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« Nikon losing sales over encryption debacle | Main | Nikon's photo encryption reported broken »


Zetetic Sastrugi

Canon's Take on RAW very similar to Nikon:

Recently Adobe announce a new "RAW" image format, the Digital Negative (DNG). What are Canon's thoughts on this?

The RAW file format is proprietary and is designed to extract the maximum information form the image. On the other hand there is value in standardization, which makes it easier for software to deal with the files. However standardization makes it more difficult to change and improve the format. With a proprietary RAW file we can make changes and improvements quickly to deal with advances in camera technology. We have no problems with the Adobe proposal for standardization, but for now we will stick with our own proprietary RAW format.

Barry Pearson

I've been trying to put the dilemma faced by Nikon & Canon into perspective, to see what their answer might be to: "A future in which Japanese corporations sell all the hardware and Adobe makes all the software and all the profit". I'll use my own case as an example, although I use neither Nikon nor Canon.

I bought Photoshop 6 in 2001, upgraded to CS in 2004 when I bought my 1st digital SLR, and I will probably upgrade to CS2 later this year. Surely that is a massive expenditure that hardware manufacturers can tap into?

Not really! In that time I have bought 2 35mm scanners, 2 printers, a digital SLR, 2 extra lenses with more to come, and some 1GB memory cards. I have spent more on scanners than Photoshop. More on printers. More on cameras. About as much on lenses so far. Far more on paper and ink than Photoshop! Photoshop (the top end version) is just about my cheapest expenditure on photography, and much of that was in the initial purchase, rather than the upgrades every year or 3. Surely I am not alone?

Why can software companies make a lot of money? Because, while software has large development costs, it has low manufacturing costs. So there are various models that software companies can adopt. They can go for a huge market, and sell it cheap. (Windows). They can go for a small market, and sell it expensive. (Photoshop is towards that end, but that are more extreme cases in other fields). They can spread the development cost over multiple products, and have a mixed model. (I assume that is what Adobe do with Photoshop & Elements). They can use a small, highly innovative, team, and sell into a niche market. And so on.

How can Nikon or Canon take advantage of this characteristic of software? Which model should they adopt? How can they hope to take money off us?

Are they going to try to divert my Photoshop expenditure to themselves, by supplying a genuine replacement for Photoshop? Get real! Are they really prepared to spend the development money needed to compete at that level? They have to live with the fact that they are competing for the rest of my budget, not the Photoshop part. (I suspect they hate that thought). And, besides, when spread over the years, it actually isn't that much.

If they tie their software to their hardware, they have immediately restricted their potential marketplace. Adobe can sell to both Nikon and Canon, as well as the rest, and in fact sold Photoshop 6 to me long before I bought a digital camera that even could be tied to a photo-editor. And if you have a smaller market, you need to sell at a higher price to recover your development costs, or spend less on development in the first place. (The hardware manufacturers appear to be doing the latter!)

Whatever they do, if they tie the software to the camera, its price will appear to be part of the price of the camera. And if the photographer is working to a budget, that means fewer hardware purchases, or buying a cheaper model. Do Nikon and Canon make relatively more profit on top end or cheaper models? If it is on top end models, they surely don't want to cause people to buy cheaper models! (Perhaps they hope to cause photographers to work to a higher photographic budget?)

"Vertical integration" of hardware and software must be tempting to them, but even IBM, which did well out of it in the computer business for a long time, fell down eventually.

I am not about to spring a surprise answer, or prove that Nikon and Canon are wrong to try to make money out of software. I simply don't know! But I would hate to be the person changed with solving their dilemma. It isn't a "Japan versus the West" problem, it is a "hardware versus software" problem. And they chose to get into hardware!

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