digital back prices

[eronald]

I thought the industrial revolution, and things like cars, jet travel were essentially based on the idea of economy of scale. Ah, yes - chip production, also. In fact there seems to be a trend that electronics generally get cheaper the more one makes off them, as what one designs is essentially the tooling and not the object, and marginal item costs are minuscule compared with production startup costs. Also there's a learning curve during production: You make more of a chip, it costs you less and less because you amortize the design but also because you push the yield up year by year. You make more of a machine and your materials costs decrease.

Edmund

David

Why would Phase One want to create products that costs less, that sell to more? By doing so, they necessarily lose a piece of their technological advantage, as inevitably, compromises are made in order to push product pricing downward, in order to attain greater unit sales numbers. By doing so, they lose ground to the companies that already play in those lower price point markets, in terms of their unique feature set advantages.

Steve Hendrix
Capture Integration

[Steve Hendrix]

Wonderfully said. The distribution and marketing costs of luxury goods are of necessity high to achieve the luxury positioning, and thereby justify the luxury pricing for said goods. You should be teaching a course in a Paris fashion business school.

A few years ago a restaurant opened over here, nice menu, tables, cutlery, service, high bill. The originality was no food was served, but in spite or because of this feature the place did stay open ... for a while.  

Edmund

Edmund, you cut out out the word "creating" (which is certainly a substantial portion of the cost) and harpooned only on marketing and distribution. Rather than just focus on the core material costs, I do understand that there are more costs associated with the end price of a product. Since David has a post degree in finance and accounting, I was surprised to hear that conclusion from him. If the separation between the "costs" associated with MFD and the selling price is so great, as many seem to believe, then Phase One must be one of the most financially successful companies in history. And in that case, then it really would be a head scratcher as to why Phase One would want to risk that for greater market share.


Also - David, you have been focusing on the market being for professionals and/or rental houses, based on Doug's sales data input. That is completely missing the fact that the amateur market has been the highest growth market for at least the past 5 years for Phase One. Yes, these amateurs can afford MFD, and they are not professional photographers.


Steve Hendrix
Capture Integration

[eronald]

Is the "cost" of a balloon the price of the rubber thingie, or the hot air to blow it into a ma

Edmund,

 If the separation between the "costs" associated with MFD and the selling price is so great, as many seem to believe, then Phase One must be one of the most financially successful companies in history.

Steve Hendrix
Capture Integration

Or, maybe, their indispensable marketing and management personnel, advertising costs and general expenses are eating up their sales revenue.

Edmund

[Steve Hendrix]

Is the "cost" of a balloon the price of the rubber thingie, or the hot air to blow it into a ma

Or, maybe, their indispensable marketing and management personnel, and general expenses are eating up their sales revenue. This is a common situation in the computer industry, just look at Microsoft who were explaining a few years ago that a retail CD of Windows sold at retail in Europe (no computer) had to cost $500.

Edmund

Edmund

Or maybe, not eating up sales revenue, but contributing toward it...

Great analogy with Microsoft by the way, just dead on...

Regardless, however one would like to think they know how the costs add up to MFD prices, I still hold that while Phase One could indeed lower prices and catch a larger market, they choose not to (IMO), possibly for good reason.

It wasn't long ago that Hasselblad pretty famously dropped their pricing across the board by an average of 30%. We were calculating that to make up the lost revenue of that reduction, they would have to roughly triple their unit sales. I don't think that happened...And since then prices have actually gone back up.

So assuming, by affordable, that David means somewhere in the $10K - $15K range at most, then we're banking on Phase One increasing their unit sales by a factor of something in the neighborhood of 7 - 8 X or more? I don't see that as anywhere near a sure thing. And even if it projected as a possibility, Phase One would have to want to do this. As it stands now, they have a tremendous license to create really great products without too much (reasonable) need to keep an eye on the budget, and recent years have brought record validation that people are digging what they're doing. I don't see anyone at Phase One telling the group - guys, this isn't going the way we'd like it to.

I'm not against affordable pricing and I'm not against creating great products regardless of ultimate cost (if you're successfully doing so). I like to understand. I understand David, what you (and others) want. But that doesn't mean I can refuse to understand what Phase One wants (and does). And given the results, I also don't agree they have something that is broken and needs fixing (from their perspective).

