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September 28 - October 3, 2004
Cologne, Germany

Photokina provides a unique view into the world of imaging every two years. There is no other trade show in this category like it. The event statistics are impressive:

1,589 Exhibitors from 50 countries
160,000 visitors from 139 countries
200,000 sq m of exhibit space

This event is a reflection of guess what? – the transition to digital.

Digital Reflex cameras grew at 500% the first half of 2004

There will be 200m camera phones sold in 2004

In 2003, 450 new digital cameras appeared on the German market

The household penetration of digital cameras in the US is now 33%, up from 28% in 2003

It is expected that there will be 70m digital cameras sold in 2004 – however, these estimates continue to be modified due to higher sales rates that have happen already in 2004

Texas Instruments – Camera Market Dynamics

When it comes to building imaging products that are flexible and responsive to market changes TI has a strong position in the camera processors using their DSP engines. The WAVE gained an excellent overview of the processor side of the market when we spoke with TI.

TI has approximately 25% of the market for camera processors. This is based on their DSP technology. The MPU core which they support and is embedded in the processor is the ARM 9.

The market for camera processors is in three segments:

Programmable processors
ASICs
Custom platform designs

TI is the leader in the DSP based programmable market. This is a vertical application of its horizontal processor family. They do not make sensors or Flash memory. But they do provide the analog front end, timing, processor and power management chips.

The current process technology they are on is 130nm with a transition to 90nm. A given processor family will last 3 – 5 years in the market.

There is not an issue with the power consumption of these processors in that the power consumption of the sensors drives battery usage. TI’s processors typically use only 300mw.

The market dynamics around embedded processors in cameras has a close parallel the embedded processor market. That is:

Big design wins drive volume and thus, the revenue side of the business for TI.

Once a customer, they do not change to not being a customer for a long period. The learning curve to use a processor, with the embedded OS and all the modules needed to do a camera, creates a long term customer over generations of products.

The processor is a platform.

Expansions to the offerings, such as red eye reduction, come from 3rd parties seeking to add value to the platform.

ODMs that use the TI platform, for cameras, are an important vehicle to market. Most of these are in Taiwan,

There is the silicon cost and the software cost. Typically modules which support both MPEG and JPEG have a royalty fee based on usage. Thus, there is a great incentive to expand the capabilities via software to be competitive against ASICs for example.

From a competitive perspective TI is competing against lower cost producers of ASICs that just do a set of fixed camera functionality. TI argues that software programmability is a major advantage to market, especially in the rapidly changing camera market.

Another competitor is the large companies such as Sony who make their own processor modules for cameras. They might have 200 engineers on just the processor section. These modules are both an internal platform used on many products and a competitive advantage. Thus, the development of a module also sets the foundation road map for future products in the large camera companies.

Given the intense competition within the overall market it is a significant that TI has gained 25% market share. Certainly TI would like to do more but this is a long term proposition given the attributes of the market, described above.

The WAVE posed the question – given that in cost sensitive markets does not the software based programmable approach eventually lose as every cent is driven from these designs. In response, TI stated that in the most sensitive imaging market, cell phones, the DSP is in virtually every device. Price had not driven this out of the designs.

When asked to describe how camera companies build on the programmability with the TI DSPs two, examples were cited.

Eastman Kodak has a large library of techniques to process images based on 100 years in the business. They continue to evaluate what techniques should be placed in a camera based on processor capabilities and price. One area which Kodak excels in is IQ. Processing images in low light is an area where they can detect the image characteristics and apply Kodak technology to improve it. Thus, having a programmable architecture is critical. Kodak expresses its core competency in the cameras with DSP programmability.

HP recently released a camera which creates panorama’s on the fly. This is in-camera automatic image stitching. The way it is done is to guide the consumer with a bound to overlap one picture to the next on the next exposure. Then the software does the stitching. HP has also added red eye removal from a TI 3rd party.

Red Eye reduction is being shown in booth. The process automatically detects and eye in each shot and removes the color artifact.

The price of its chip runs from $5 to $15 based on quantity. Typically TI finds itself in the market were the ASP is $100 or more. Recent market research indicates that the sweet spot of the camera market is $430.

Carl Zeiss – Back with Passion

The phrase above comes directly from the booth. Carl Zeiss has long been known as the best in optical design. Sony uses them extensively in a number of their products – especially the low end consumer cameras.

What attracted the attention of the WAVE is the announcement that Carl Zeiss did the optics for a camphone imaging module. This first product is only for a 640 X 480 imager and one would immediately respond – ho hum. Wrong. What Carl Zeiss has made is a 3 element lens with one of the lenses having an aspheric. Wow. It is here that the competence of Carl Zeiss drives the optics. Even these low end camera optics suffer from: vignetting, flare and distortion and the Carl Zeiss to bring quality into the camera imaging system.

The optics mates to a CMOS sensor by Dialog Semiconductor. The optics assembly is 6mm in diameter and only 5mm in height.

What is most significant is that Carl Zeiss claims the price of their design is “similar to” much lower quality lenses designs.

