? One was cheaper and had only WiFi)

Mobile is unstoppable. Now lets take the lessons to current races and some observations. Microsoft? They SAW the smartphone revolution and when Bill Gates was in charge, Microsoft pursued the smartphone market vigorously (while also ruthlessly as Bill Gates would like to do, abusing his monopolistic powers). You might not have noticed, but Microsoft's Windows smartphone OS was briefly the world's second-most-used OS behind Nokia's Symbian (but their share was only 12% so it wasn't exactly a 'dominant' position when Symbian was at 70%). Then came idiot Steve Ballmer and dickishly destroyed the Windows smartphone future by screwing his ecosystem and partners time and again. Windows smartphone OS just died a few weeks ago. Microsoft has been PLAYED OUT OF THE FUTURE OF MOBILE. They HAVE NO FUTURE. They are like Nikon. The only difference is, Bill Gates HAD SEEN the future and tried to pursue it. It was Steve Ballmer who destroyed Microsoft's path to mobile. Good job, moron!

Who won the operating system war? Not Apple. Did you see iPhone's market share? It peaked at 21% for one quarter five years ago, it is now down to around 14% and falling. Once the whole digital IT world was OWNED by Microsoft and Windows (in the PC era). Today, the future - this whole CENTURY - belongs to.. Google's Android. Microsoft's Windows reached at its peak well over 1 Billion users. Facebook reaches over 2 Billion users. But Google's Android? It reaches THREE BILLION human beings by the end of this year, 2017. Google has won the war of the century. And because Microsoft threw in the towel, they will become as relevant to the tech world as well, Olympus is to cameras today. Yes, you can find one in a specialist store, they still do technically exist. But they are irrelevant to the market of photography. Microsoft Windows will shrink to become a niche specialist IT platform used by some large legacy organizations, and Microsoft will live two decades of continuous decline of relevance to eventually disappear, eaten up by some healthy giant, not for their 'reach' but rather, to hire their skilled staff. (And good riddance too, when that happens)

But look at banks! What happens to money? I said from the start, that money will become mobile. Not plastic, not online e-cash. Not bitcoins. Money will be mobile. Mobile phones become our wallets (and our driver's licences and our passports etc). This is NOW accepted as probably true, as Americans (finally) got into mobile payments thanks in great part to Starbucks mobile wallet, and then - after an eternity, finally also Apple's mobile wallet. In China alone, the mobile payments annual turnover is 100 TIMES larger than the mobile wallet turnover in the USA. And China's economy is only slightly larger than the US. Japan's mobile payments are MASSIVELY bigger than the USA. Europe? More than HALF of all Europeans use mobile payments already! So if you thought mobile payments are 'hot' and 'new' you must have been reading the obsolete thoughts of American tech or banking writers. Go visit Turkey or Romania or Kenya or the Philippines or Estonia or Japan or Finland or South Korea or Norway or Somalia or Sweden or ....

In mobile payments, money, banking, we will have the 'Nikons' giant banking conglomerates who fail at capturing the mobile opportunity. We will have the 'Nokias' and Samsungs and Apples and Huaweis who come from the outside and succeed in 'mobile money' and will take a disproportionate share (and end up buying many of the dying dinosaurs). We will also have the hapless 'Microsofts' who TRY to get in, and fail totally. And we will have the struggling 'Sonys' who will have momentary glory but will find the new digital mobile world difficult to survive in. And who wins the race for the mobile wallet? That battle was already decided. It is Google's Android. Of course.

What about the 'Reality' industries? VR and AR? Virtual Reality and Augmented Reality? I was among the first 'Reality' experts to say AR will be big and VR will only be a niche. And I was THE first to be able to explain WHY it was so. Duh. It is because of mobile. VR like Oculus will never be a global platform, and now the various VR experts are increasingly starting to believe. But because AR can be consumed (with the CAMERA function of) smartphones - AR will be FAR FAR bigger - witness Pokemon Go.

So think about newsmedia, or advertising, or retail, or travel, or healthcare, or education; etc. Or government. Did you know the first passports are already available on mobile phones - done first in the UAE (which was also the first country to do mobile phone based driver's licences)? Yes. The future is here. And the key to being a viable business in the future, is mobile. And one VERY valuable lesson you can bring to your staff is the case study of the camera industry. How the big giants failed to capitalize on the Golden Age of Photography, and the Japanese giants gave their industry to players from South Korea, Finland, China and the USA. Don't let YOUR industry miss out on the mobile revolution. Learn from the lessons of the first case study of mobile disruption.