**Now, back to deconvoluted sharpening!


Steve Hendrix
Capture Integration

[ErikKaffehr]

Hi,

My guess is that Phase One can set whatever prices they want, after all, we live in a free market economy. There is competition in the MF market, that starts with Pentax, over Leica, Hasselblad and Phamiya. If the market was that lucrative, we would see more competition.

On the other hand, we may see more competition. Technical cameras just became more attractive with live view and I think Alpa, Arca and Hartblei would gladly cooperate with anyone offering an MFDB at a reasonable price.

Best regards
Erik

Or maybe, not eating up sales revenue, but contributing toward it...

Great analogy with Microsoft by the way, just dead on...

Regardless, however one would like to think they know how the costs add up to MFD prices, I still hold that while Phase One could indeed lower prices and catch a larger market, they choose not to (IMO), possibly for good reason.

It wasn't long ago that Hasselblad pretty famously dropped their pricing across the board by an average of 30%. We were calculating that to make up the lost revenue of that reduction, they would have to roughly triple their unit sales. I don't think that happened...And since then prices have actually gone back up.

So assuming, by affordable, that David means somewhere in the $10K - $15K range at most, then we're banking on Phase One increasing their unit sales by a factor of something in the neighborhood of 7 - 8 X or more? I don't see that as anywhere near a sure thing. And even if it projected as a possibility, Phase One would have to want to do this. As it stands now, they have a tremendous license to create really great products without too much (reasonable) need to keep an eye on the budget, and recent years have brought record validation that people are digging what they're doing. I don't see anyone at Phase One telling the group - guys, this isn't going the way we'd like it to.

I'm not against affordable pricing and I'm not against creating great products regardless of ultimate cost (if you're successfully doing so). I like to understand. I understand David, what you (and others) want. But that doesn't mean I can refuse to understand what Phase One wants (and does). And given the results, I also don't agree they have something that is broken and needs fixing (from their perspective).

**Now, back to deconvoluted sharpening!


Steve Hendrix
Capture Integration

[Steve Hendrix]

Hi,

My guess is that Phase One can set whatever prices they want, after all, we live in a free market economy. There is competition in the MF market, that starts with Pentax, over Leica, Hasselblad and Phamiya. If the market was that lucrative, we would see more competition.

On the other hand, we may see more competition. Technical cameras just became more attractive with live view and I think Alpa, Arca and Hartblei would gladly cooperate with anyone offering an MFDB at a reasonable price.

Best regards
Erik

You're right Erik, competition can certainly have an impact and disrupt business models. We shall see. Regardless of whether or not the competition is successful in forcing Phase One to adopt a lower price point approach to the market, their efforts will still present more choices to consider, and that's a good thing.


Steve Hendrix
Capture Integration

[Theodoros]

David

You're making the case for a desire, not a business plan. There are numerous assumptions in your statement that are skin-deep in real information. Only one example being that "Sony has done the research on the sensor, so what is left?" By this basis, one could say the same thing about every sensor that has been created for medium format. I'm pretty sure there's quite a lot left.

But anyway - the market for MFD isn't small because the prices are "way out of line". The market is small, because that is how MFD wants it (IMO). You have a small, but passionate target market that can afford your products and eagerly looks forward to the next generation. Your entry level products approach affordability for a larger market, and 2nd hand, previous generation products enrich this larger, secondary market as well, many of whom eventually find their way toward being able to afford one of the higher end systems.

Why would Phase One want to create products that costs less, that sell to more? By doing so, they necessarily lose a piece of their technological advantage, as inevitably, compromises are made in order to push product pricing downward, in order to attain greater unit sales numbers. By doing so, they lose ground to the companies that already play in those lower price point markets, in terms of their unique feature set advantages.

It is a huge risk, because to lower price points where I imagine you think they should be, Phase One would have to sell many, may, many times more the number of units they sell now. It is a very different market approach. I believe the pricing and the technology, and the capability/drive - whatever you wish to call it - to create products that fulfill their ambitions is a result of their market approach and this would suffer greatly by adopting a larger market approach. Or at least it would have a tremendous potential to.