The quote from the President of Dialog Semiconductor in the announcement of this module is also interesting.

“The battle for the next generation of camera phones will be decided by the combination of CMOS image sensors with innovative optics,' explains Roland Pudelko, CEO and president of Dialog Semiconductor. Pudelko considers 10 mega pixels in the camera phone to be well within reach.”

Dialog Semiconductor

http://www.diasemi.com/

JVC Creates a Quantum Shift in CE for Photos and Imaging

Good bye magnetic tape for home video. We have seen this trend develop in multiple CEATEC events but here at Photokina it is a reality. JVC has announced two “Media Cameras” which use a CCD sensor that uses a micro drive – 4GB for the most effective performance. The models are the GX-MC100 which stands vertical and the GZ-MC200 which lays flat. The camera lens has 9 groups and 11 elements and supports 10X optical zoom. One of the most impressive aspects is the ability to record 60m of MPEG-2 video and AC 3 audio on the removable micro drive. This is equivalent to 720 X 480/i video. Lower quality video will support up to 5 hours of recording. The still imaging is UXGA with up to 5,595 recordable on the disk. The camera supports USB 2.0 and PictBridge. There is a CyberLink software bundled with the camera which allows for one hour of video to be recorded on DVD—R/RW. The cameras have a built in 1.8” LCD display panel.

The unit will ship in November and cost approximately $1,300.

Fujifilm – Striking Concept Products

One of the dominate features of these cameras is the integration of displays.

A glove which combines a camera module on a finger tip with a display on the back of the hand.

A display and camera in a circular tube about 1/2” diameter and 4” long. The camera is in the tube and the product of the picture is actually printed from the tube.

A headband camera and display, and

A very small camera integrated into the frame which appears like a transparent sheet of glass. It is actually the frame of a display.

Impressive design concepts.

iTech Electronics

This is a China based OEM camera company. They are located in Shenzhen. The brochure was very well done and the camera designs modern. The cameras, all still, are quite simple. They are based on the reference designs of SunPlus Technologies and do 3mp cameras with CMOS sensors and glass lenses. They are fixed focus. The price is $60 - $70 for 100,000 units FOB Hong Kong or Shenzhen. It was very easy to discuss the market and technology with iTech. They were brimming with enthusiasm on the potential of the market – basically we only need to get a few percentage points of share and we will do well.

Alteck – We cannot make cameras fast enough

This booth was just a white wall with a door. Nothing to show, only a place to sit. I was fortunate to find the VP for the DSC business Unit outside talking with a competitor. All the other times I have passed the booth, the door has been closed.

M.F. Yen began by stating they built 3.5m cameras last year, and could not build any more. Alteck could reach 6m this year. If so, this company has 6 - 8% of the market.

Their cameras use CCDs and have glass lenses. They have their own processor. The camera designs also support auto focus. Much to my surprise they get their glass, i.e., optical assemblies, from Japan. This is especially important for zoom lenses. It is his view that the Taiwan optical industry is not to the quality level required for many but the low end cameras.

Cameras at the low end of the market, which Alteck does not make, will use CMOS and have lenses of glass or plastic. For these cameras the optics be they glass or plastic are sources in Taiwan.

One of the problems with plastic is water absorption. The quality suffers as one takes the camera into and out of the home.

Altek works in three business models:

Black box

The customer gives us a spec and respond with a design. This is the basis for what the customer buys.

White box

The customer buys one of our cameras and we label it for them.

Grey box

This is in-between the two extremes above. Typically, the customer works closely in some aspects of the design or may even do some of the processor programming themselves.

Altek has considerable experience in IQ optimization, however, some of our customers are more experienced and they choose to do some of the product optimizations by them selves.

When asked which sensor technology is best for low light the response was blunt. CCD is not good but CMOS is even worse.

Altek only does DSC and no video.

The interfaces which they are being asked to support include Photobridge and increasingly camera docking stations. Even though the company supports USB this is being requested less and less. The PC is falling from the camera design radar screen.

Premier Image Technology – We do not need your business

The WAVE Report sought an interview the Premier Image Technology. This company was mentioned many times during our time at Photokina. We depart from the usual interview reporting given the response of Premier to our request.

This is the “premier” supplier of cameras, both still and video, in Taiwan. The booth looked like a prison block. Entrance to the booth, which was no more than a line of closed conference rooms was watched continually. A woman manned a PC with scheduling software. If you are not on the list you did not get in. A customer asked to see someone, while I stood there, and was put off for 3 days. It was not clear everyone from the company was busy as many were just standing around outside the booth. There were also what appeared to be customers just waiting around. I spoke to some of these stringers from Premier as they stood outside and it was like a blank wall. This was not a language issue – they just would not answer even the simplest question. I finally spoke with Betty, the woman doing the scheduling. One of the problems I posed was that my questions were technical, such as, why use a CCD over CMOS? She “promised” me an appointment in the afternoon. My experience has been, if some one from Asia does not want to do anything, this is the “nice” way to put them off. With that I was back at 2pm to get the details of the appointment. Betty was surprised. She promised me that she would be prepared to see me at 5pm. I again stated that I was interested in technical information. With that I was back at 5pm. Betty was not there but Bo Liu, the Sales Department Manager was. He just wanted to chat. I insisted we sit down. He took me to a stool in the back and stood all the time while I wrote his responses to my questions. From the start he insisted that he only had 15 minutes.

