DHW bankrupt, the harsh reality

[ErikKaffehr]

Hi,

I feel very sorry about DHW, not least for the employes of the company. But let's discuss some aspects of keeping a small company alive.

• First and foremost, sufficient sales are needed to offer a decent pay for the workforce.
• New products need to be developed and put into production
• R&D costs will be distributed over small sales, so R&D needs to be efficient.
• Prices need to cover costs and allow for operating margin
• Increasing production needs investment. New production lines, machining capability not least expanded work force

So, a small company needs to maintain relatively high prices to survive on small sales.

There are some ways to improve profitability, like outsourcing parts of production or using excess machine capability to produce for external customers. RRS is making the former, the actual machining is done outside the company while Cambo is doing the other, they produce parts for external customers.

A real issue is that the sensor and associated electronics are the parts generating best income, lenses may come second. Newly designed high quality lenses are expensive. Lens companies like Schneider and Rodenstock have a wider customer base and are parts of a larger operation. Companies building cameras but not backs or lenses make the hard work, earning little money.

Reality is a harsh place to live in…

Best regards
Erik

[MrSmith]

I think the biggest reality is people knowing about your product and it being a viable purchase for businesses, the DHW camera is neither. Here in the U.K. I wouldn't know where to buy one, rent a lens or any idea of how much they are as they are off the radar. It wouldn't surprise me if the U.K. Sales were in single figures.
Probably a lot different in Germany but obviously the home market isn't enough to sustain the business.
Will be a shame to see the camera disappear but the simple fact is they need to sell more cameras to survive

[ErikKaffehr]

Hi,

I would say that it is important to have a user base. Also it is important to have a price structure that is reasonable.

I have taken part in a few significant procurements in the computer industry, buying equipment from SUN Microsystems and Silicon Graphics (SGI), both were industry greats once but fringe players now.

Their problem was perceived value. Early on, they had a tremendous lead with fast processors, efficient hardware supported by stable and capable operating system. They could sell those systems at very high price.

But, the PC industry was in fast development and could soon enough offer similar performance at rock bottom prices. Old guys, like me, tried to see the benefits of the advanced architectures SUN and specially SGI had, but PC hardware was good enough, and SGI was simply to expensive. Adding insult to injury SGI could charge like 1500-2000$ for a DVD reader which could be bought for 200$ at any place. Other components were priced similarly. Some parts like hard drives were industry standard, so we bought ours from Seagate or Hitachi at a fraction of SGI price.

When SUN and SGI were loosing sales, they focused on marketing, but that was bound to fail as prices were to high in relation to the performance offered.

Both companies had excellent support, typically with a yearly contract at 10% of original purchase cost.

SUN has been bought by Oracle, SGI lingers around still, building some supercomputers (market share 3.8% on top 500 list).

Times are changing.

Best regards
Erik

I think the biggest reality is people knowing about your product and it being a viable purchase for businesses, the DHW camera is neither. Here in the U.K. I wouldn't know where to buy one, rent a lens or any idea of how much they are as they are off the radar. It wouldn't surprise me if the U.K. Sales were in single figures.
Probably a lot different in Germany but obviously the home market isn't enough to sustain the business.
Will be a shame to see the camera disappear but the simple fact is they need to sell more cameras to survive

[eronald]

deleted.

[ErikKaffehr]

Hi Ronald,

Sad it has been deleted, your views are always interesting…

Best regards
Erik

[luxborealis]

I'm not quite ignorant on photo matters, but I had to look up who/what DHW is/was. That, in itself, is telling.

[Joe Towner]

Rackable bought SGI for the brandname, it's not the RISC computing power that it once was.  I love their half depth design

I think the DHW situation is much like what would happen had Eronald's digital back moved forward.  It's easy to pull resources together with the idea to create a product, but what happens once the initial orders are fulfilled, and there is want/need for ongoing service and support.  Shy of a subscription model where everyone gets an annual bill for service and support, I'm at a loss as to what can be done to prop up a niche product in a niche market.  DHW needs a rich uncle, just like the rest of us.

[Jim Kasson]

I have taken part in a few significant procurements in the computer industry, buying equipment from SUN Microsystems and Silicon Graphics (SGI), both were industry greats once but fringe players now.

Their problem was perceived value. Early on, they had a tremendous lead with fast processors, efficient hardware supported by stable and capable operating system. They could sell those systems at very high price.

But, the PC industry was in fast development and could soon enough offer similar performance at rock bottom prices. Old guys, like me, tried to see the benefits of the advanced architectures SUN and specially SGI had, but PC hardware was good enough, and SGI was simply to expensive. Adding insult to injury SGI could charge like 1500-2000$ for a DVD reader which could be bought for 200$ at any place. Other components were priced similarly. Some parts like hard drives were industry standard, so we bought ours from Seagate or Hitachi at a fraction of SGI price.

When SUN and SGI were loosing sales, they focused on marketing, but that was bound to fail as prices were to high in relation to the performance offered.

Both companies had excellent support, typically with a yearly contract at 10% of original purchase cost.

SUN has been bought by Oracle, SGI lingers around still, building some supercomputers (market share 3.8% on top 500 list).

Times are changing.

Erik, I think what happened to SGI and Sun was driven as much by business model obsolescence as anything else. SGI and Sun had the minicomputer business model. Their numbers may have been different, but when I worked at hp in the late 60s and early 70s, our target gross margin was 67%. (When I worked at Rolm, ours was 60%.) The hp margin got parceled out approximately as follows: Engineering 10%, Corp R&D 1%, Marketing 5%, sales and service 26%, G&A 5%, and pre-tax profit 20%. I hope those add up...  Compare that to the paper-thin gross margins of Dell and the like.