Look - I personally want every single person who is passionate about photography, that loves creating images, to be able to afford whatever tool they would love to use for that purpose. I do wish MFD was more affordable for those individuals. But not at the expense of the health of any company that makes truly excellent products for photography.


Steve Hendrix
Capture Integration

1.You are right that the makers want MF market small… and you are right that is not the cost that keeps it small… The problem is, that to keep it small they destroy the base of it by using their part-exchange policy… The other problem is that they misjudged the damage done to the base of the market (they excluded too many people that wanted to enter the market) to an extend that instead of keeping it constant and have a small growth, the market is shrinking to dangerous level.
2. P1 can't compete internally with Leaf… It's Leaf that is setting the base of the new market… It's like if one would think that Audi should compete with VW, that, is clearly a wrong policy. However, what they are doing wrong, is that they support only a few MF products and they do that intentionally (for example, they deny selling to the users of Rollei cameras although these cameras have great compatibility with digital backs) because they thought of it as competition instead of additional sales… Another problem is that they pay less attention all the time to LF/tech camera compatibility and other special uses of MFDB (scanning and MS is another example), which makes their products look more and more as better alternatives to D800… My opinion, is that Leaf and Dalsa should work on increasing the size of their 22mp & 33mp sensors up to 54mm size (because they are the most compatible with LF cameras), if they would offer a 41.5mp 54x40.5mm back (by expanding the size of their 33mp sensor) and if they would jump on to the MS ship (will Leica/Sinar let them do so? …or they will block any possible negotiations with Jenoptik? …I'm afraid of the later.) as well, I could see a great future for them, otherwise I can see Leica/Sinar causing them huge problems with their future products… (Sinar may want a "payback" here for what happened with the HY6). As of Hasselblad… they jumped off the MF train themselves, they have to correct all the mistakes they've done over the years… and that's no easy path…. I don't know what they were thinking with all those multiple "suicidal" decisions….

P.S. Having user interchangeable adapter plates is another path that Phamyia should consider…. at least as far as Leaf is concerned.

[eronald]

Steve,

 It seems to me that we're seeing an unusual level of unhappy comments about pricing at this announcement. I don't know what that means, but it probably means something.

Edmund

[Doug Peterson]

Steve,

 It seems to me that we're seeing an unusual level of unhappy comments about pricing at this announcement. I don't know what that means, but it probably means something.

Edmund

Edmund, see also: every single Phase launch ever. The 65+ Launch: sky is falling, too pricey, yet... Sold well. IQ series, sky is falling, too little to late, too pricey... Sold well. The IQ260, too pricey... Sold well. IQ250, too pricey... Already selling well.

See also also the introduction of every new dSLR or competitive product ever. The 16mp dSLRs were supposed to end medium format, then the 22mp, then the cheaper 22mp, then the 36mp.

The sky in the forums must be very very high, because it's always falling .

[synn]

Steve,

 It seems to me that we're seeing an unusual level of unhappy comments about pricing at this announcement. I don't know what that means, but it probably means something.

Edmund

It means there is nothing in this world that makes everyone happy at the same time and the internet amplification effect shows up more negative comments than positive; especially now that more and more people are connected.

Go back and check the reviews of every cutting edge digital back on this site. First gen technology in MF has always been priced at this same level. Sometimes even more. This includes even backs like the P20+ that had a sensor barely bigger than 35mm and not much more resolution than the best 35mm cameras then.

The way some people are portraying the IQ250 pricing as a "Neverbeforeseen event" is kinda silly.

[eronald]

Doug, Steve,

 Firstly, I would like to apologize for having being a bit too trollish in the previous discussion.

 I agree with the fact that the pricing per-se is in a way in line with previous products.

 But I do get a feeling of genuine unhappiness from the comments. Something is off, maybe people don't think they will be cutting edge by getting a new back, maybe participants in this forum are embittered at the strictures created by economic change.

