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 Author Topic: Will there be a new H5D at the Photokina?  (Read 24266 times)
jduncan
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There is a big difference between a per-unit cost of production (money paid to suppliers) and cost of operation (salaries and office space).

Let use some imaginary numbers - please don't challenge me on these numbers, as they are just examples.

Leaf sells 1,000 units per year.
Average sale price to consumer \$20,000.
Average price paid to Leaf per unit by dealer \$10,000.
Total revenue \$10,000,000.

Expenses:
Let's say average cost of producing a unit is \$3,000 (BTW, there is minimal difference in the production cost of a \$40,000 back and a \$15,000 back.)
Production: 1000*\$3000 = \$3,000,000
Salaries and office space for 30 people: \$5,000,000
Total expenses: \$8,000,000

Profit: \$2m

Now let's make a 50% price reduction:
Lets say sales triple as a result of the price cut.
Cost of production goes down maybe 30% due to higher volume.
Cost of operations goes up maybe 20% due to higher volume.

So:

Leaf sells 3,000 units per year.
Average sale price to consumer \$10,000.
Average price paid to Leaf per unit by dealer \$5,000.
Total revenue \$15,000,000.

Expenses:
Average cost of producing a unit is \$2,000
Production: 3000*\$2000 = \$6,000,000
Salaries and office space for 40 people: \$6,000,000
Total expenses: \$12,000,000

Profit: \$3m

==>

You are working three times as hard, and making only \$1m more in profit.
Of course you could be selling now 5 times than before, and making \$8m profit - but if you sell only twice as before, profit would be \$0.

Negative side effects:
- Very increased exposure to fluctuations in costs, due to decreased margin. Now an earthquake in Taiwan can bring you to bankruptcy.
- Now you are taking bread out of the mouth of Canon - and they will make a move to compete and devour you. They can set up much more cost effective production lines, procurement and sales.

Regarding the actual numbers: the \$2,000 numbers is a correct number for 5 years ago.
There is no way the per unit production cost today is more than \$5000.

Not challenging your numbers, but I will borrow them to explain a little more where I see the risk. If medium format were competitive system wise with Nikon and Canon, or even Sonny, then,  we could easy bet  that lowering prices could boost the sales a lot.

Can price be at the cornerstone of the strategy? I don't know, but here are some points that make me wonder:

1. The system is not there. Hasselblad is the best, but not close to Nikon and Canon.

2. Blogs etc are invested on  Nikon, Canon and to the lesser extend Pentax and Sony. They made their money from companies that make money from those brands.  They need access to them, for reviews and press releases etc. The reviewers also shoot those brands, and understand them. Phase One is far better at this than Hasselblad, but is not even at the Pentax /Sigma level.

3. People have invested a lot on those brands, they have 3th   party lenses etc.

4. Most people shoot multiple subjects. If you are good you can shoot action with MF anticipating the moments etc, but even as good guy with a DSLR will be competitive with you. There is software stitching if very big prints are called for. Of course MF is better for a lot of situation. Plus the big view finder, the looks and colors. But the point is DSLR are competitive and when they are better, they are way better.

5.  Most people will not like to have a totally different systems. That is part of the appealing of the D800E. If Canon goes there it will be even more interesting (not for me, I do shoot Nikon).

6. Lowering the price to much could erase the competitive advantage for the working pro. That is: They will not be differentiating themselves at the camera level. (Creativity, service and technique are far more important in any case)

There are more, and in the post I am quoting, the author already talked about driving the reaction of Nikon and Canon.  About point 2 please note, as an example,  that the Pentax 645 did not got harsh notes about the so called "multi point focusing system". Even with the clustering of the points. Just imagine Hasselblad doing that.

Should they lower prices: Probably yes, but if they want to grow sales,  they have to Up the Image quality a lot (that will do at current prices), or improve the system  together with the price.

Best regards,

James
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english is not my first language, an I know is shows
sbernthal
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Lowering the price to much could erase the competitive advantage for the working pro.

