This Month's Spectrum Summary:

(The following is an excerpt from the July 2003 issue of Spectrum. Spectrum is a proprietary monthly briefing published exclusively for the clients of I.T. Strategies, Inc. © 2003)

The Digital Photography Puzzle: Irresistible Lure, Trends and Traps

This month I.T. Strategies analysts discuss today's volatile digital photography scene and evaluate opportunities.

First, some positives. Photography is a natural fit for digital printing since most output is variable. Also, images, more than information, convey emotion; and emotion, though priceless, sells. Digital camera sales are rapidly growing. There is strong demand for edited, large-size prints which may bode well for digital mini-labs. Noritsu has introduced a new line of photo processing mini-labs using Epson inkjet technology. Those concerned with image archivability are advised to go with hard copy rather than digital files since storage media and file formats change frequently and files can be lost.

Then, some negatives. One recent survey indicates a big jump in digital camera owners who feel prints are "not important." Feeding this trend may be the reality that getting digital images printed needs to be simplified. In addition, the decision by HP and Kodak to abandon their Phogenix joint venture might be seen as a shadow on prospects for digital mini-labs.

To simplify home photo printing, Kodak has introduced a new digital camera docking station. This allows the user to specify which images to print when the picture is taken, and these will be automatically printed back home when the camera is docked. The new station is compatible only with new Kodak cameras, which is seen as a limitation, but it looks like a profitable venture for them.

The problem for Phogenix was apparently an unsatisfactory risk/reward ratio. It looked like it would take time for people to change their habits and grow accustomed to going outside for prints. PMA research shows only a small minority of digital camera users at this time go outside for prints. One way to improve the mini-lab and kiosk business would be to take the concept further and offer output that cannot be done at home such as full-scale albums.

Future developments that may drive growth in digital photo printing include wireless downloading and self-serve kiosks. It is expected that wireless will be introduced soon, thanks, perhaps, to Intel's new Centro Mobile Technology. The phone camera print kiosks, already common in Japan, in time may find popularity elsewhere.

Among the opportunities listed are products to simplify home printing such as the new Kodak docking station, faster printing, perhaps adapting EP technology, and kiosks or labs that can produce hardcopy photo albums and other formats that cannot be printed at home. Digital photography is still relatively young and volatile and calls for measured rather than bold strategies.