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Eli Harari, founder and CEO of SanDisk
»I've been closely following the digital revolution from the very beginning and it took longer than I anticipated.” Those words marked the start of the press conference. Those were the words by Eli Harari, founder and CEO of SanDisk, that I remember the most from Photokina. The memory of a conversation only hours before the conference was still very alive and it made me chuckle. There we were, hearing “Viva la Revolution!” when there are still many people trying (or hoping) to stop the revolution in its tracks. Digital is baaaaad… or so they say. Wake up! It has come and (almost) gone. We’re in for another one very soon. But more on that later. What I want to say right now is that I understand both sides. Companies like SanDisk exploit the situation; they claim it is the best time in history to sell to consumers, making large sums of money while on the other side there are traditional corporations barely staying alive, most of them feeling sorry for themselves. It may be cruel but it’s true. In the end, no matter how you look at it, these are the early stages of a phenomenal growth cycle and those still trying to hold on to tradition and good old times will soon be forgotten (if they haven’t gone under already). Bronica is just one of latest reminders.
A new plant built in cooperation with Toshiba should increase production output by 200%
The incredible success of SanDisk is best expressed in growth rate of their shares. They’ve gone from 9$ to 85$ per share in just two years. Nobody is expecting this to be a constant rate (and it hasn’t been, current price per share is around 30$) but you get the picture. They’re also building a new production plant in cooperation with Toshiba (each company takes 50% of production) which will further increase their production by over 200%. Food for thought – they’re making roughly 1 million units per week as it is.
SECOND DIGITAL REVOLUTION (2003-20??)
To a certain extent it was the SanDisk press conference where we learned the most interesting data. Little things that traditional photography (or imaging as they prefer these days) companies have a hard time admitting although I'm sure they are very much aware of them. Some are actually trying to make a difference for themselves with restructuring, reanalyzing their market approach as well as complementary products and services. Of course I'm talking about so called feature phones and similar multimedia devices that are quickly becoming the reality of mass market photography. Perhaps you believe the current levels of quality doesn’t pose a substantial threat to traditional forms of photography but how is it different from early years of digital cameras? To paraphrase something I once heard on MTV of all places – whoever said progress is a slow process wasn't talking about these devices. In Europe we're seeing megapixel feature phones; in Japan you can already buy two or even three megapixel models. SanDisk expect the sales of feature phones to rise by over 300 million units per year in the next three years (from current 170 million per year level). 55% of these will have a resolution greater than 2MP and almost 10% will boast 4-5MP. In 2009 they expect the sales of digital cameras to level off at around 100 million units per year while feature phones continue to grow at an incredible rate and should, by then, reach 600 million units per year. Perhaps a different approach for those that don’t like figures... the “second” digital revolution will develop in three to four years compared to eight years it took digicams to become mainstream. All along you have to keep in mind the second revolution is going to be many times bigger than the first! As I mentioned earlier, those that refuse to reconsider their priorities and accept the new trends will soon be forgotten. Many, photo labs included, should start making some changes in their business or at least start thinking about it seriously. Don’t get left out the second time around!
Increasing annual growth rate
Together with advancements in optical technology the quality of final image will increase. Many consumers will switch over from low end digicams and everyone is aware of it. At Photokina we could see companies trying to open up new markets, adapting to trends and exploiting them in one way or another. Perhaps the most prevalent was the attempt to persuade customers into necessity of printing, the fun of printing your photos or viewing them on various devices. Even SanDisk introduced their own Photo Album.
Expanding market revenue growth
THE NEED FOR SPEED (& CAPACITY)
Let's venture into more technical side of things (relative I guess). We witnessed an introduction of three exciting new flash card series each serving its own market share. For the advanced amateur and pro we have the Ultra II series that gained some weight in gigabytes and now delivers capacities up to 8GB at speeds we have known before (9-10 MB/s). It also has an interesting feature in a form of a switch that creates partitions therefore making it possible to use on older cameras as well. If you’re very abusive when it comes to photographic equipment or if only the best is good enough (for your wallet) then you should consider the top of the line Extreme III series with lifetime warranty and priority tech support. With a special silicon layer it can stand up to abuse in temperatures as low as -25°C or as high as 85°C (that would be 13F-185F) however this is not what really separates these cards from the rest. By far the most impressive thing about them is a gigantic leap forward regarding speed of transfer. They jumped to twice the speed of nearest competitors and you can find them at the 20MB/s mark. According to tests by Rob Galbraith and SanDisk, none of current top end dSLRs can reach those speeds so we could be left wondering what the point is? At the moment the only stage of the workflow that will be affected is transfer to computer which I’m sure will delight many picture editors processing gigabytes of images after a certain event. However even this won’t be possible with just any old box under the table. To reach that high you will need top quality computers, most importantly disk drives, card readers etc. Perhaps you still wonder what the purpose of elevating transfer speed is but just think of future possibilities. If camera manufacturers figure out how to match card speeds we could even see a buffer-less camera that saves directly to the card and unlimited bursts at high fps. I must add this is pure speculation, whether it’s a realistic dream remains to be seen.
U.S. retail revenue share
SHOOT & STORE
S&S is a completely different concept. This series aims to conquer the low end of the market by convincing the consumers that shooting film or digital is essentially equivalent. Cards will be available in any shop, when you fill up one (with up to 100 images) you go and buy another (and another etc) saving used ones in a box or whatever. Just like film, without any need for a computer. SanDisk calls them consumable cards. Low price (10-15$) and availability around every corner contrary to current situation where cards are rather expensive and only sold in specialized shops is what SanDisk hopes will entice buyers. The responses I got from conversations with other flash card companies were pretty much unanimous. Most of them claimed this is only an attempt to clear old stock or overproduction and this is, to some extent, what SanDisk are saying as well although they will never admit it directly. I should add that Shoot&Store cards are no different that regular flash cards. We can always delete images and continue using the card over and over. The difference is in the fact that they don’t expect such use. They want people constantly buying new cards and storing old ones as if the cards were single use only.
I’m rather pragmatic regarding the issue. People have been losing CDs as long as I can remember, we have problems remembering where we stored certain files, we are worried about long term stability of current storage media and what might happen to new ones. Who can guarantee long term safety of files stored on flash cards? Most cards are so small we can easily misplace them?! I was even less convinced this is a good idea when I remembered what I heard from DATA RESCUE specialist who told me it only takes a short circuit or a stronger magnetic field to cause serious problems. Gone with the wind… I don’t plan on using my flash cards for long term storage until someone proves that I’m crazy and my doubts are unsubstantiated
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