I understand the emotional attachment that people have to the tools that they use to create art. Whether the endeavor is considered commercial illustration or fine-art, the tools are part of the creative process and to some degree become an extension of the artist. I also, therefore, understand when emotions affect our attitudes about the direction that we would like to see companies, that make those tools, take and our desires for the tools we'd like to see them produce. There are, unfortunately, some cold hard financial and business realities at work in the medium-format photography market that are simply unavoidable and just starting to be fully realized.
First, there is no longer any profit to be made selling medium-format SLR cameras to the public. There is no balance or combination of volume and price that will make them profitable to sell for any company. The simple notions that a company can either reduce prices to increase volume or raise prices to increase profit do not work for this market. The factors limiting demand and volume for medium-format cameras are not directly related to the cameras themselves. The primary factor limiting medium-format camera demand is the high cost of digital backs compared to 35mm digital SLRs.
There was a healthy medium-format camera market when film was king. In the past, the cost of a medium-format camera was thousands of dollars higher than 35mm, but the cost of using one (film and processing) was comparable. As demand for digital cameras replaced demand for film cameras, the cost for a medium-format camera was still thousands of dollars higher, but the cost of using one for digital capture added tens of thousands of dollars to the cost! Demand plummeted for medium-format and once healthy manufacturers went out of business and they all lost money at a rapid rate. This is where we are today. Hasselblad, Mamiya and Rollei are left standing in the medium-format SLR market. All have been through severe financial problems and have been sold, merged or reorganized multiple times.
If there is no longer any profit in making medium-format cameras, how will the remaining market be sustained? The answer is that the cameras left will have to be subsidized and supported by the sale of digital backs. Medium-format cameras and backs have reached a symbiotic financial and market relationship. The reality is, medium-format camera manufacturing can only be sustained by the sale of the digital backs that are connected to them–not electronically, but financially. The other half of this financial/market mutual reliance is that digital backs need cameras to connect to, in order to have a purpose and survive.
The real-world proof, of all of this, is the past and present market. Those medium-format SLR makes and models that did not also have the sale of digital backs as a source of income are gone. Those remaining are all tied financially to digital back sales of their own make or in the case of the Hy6/AFi to others. Hasselblad has already indicated that they have little or no interest in the business of selling cameras that are not mated to their digital backs. The Sinar/Rollei/Leaf Hy6/AFi would not exist without the financial support of R&D, sales, marketing and service that are provided by Jenoptik and Leaf. The maker, Franke & Heidecke, no longer has the financial resources and has positioned themselves as a contract manufacturer. Mamiya has had very severe financial losses and it remains to be seen if their late entry into the digital back/camera market can return them to a healthy financial state. The plans of Mamiya's new owner, Cosmos Scientific Systems, Inc., remain unknown. I've left out Pentax, as they are missing-in-action in the medium-format digital business and are in the process of being absorbed by Hoya.
Given the financial reality as it exists now, I would anticipate that in the future medium-format cameras will follow the trend of camera and back being designed, marketed and sold as integrated units. There is simply no financial justification to make a money losing product, unless it supports income from a profitable one.
The business of selling digital backs has not always been profitable either. You may be surprised to discover that Phase One has operated at a loss in many of the past years. The current CEO was appointed in 2001 and given the task of turning the company around. The group of banks and venture capital firms that owned Phase One wanted to groom the company to take public or sell. In 2002, Phase One diversified by becoming a software company with Capture One for Canon, Nikon and many other cameras. After years of losses, in 2003 Phase One turned a small profit. 2004 was considerably better and by 2005, the owners were actively trying to find a buyer when they could show three straight years of profit. No buyer was found and in 2006 the company was sold to four current Phase One managers (75% share) and a danish venture capital firm (25% share).
The problem facing Phase One is not their current financial position, but future direction. As a software company they are going to be hit hard in market share by Adobe and Apple. DxO will take another slice.
In digital backs, Phase One is not providing any financial incentive for a camera maker to provide them with a platform. If I have made anything clear with this lengthy post, I hope it is the business necessity that is now emerging for medium-format camera manufacture to be financially supported by the sale of digital backs. Being offended by this fact, will unfortunately not change it. You can expect that Phase One is now actively searching for a camera to be tied to not just electronically, but financially as well–for their own future prosperity. The days of medium-format cameras and digital backs that are connected electronically, but not financially, is rapidly coming to a close–not because any of these companies are uncaring, evil or have bad intentions, but to survive into the future.