The conversation was amazing. He described how they are flexible in the way they do business with customers. But when I asked him how they work with a customer to select the imaging chip he thought this was not an issue because the customer had the design already completed. Another question was about the processing chip and he said he could not answer that question. I responded that I knew they used TI and he refused to comment. When asked about the trades between glass and plastic he said the design was already done. I pointed out that these are contradictions between the desire of the company to work with new customers and his insistence that they select only existing Premier designs was inconsistent. He said that yes they do want new business that is not from existing customers. Bo insisted that I had only 15 minutes. With that the “meeting” ended. It was made very clear that his performance did not reflect well on his company given its distain for the press.

Mustek - Driving the Low End

The WAVE has known Mustek for many years, having toured their factories during the coverage of Computex some years ago. Their strength is scanners and they even sell these in their own name. Our attention to their booth was directed to a web cam in the shape of a soccer ball. In discussions that followed Mustek was both open and informative.

Mustek provides products across a spectrum of OEM requirements. Many of the OEMs come to us with a design specification and we tune one of our designs to meet the need. Our products are positioned at the low end of the market – we make fun products.

The company manufactures its own products. We have 3 factories in China and turn out 20,000 to 50,000 cameras a week.

In the sensor trade offs CMOS has the advantage with:

Greater availability;
Lower power;
Higher speed; and
Lower Price.

CCD’s have the advantage of quality but availability is a problem. Sony is a major factor in controlling the supply chain.

We have products that use both CMOS and CCD. The image processor we use is SunPlus.

Most of our cameras support both still and video. The video is MPEG-4. We do not support MPEG-2 as this is another step up in quality and the cameras are much more expensive.

The web cam market is driven by price. We even have one That sells for 20 Euro on the German market – retail.

Most of our lenses are fixed focal length fixed focus. We do the lens design for these products in-house. For variable focal length lenses we go to Ricoh in Japan.

Chicony – Seeking to go Beyond Keyboards

Chicony Electronics is known for their keyboards, one of the largest keyboard manufactures. Yet, the company has struggled to get beyond this product space. Some 5 years ago they entered the notebook market and it was a disaster. For at least the last 5 years they have been selling cameras. The booth also had a number of web cams on display. Another interesting discussion followed.

The web cam market is biopolar. There are web cams for the PC which are fixed focus and limited capability. This market is driven by price. The only other web cam market, with some innovation and higher price, is for video conferencing. We do not play in that market.

All our cameras use CMOS. The use of this sensor is all about supply and price.

Our technical ability in the market is supported by the relationship we have with Skanhex who helps us on product design and the technical aspects of the cameras.

It is hard breaking into new markets, We have found that it takes at least 5 years to develop the market. Now we are seeing customers come back after 5 years with us.

Yes, the market in Taiwan has changed significantly in the last few years. Companies have had to become much more specialized. It is no longer about building reference designs. Premier is a good example, as a market leader in imaging. They have the expertise and customer base to determine who they accept as new customers. Core competency is a significant barrier to entry in imaging and many other electronic markets in Taiwan.

Skanhex – Depth in Cameras

It did not take much to realize this company has a technical foundation we have not seen in most of the Taiwanese companies spoken to at Photokina.

We are an OEM/ODM supplier and do not sell our designs directly. We work with our customers to tune designs to meet their needs. Our position in the market is high end still cameras. We do our own production in China.( I was shown a camera which had 8X optical zoom with a 4mp sensor.)

The company works with both CMOS and CCD.

We use image processing chips from:

Zoran
ATMEL
SunPlus and
MegaChip - Japan

Our sensors come from:

Sharp
Panasonic and
Sony

Camera lenses are supplied by:

Richo
Samsung and
Konica

and these lenses are all zoom and with auto focus.

We asked many companies – will you do a design of an imaging camera that works in low light? This was the only one to respond that they have the engineering talent to do so.

Skanhex Technology

http://www.skanhex.com.tw/

WAVE Comments

As Carl Zeiss made clear the technology of taking pictures is old and the core competencies run deep. Such experience provides a strong lever arm for entering digital market. Canon, Nikon, Fuji, Sony and JVC are innovators. Carl Zeiss is seeking a reentry, in part, with a cell phone camera module. HP is one of the few PC companies in this space while Kodak is an analog company which tries hard to make cameras. Thus, color science, imaging expertise and image processes are all skills that fit well in these new markets. Old science implemented in new technology.

As we found out here at Photokina, this is a business driven by growth. Demand is not an issue. There is no excess capacity in plant or engineering talent.

http://www.koelnmesse.de/wEnglisch/photokina/index.htm