 One member contacted me privately to say "I payed $38,000 8 years ago for a Leaf Aptus 75 and it didn't bother me cause at the time there was no other product on the market which came close to the quality of image it produced. Now with the choices available (Nikon, Pentax) its is a completely different ball game"

Edmund

Edmund, see also: every single Phase launch ever. The 65+ Launch: sky is falling, too pricey, yet... Sold well. IQ series, sky is falling, too little to late, too pricey... Sold well. The IQ260, too pricey... Sold well. IQ250, too pricey... Already selling well.

See also also the introduction of every new dSLR or competitive product ever. The 16mp dSLRs were supposed to end medium format, then the 22mp, then the cheaper 22mp, then the 36mp.

The sky in the forums must be very very high, because it's always falling .

[Theodoros]

I do believe that pricing is more than it should be, but not that it is at insane level as others suggest… IMO, P1 latest models, should be at Credo prices and Leaf prices should be comparatively lower… Is this achievable? I think it is, ...if the "trade premium" that is included in MF price will be vanished and makers will stop charging "thin air" to trade a back that will never return back to the market… The worst thing however is that this policy, 1. "Pockets" the premium from one that enters MF without having anything to trade (…sometimes people are forced to buy a cheap MFDB and then trade it to get maybe three times the price they payed to buy it, just to get (what should have been) a discount), 2. It shrinks the base of customers, which is what (despite Doug's "sold well" comment - total number of new MFDBs sold is lower by each year) causes the whole MF market to shrink… To an extend, I believe that MF makers are taking "their own eyes off"… I said it before and I will say it once more… Leica/Sinar will beat them to death with their future products… They'll come with a Cmos sensor alternative (Cmosis?) for a future Leica S body capable of "FF DSLR high Iso" and they will come up with new CCD self contained backs from Sinar, with interchangeable adapters for most cameras and full tech/view camera compatibility and their (traditionally supported) MS capability that will give solutions and diverge the market back to its original values of modularity and ability to "perform the task", …catching them with their "pants down"… Does anybody here believes that they are so naive in Leica as to invest on a company that is losing money without having in mind a prosperous future?

[Doug Peterson]

One member contacted me privately to say "I payed $38,000 8 years ago for a Leaf Aptus 75 and it didn't bother me cause at the time there was no other product on the market which came close to the quality of image it produced. Now with the choices available (Nikon, Pentax) its is a completely different ball game"

*shrugs* I see this argument.

But the Pentax 645 and D800 and 5D3 have all been on the market long enough to measure their impact. Phase sales have gone up since the introduction of each.

If, in some alternative history, mfd was a 50% market share product the year before the D800 or 645D were release I suspect their introductions would have crashed the mfd market. But MFD hasn't been a majority player in well over a decade, so the market dynamics are more based on niche-dynamics then what the middle 50% wants (which drives the consumer and prosumer and low end pro markets). Frustrated d800 users were one of our biggest markets for sales last year.

[Doug Peterson]

I do believe that pricing is more than it should be, but not that it is at insane level as others suggest… IMO, P1 latest models, should be at Credo prices and Leaf prices should be comparatively lower… Is this achievable? I think it is, ...if the "trade premium" that is included in MF price will be vanished and makers will stop charging "thin air" to trade a back that will never return back to the market… The worst thing however is that this policy, 1. "Pockets" the premium from one that enters MF without having anything to trade (…sometimes people are forced to buy a cheap MFDB and then trade it to get maybe three times the price they payed to buy it, just to get (what should have been) a discount), 2. It shrinks the base of customers, which is what (despite Doug's "sold well" comment - total number of new MFDBs sold is lower by each year) causes the whole MF market to shrink… To an extend, I believe that MF makers are taking "their own eyes off"… I said it before and I will say it once more… Leica/Sinar will beat them to death with their future products… They'll come with a Cmos sensor alternative (Cmosis?) for a future Leica S body capable of "FF DSLR high Iso" and they will come up with new CCD self contained backs from Sinar, with interchangeable adapters for most cameras and full tech/view camera compatibility and their (traditionally supported) MS capability that will give solutions and diverge the market back to its original values of modularity and ability to "perform the task", …catching them with their "pants down"… Does anybody here believes that they are so naive in Leica as to invest on a company that is losing money without having in mind a prosperous future?

T...