The exercise of changing the price and see how the market reacts, yields drastically different results from b2c and b2b market segments.

When selling luxury products to consumers, past a certain price point, higher price does not reduce sales. There are enough people out there for which price is not a hindrance. Quite the opposite, the more expensive your product is, more exclusive and prestigious, the more they would like to buy it.

Professionals, on the other hand, need to eat their bottom line, so past a certain price point, they simply will not buy, unless their own sales justify it.

So what we have seen in the past few years, is a shift in the makeup of owners of high end photographic equipment.
More and more of MFDB owners are very well to do amateurs.
I believe at this point they make the majority of MFDB sales.
20 years ago I'm pretty sure the majority of professional grade cameras were pros.

Phase / Hasselblad don't care if you're a pro or not, only if you can pay the premium price.
They need a few hundred high level pros to use their equipment - some of which will get free or reduced price, and then make the killing from the amateurs.
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JV
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Phase / Hasselblad don't care if you're a pro or not, only if you can pay the premium price.
They need a few hundred high level pros to use their equipment - some of which will get free or reduced price, and then make the killing from the amateurs.

Sounds like the Leica model
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MrSmith
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Professionals, on the other hand, need to eat their bottom line, so past a certain price point, they simply will not buy, unless their own sales justify it.

So what we have seen in the past few years, is a shift in the makeup of owners of high end photographic equipment.
More and more of MFDB owners are very well to do amateurs.

very true, you only have to look at a lot of the posts on here and in the classifieds, people selling nearly new 50-80mpixel backs like they are deciding to swap from jag to merc or maybe a porsche.
maybe it's time for a dentist/optician/lawyer subforum?
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sbernthal
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Almost all the MFDB owners I've encountered are amateurs.
The few pros I know, buy either entry level backs or used, and struggle financially do to even that.
To buy a \$40,000 back, it would make sense that your income would be above \$200K - very few photographers are there.

The D800E, as a Simon Harper said here a few days ago, provides a very good solution for almost any professional photographer.
As long as you're not dealing with extreme technical requirements in the shoot, the clients will be perfectly satisfied.
I don't think this camera will be an MFDB killer, but it will further affect the makeup of MFDB owners, towards less pros and more amateurs.
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KLaban
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The D800E, as a Simon Harper said here a few days ago, provides a very good solution for almost any professional photographer.

You think they need the D800?

Most jobbing photographers have been managing perfectly well with 5Ds. The cameras are adequate, as is the work.
 « Last Edit: June 16, 2012, 01:37:00 PM by KLaban » Logged

sbernthal
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It's true that most pros use 5D.
It's true that most of that work in merely adequate.

I don't think it's true that if you see a photographer with a 5D, then you can conclude anything about the expected quality of the work.
I've seen some very nice works done with 5D.

What we're seeing is, that the prices remain the same for 5 years.
However, within these price, the quality of the cameras gets better and better.

If, 5 years ago, it would make some sense to make the extra investment in an MFDB, it makes less business sense now, with the new 35mm bodies.

This statement is arguable: "35mm cameras now are good enough for anything"
This statement is not arguable: "35mm cameras now are much much better than ever before, therefore good enough for a lot more tasks than before"
 « Last Edit: June 16, 2012, 01:58:35 PM by sbernthal » Logged
theguywitha645d
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This statement is not arguable: "35mm cameras now are much much better than ever before, therefore good enough for a lot more tasks than before"

Well, show us your data to support the statement and then it is not arguable unless your methodology is flawed. Otherwise this is just personal conjecture which is actually falsified by the fact the same work simply continues to be produced by these cameras as has always been. The same is true for photography as a whole. The advances in technology has increased the amount of photography being done, but cameras are still being used for what they have always been used for--pictures of girlfriends and family pets, holiday snaps, travel memories, etc.