Comments

[Jim Glue]

Hi Tomi,

Where we may have a miscommunication is not that "mobile wins" but that "mobile always disrupts".

Did mobile disrupt Facebook, Twitter, Ebay, Amazon? No. They all added mobile to their delivery mechanism and are thriving with mobile.

I think banks are adopting mobile, not sitting around waiting to become dinosaurs. Banks have turned mobile phones into mobile bank branches in your pocket.

Did mobile disrupt Telco's? No. It would have had Telco's not become mobile telecoms...but the mobile infrastructure is owned by the Telco's. Some parts of their money streams were disrupted, others were created or grew. So Telco's no longer (I'll speak for the USA) sell minutes. Every plan is unlimited minutes now. They used to charge for buckets of texts...they no longer do. But now they sell data, and are making more money than ever because they have evolved with mobile (of course, you could say the telco's "evolved mobile").

Take Taxi's. Mobile is enabling Uber/Lyft to be a threat to the taxi business. There is no reason that Taxi companies couldn't have responded to the opportunity of mobile much more quickly. The "ride hailing" aspect of Uber should have been invented by Taxi companies...or quickly adopted (they are coming along now). The "mobile allows Uber to turn almost anyone into a taxi driver" - is a disruptive force.

I'm just teasing out finer aspects of what type of products and services will mobile disrupt (and there is nothing that can be done to stop it), and what types of services/providers/companies will just add mobile to their delivery system.

So...cameras and music players had NO WAY to protect themselves from the disruption of camera/music playing phones. None. Even Apple wasn't able to protect the iPod from music playing phones. The camera on a phone, the music app on a phone, are direct replacements. Apple wasn't blind to what was going to occur and entered the phone business. I'm not so sure Kodak, Nikon would have been able to put out their own mobile phone platform....though perhaps they should have jumped on the Android bandwagon or at least partnered up (like Sony has).

No doubt, mobile is the computing platform of choice. Anything that can be delivered on mobile will be dominated by mobile. But that doesn't mean disruption if the "companies to be disrupted" jump on mobile.

[Tester]

@Jim Glue:

Good points. The taxi example in particular is interesting. Here in Germany the response of the established companies was running to the politicians and crying for help to make Uber's business model illegal and nonsense like that. Apparently they didn't even THINK about countering with something that turned their established organization into an asset.

It needs no saying that with such a response they stand no chance long term.

In any case, looking into the future I still do not see mobile as the single way to go to do payments. For once, this is such a crucial part of life that there NEEDS to be some kind of fallback - a non-technological one preferably. This cannot solely rely on a system that may fail. Today we still have cash if all other options fail so hopefully it will stay that way. Besides, why even require a device for this? Ideally this could be done with just a fingerprint with all the required information stored on some remote server that will be accessed by the payment system. Or if we absolutely need some electronic signature, why not embed some small chip into your key chain? I know lots of people who leave their house without a phone - but I do not know anyone leaving their house without their keys!

[Tomi T Ahonen]

Hi Winter, Timo, Phil (Oct 30)

Winter - Good example of a service doing it now, Tikkie. Thanks. (Thanks also for link later).

Timo - Great comment and example from Finland. For those not familiar with EU regulations, early on with mobile payments the EU passed some laws that restricted instant payments to a small amount (currently 25 Euros) and you could set the payment to be approved for the small amount without security checks (like to have rapid payment of a bus, train, metro ticket without needing a pin code) and of course in many cases the user could also set a separate security check/pin code limit that was even lower. There is some legislation coming that brings changes/evolution to the EU banking regulations and impacts some mobile payments stuff too. (Also thanks re Nordea later)

Phil (haha 'Timo' becomes 'Tomorrow' with predictive text... gosh what would Tomi become). As to 'age thing' most definitely the evolution towards using mobile as a payment method will have youth near the front, but also the poorest (who tend not to have full banking services, credit cards etc) and the migrants and refugees - eg the big wave of refugees into Europe right now. They'd be far faster to adopt mobile payments than a safely-employed older European dad or mom (or grand-dad or grandma)

Ok, that takes the first comments up to my first comment on Oct 30. I'll be returning with more. Please do keep the discussion going.

PS skipping ahead to Winter (from 3 Nov) haha very funny about Bitcoin and Russians and Chinese.