Team Phase One does not do MS or interchangeable plates - their unit sales, revenue, and profit keep growing.

Hasselblad/Imacon and Sinar do MS and interchangeable plates - how are they doing financially?

What in the world, with those real world case studies, makes you think Team P1 should start doing MS and interchangeable plates? Do you not see a large gap between what is important to you (specifically you) as one individual photographer with specific needs, and what has actually made financially successful digital back companies?

If you're hoping Leica will come with a value-priced CMOS version of the S and that a new back from Sinar is going to take a significant (even double digit) market share - I fear you will be waiting for a very long time.

[eronald]

Do you not see a large gap between what is important to you (specifically you) as one individual photographer with specific needs, and what has actually made financially successful digital back companies?

Actually, yes, I see a *camera* as a necessity and my P1 dealer sold me a back. That is why I sold my P1 system and will not buy another. And yes, I as an individual photographer care about my wishes and needs, and not about the bottom line of the company which makes the things. And by the way, Hasselblad make backs but they sell  *cameras*, not backs. Nikon and Canon have been financially successful, in case you haven't noticed, and they managed this in large part by building very flexible systems rather than telling their customers that they are idiots with unrealistic wishes.

Edmund

[synn]

Actually, yes, I see a *camera* as a necessity and P1 sold me a back with junk in front. That is why I sold my P1 system and will not buy another.

Edmund

I just shot a pretty nice gig today with this "Junk" you speak of.
I must have got the only good one they had. Lucky me.

[eronald]

I just shot a pretty nice gig today with this "Junk" you speak of.
I must have got the only good one they had. Lucky me.

Of course, you are so highly skilled you could also have done the job with a D800, I bet

Reminds me of a friend of my father's,  a violin player called Kreisler, quite well known in his day - played, got applauded, smashed the violin, told the public: "that was just a cheap violin I picked up to make a point", pulled out his Strad and went on with the concert.

Edmund

[synn]

Nikon and Canon have been financially successful, in case you haven't noticed, and they managed this in large part by building very flexible systems rather than telling their customers that they are idiots with unrealistic wishes.

Lol. Seriously?

Go to Thom Hogan's blog to see a huge laundry list of all the times Nikon has treated their customers as idiots who should be taking what's given to them. And he has been shooting Nikon for decades.

[synn]

Of course, you are so highly skilled you could also have done the job with a D800, I bet

Reminds me of a friend of my father's,  a violin player called Kreisler, quite well known in his day - played, got applauded, smashed the violin, told the public: "that was just a cheap violin I picked up to make a point", pulled out his Strad and went on with the concert.

Edmund

...and looks like you can't get the job done with your "cheap violin" either.

[Theodoros]

T...

Team Phase One does not do MS or interchangeable plates - their unit sales, revenue, and profit keep growing.

Sure they do… they have lots of space left without any competition around… Still, MF sales are shrinking… It is MF where P1 operates …no?

Hasselblad/Imacon and Sinar do MS and interchangeable plates - how are they doing financially?

H/Imacon does badly exactly because they stopped doing interchangeable plates and MS MFDBs... (leaving P1 some of their space…), Sinar suffered not having a camera platform to promote their backs… (P1 "helped" there…) now they are under the power of Leica… You do know who Leica is and its financial strength …no? Everybody does… for (much) more than a century now….

What in the world, with those real world case studies, makes you think Team P1 should start doing MS and interchangeable plates? Do you not see a large gap between what is important to you (specifically you) as one individual photographer with specific needs, and what has actually made financially successful digital back companies?

I don't suggest what P1 should do… I state why MF market shrinks… again, P1 is in the MF market …no? If P1 thinks that their customers are the "D800 disappointed people", what will they do when D810 will have less "disappointed customers"? …and later on with the D820? …what then?

If you're hoping Leica will come with a value-priced CMOS version of the S and that a new back from Sinar is going to take a significant (even double digit) market share - I fear you will be waiting for a very long time.

Where did I say "value-priced"? …they don't need price to compete, they 've proven that already, I better repeat my saying: "Does anybody here believes that they are so naive in Leica as to invest on a company that is losing money without having in mind a prosperous future?" …do you?