As far as high-end camera sales, amateur sales have always out-stripped professional sales--there are more amateurs than professionals and the desire for the "best" has never changed.
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sbernthal
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What data?

All I said was that 35mm cameras are better today than before.
Surely that can be agreed as an axiom.

Then I said the following that, the range of what they are good for now, is larger than the range of what they were good for before, when they were not as good.

That is just logic, no data involved.

As far as high-end camera sales, amateur sales have always out-stripped professional sales--there are more amateurs than professionals and the desire for the "best" has never changed.

This one does require data - I've been around for a while, and in the 1970's and 1980's, I would be very surprised to find out that the majority of pro equipment owners then were amateurs. I would love (really) any supporting reference to that statement.
 « Last Edit: June 16, 2012, 03:01:24 PM by sbernthal » Logged
theguywitha645d
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What data?

All I said was that 35mm cameras are better today than before.
Surely that can be agreed as an axiom.

Then I said the following that, the range of what they are good for now, is larger than the range of what they were good for before, when they were not as good.

That is just logic, no data involved.

You said that that was a statement that could not be refuted. I do not think that the part where cameras are really being used for more than they used to in the past is actually true--unless you had some data and then my perception would be incorrect. And "logic" based on personal bias tends not to be logical.

Quote
This one does require data - I've been around for a while, and in the 1970's and 1980's, I would be very surprised to find out that the majority of pro equipment owners then were amateurs. I would love (really) any supporting reference to that statement.

Me too--I was around in that period and would like some numbers (but I never suggested my statement could never be challenged). Still, most of the high-end cameras I saw where owned and operated by amateurs, just as it is today. So what would be different to change the sales dynamic? Professional photographers make up such a small market which is why advertising in popular photography magazines for high-end equipment were so common and listings for this equipment for retailers like B&H carried this stuff--I don't think I have ever met a professional that subscribed to these rags, but many of the amateurs I knew did. B&H and similar stores do make their money with volume purchases. Do you think photographers like Ansel Adams had workshops populated by professionals? The whole workshop scene was coming into its own at that time catering to the hordes of amateurs welding some pretty sophisticate toys. And the medium- and large-format enlarger market I doubt was being supported by the opening of professional darkroom--someone was shooting the film for those enlargers. I also knew lots of students during that period that were shooting some really top-line equipment, very few went on to be professional. I actually think it is harder to come to a conclusion that amateurs were not the driving force in high-end equipment--if I use the same logical process you do.
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sbernthal
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You said that that was a statement that could not be refuted. I do not think that the part where cameras are really being used for more than they used to in the past is actually true--unless you had some data and then my perception would be incorrect. And "logic" based on personal bias tends not to be logical.

I didn't say 35mm cameras are being used more.
I said they are "good for" more.
That follows from the assumption that they are better, and is not data based.

Regarding amateurs in the olden days - that might be true, I have no idea.
The only thing I know is that I had a Zorki and a Fujica back then.
The only people I knew with cameras had 35mm reflex at best.
I didn't know anybody with MF or LF.
I believe the distribution of wealth is quite different now, and that affects ownership numbers.

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gerald.d
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The production cost of a digital back that is sold for \$30,000, is \$2,000.

There is no way the per unit production cost today is more than \$5000.

Or alternatively, perhaps you should be a little more careful with your presentation of opinion as fact?
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gerald.d
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There is a big difference between a per-unit cost of production (money paid to suppliers) and cost of operation (salaries and office space).

Let use some imaginary numbers - please don't challenge me on these numbers, as they are just examples.

Leaf sells 1,000 units per year.
Average sale price to consumer \$20,000.
Average price paid to Leaf per unit by dealer \$10,000.
Total revenue \$10,000,000.