Tomi Ahonen :-)

[Tomi T Ahonen]

PS everybody

Haha this comments section is starting to be the Online Encyclopedia of Mobile Money and Payments haha as essentially all innovations in mobile payments seem to crop up in the examples..

Tomi Ahonen :-)

[Tomi T Ahonen]

Hi Jim (Oct 31)

Jim - first off, good comment on BBM. Just being on mobile doesn't mean you are immune from immense strategic blunders as for example how could Blackberry abandon its MASSIVE lead in the consumer instant-messaging space to Whatsapp, when BBM was the PREFERRED choice of the YOUTH (and even had a hardware portion to their business too). Just being mobile doesn't mean you will automatically win. It only means that you CANNOT win without it. It is a pre-requisite for winning but not an adequate attribute to win. You still have to do good management of your company to capitalize on that asset.

As to Starbucks and similar mobile wallets, very good point, you do need some way to charge the wallet and to withdraw money from it (if that even is possible). And behind that is usually a bank or credit card company (behind which is a bank). But it can increasingly be another non-bank but similar money transfer company like Paypal (behind which again, you need a bank or credit card company).

Where it gets interesting is if the mobile wallet can be recharged BYPASSING the banking system totally (by some entity that is similar to a bank, and may or may not have a banking licence). And this is where things like M-Pesa come in. And the ability to 'top up' a mobile wallet via the telco's charging - as invented by Habbo Hotel in Finland the teenagers' 'Second Life' type of virtual playground. Then you do have the ability to charge up the mobile wallet by some other means by a person who doesn't even legally qualify for a banking account or credit card.

If the Starbucks mobile wallet remains only serving Starbucks, then it is a poor substitute for 'money' because then we'd need to store money also into our McDonalds wallet and Pizza Hut wallet and 7-Eleven wallet and on and on and on. BUT the solution to these is what India's regulator is doing - demanding that mobile wallets become interoperable. But THAT is a big step in moving towards an integrated financial system.

Now if even one of the wallets becomes 'rechargable' via a non-banking method - then the whole SYSTEM has an alternate way to store money that essentially bypasses (and potentially disrupts) the whole banking system including credit card companies living within that system.

Then take an exit option to pull out cash from the stored value wallets...

Meanwhile if you toss in mobile top-ups then the whole system is instantly 'convertible' from cash to minutes and back. And there will be some costs of transfering money just like costs of exchanging currencies across borders - but the system gets a significant alternative method. Again, you can top up your mobile phone accounts at most modern ATMs today... so we are quite far on that route also. And there are plenty of online vendors who provide loans that then let you go to an ATM, type in some codes and withdraw the money that was just lent to you - without applying for that loan via a bank - but using the existing ATM network. There are tons of 'murky areas' here.

(Gotta rush, I'll be back)

Tomi Ahonen :-)

[Jim Glue]

It's always nice when we get on the same page. I can't say I'm sold on mobile replacing "money". I am sure that mobile MAY WELL disrupt the money-transaction-use-case of credit cards.

Several ways:

Merchant specific apps withdraw specifically from your bank using debits and avoids the CC charge (and all the fraud benefits of CC too). Apps give merchants far more control of and access to their customers for their own data mining purposes. Even though Starbucks only works at Starbucks and therefore isn't "money" -- you can have a BUNCH of merchant apps on your phone. I have a handful of them already. I am enticed to use them with discount offers...and to pre-order food and just show up and pay.

Store and forward services like Paypal. While Paypal gained life as an web/internet easy-purchase platform....there is no reason that can't be extended to mobile the same way merchants have custom apps. If Walmart's multi-merchant effort, CurrentC, had succeeded (it may still some time in the future)...we'd already have a multi-vendor app.

ApplePay may in the furture go direct to banks bypassing CC. Already when I purchase at Walgreens (a nationwide drug store), it defaults to using a debit instead of a credit charge when I use ApplePay.

Of course, Bitcoin is waiting in the wings. This is an actual threat to national monopolies on currency. Imagine Bitcoin (or some other) tied to any of these mobile payment-transaction type apps. I just don't know if governments will ultimately allow the general use of crypto currencies.

The rise of "paying with CC" was all the superiority for ease of payments and security of not carrying around cash. Mobile is even easier to use, and ultimately safer. It will be interesting if "protecting your purchase" and "CC eat fraud charges" aspects of using CC will save them or not. The "buy what you can't afford right now" aspect will keep CC in existence.