Expenses:
Let's say average cost of producing a unit is \$3,000 (BTW, there is minimal difference in the production cost of a \$40,000 back and a \$15,000 back.)
Production: 1000*\$3000 = \$3,000,000
Salaries and office space for 30 people: \$5,000,000
Total expenses: \$8,000,000

Profit: \$2m

Why not challenge you? They are absolutely farcical in pretty much every respect. You quite clearly have no background in either accountancy or running a business, because if you did, you'd never have come out with such a purile and meaningless example. Go look at a few P&L's of publicly quoted companies. Get an understanding as to the costs involved in running a business, and then try again.

This assertion that "there is minimal difference in the production cost of a \$40K back and a \$15k back" is most intriguing though, so let's dwell on that.

Would you assert the same for other electronics such as displays and memory, where the difference between upper and lower ends of the product range is also primarily measured in terms of density of the fundamental building block of the product?
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sbernthal
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I said very clearly these are not real numbers, just an exercise.

Instead of calling them farcical, why don't you educate us and put in the numbers you think are closer to reality?
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gerald.d
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I said very clearly these are not real numbers, just an exercise.

Instead of calling them farcical, why don't you educate us and put in the numbers you think are closer to reality?

Because I have better things to do than waste other people's time with made up nonsense.
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High end amateurs will only follow up to a certain level (read the book  about Trading Up from Silverstein). When a camera costs 6-7k, like a high end Canon / Nikon / Leica, they will follow / trade up, even if they use only a fraction of the camera's potential.

When a camera system costs the price of a car, they hesitate and drop off.

I am sure there are pretty high volumes to gain from a below 10k system. The initial R&D investment is fully recuperated now.

Now it is time to bring in these high end amateurs (like Leica does with the M series) with an attractive price point or it will be the end for some MF manufacturers. They will not survive in the long run by only selling to pros who make the 200k income level and change their backs once every 3-4 years.
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Chris Livsey
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Now it is time to bring in these high end amateurs (like Leica does with the M series) with an attractive price point or it will be the end for some MF manufacturers. They will not survive in the long run by only selling to pros who make the 200k income level and change their backs once every 3-4 years.

"They" seem intent on locking out the high end amateurs by restricting the availability of used backs following pro trade in. That was a mistake as trickle down would have developed the user base which, by this activity, is a much smaller number than it could have been. In turn bringing out a price competitive new offering would have had a base ready to trade up, surely easier than selling in from new?

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Chris Livsey

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eronald
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This one does require data - I've been around for a while, and in the 1970's and 1980's, I would be very surprised to find out that the majority of pro equipment owners then were amateurs. I would love (really) any supporting reference to that statement.

I don't know about then, but I do hear stuff now: Reps of pro 35mm equipment moaning.
-The pros have no money, getting paid less, so they buy amateur equipment.
-Amateurs mostly are buying pro equipment
-The amateur departments of the camera corps give the shops/reps hell because their sales are getting lowered by the sales of pro equipment to "their" customers.

Edmund

PS. You can see a bit of the same situation here in Paris in the taxi market which used to be dominated by Mercedes limos that were much nicer than most private cars. Now your taxi is often a badly maintained compact with children's seats or a grocer's wagon with tubular seat frames, while many middle class people own large private cars.

Edmund
 « Last Edit: June 18, 2012, 03:26:12 AM by eronald » Logged
ondebanks
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But back onto topic... I hope they do have something new at Photokina... I don't think it'd hurt, but the H4D system is still relatively new by MFD standards.

Yes, back onto topic. No-one has said why there should be a new H5D? What (more) would you want in the body? [Let's hear some specifics - that would be more interesting than debating production costs].

Now the sensor/back is another matter.

For starters, Hasselblad should learn how to properly exploit the best-in-class dark current of their Kodak 6-micron 40MP and 50MP CCDs. If Phase One can deliver 1 hour noise free exposures with the previous generation of 6.8 micron sensors, there is absolutely no excuse for Hasselblad being stuck at 1 - 4 minutes with sensors which have roughly one quarter the level of dark current.

Ray
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Restricting user base is indeed a mistake. They could sell that much more lenses.
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