If you'd have asked a hp division general manager how he'd (they were all he's, back then) survive on 22% GM, he'd have told you that the company would go out of business if it tried that. An hp division GM couldn't hold his head high unless he had his own semiconductor fab (they did cost a lot less back then). They couldn't conceive of doing business any other way. Dell's current gross margin is about 22% (a little less recently). They spend about 1% on engineering.

When I worked for hp, one of the most popular topics around the coffee pot was computer instruction set design. Now that's all the province of the semiconductor houses. I got to design two large system backplanes myself. Now that's done in industry groups. The engineering didn't disappear, it just went somewhere else. And, maybe more significantly, it got spread over a much larger volume.

I haven't done the research, but I'll bet if you look under the covers of the MF manufacturers annual reports, you'll find a business model that's quite different from SoCaNikon. i'd be interested in your thoughts on that.

Jim

[ErikKaffehr]

Hi,

I guess that MF makers have a small market high price model. Increasing production comes with a price, so I would guess that it would be difficult for a small MFD vendor to increase market share by reducing price. It is of course quite possible that Phase One may move into that direction, it is a feasible explanation for their need of venture capital. In a sense Leica has made that step, they have significant manufacturing capability and the Leica S2/S is actually cheaper than most Phase One backs.

In my view, there are some similarities between the "minicomputer business model" and the MFD business model. Small series, high prices, proprietary solutions, extensive marketing and an expensive support model. It is sort of a good business model, as it reduces the need for development. Customer pays support fees, a calculated cost. The customer gets good support for his money. There is little need for disruptive change.

In the computer industry all that had changed with new technology, in part because of intensive competition between Intel and AMD. AMD essentially has implemented a Silicon Graphics Origin on a chip. Market at that time was solidly Intel and our company was not even considering an alternative, but demand for computing power increased, and we finally tested an AMD based solution which was promising according to SPECRate FP (something like DxO-mark in the computing industry). So we got twice the performance at half the price, our problems were solved and suddenly AMD was our standard platform for a couple of years. Later Intel came back, they copied and improved on AMD-s design. (Just to put it straight, much of the original concepts of SGI and AMD came DEC's Alpha platform and from Cray).

I see some similarities between the camera industry and the now demised minicomputer industry. New technology pushing the limits, high performance at low cost. A good deal of fact denial in the industry, think about six stops of DR advantage and 16 bit data paths transferring 12 bits of data. The older computers had some real advantages, SGI's technology was very efficient for a large number of CPUs, for instance. But some of those advantages were hard to sell to management and they were soon overshadowed by the sheer computing power of the new generation of microprocessors.

I am personally most familiar with SGI, as we have used that platform for over 20 years.

Another difference is that nowdays everyone cares about money. In 1996 we built a small simulator with six screens. We could have a perceivably but really measurably faster system using SGI computers instead of SUN. So we told our customer that we had a solution that was something like 15% faster, but at 600 k$US higher cost, it didn't even take four hours until decision was made for the more expensive solution. That would not happen today…

Best regards
Erik

Erik, I think what happened to SGI and Sun was driven as much by business model obsolescence as anything else. SGI and Sun had the minicomputer business model. Their numbers may have been different, but when I worked at hp in the late 60s and early 70s, our target gross margin was 67%. (When I worked at Rolm, ours was 60%.) The hp margin got parceled out approximately as follows: Engineering 10%, Corp R&D 1%, Marketing 5%, sales and service 26%, G&A 5%, and pre-tax profit 20%. I hope those add up...  Compare that to the paper-thin gross margins of Dell and the like.

If you'd have asked a hp division general manager how he'd (they were all he's, back then) survive on 22% GM, he'd have told you that the company would go out of business if it tried that. An hp division GM couldn't hold his head high unless he had his own semiconductor fab (they did cost a lot less back then). They couldn't conceive of doing business any other way. Dell's current gross margin is about 22% (a little less recently). They spend about 1% on engineering.

When I worked for hp, one of the most popular topics around the coffee pot was computer instruction set design. Now that's all the province of the semiconductor houses. I got to design two large system backplanes myself. Now that's done in industry groups. The engineering didn't disappear, it just went somewhere else. And, maybe more significantly, it got spread over a much larger volume.

I haven't done the research, but I'll bet if you look under the covers of the MF manufacturers annual reports, you'll find a business model that's quite different from SoCaNikon. i'd be interested in your thoughts on that.

Jim

[Paul Lamb]

I have just joined The Luminous Landscape forum.  
I hope I may be able to improve the situation of UK sales of new Rolleiflex cameras, lenses and accessories, having recently launched our website www.rolleiflex.co.uk
My son Adam and I have begun a new business based in London and our aim is to revive the Rolleilfex brand in the UK. I too found it difficult to find out about DHW's product range and prices and could not find a place in the UK to buy a new Rolleiflex. So we have become the exclusive UK authorised dealer of DHW Fototechnik products!
Many may think the timing of our launch to be strange, with the news of the manufacturer's financial problems. However, for the brand to survive, more sales are required, with improved marketing and communication. It our belief that we can assist in this way, by making the products much more accessible and easy to purchase. We also ship free anywhere in Europe.
With small companies, the budget for PR and advertising is always going to be small. However, promotion of such high quality products can be achieved through different means, in the 21st century, the web rules and social media has grown massively.
Are Rolleiflex cameras a suitable tool for professional photographers today as well as collectors and enthusiasts? Absolutely. The Hy6 Mod 2 and the X-Act2 are extremely versatile and robust. They have the benefit of film or digital backs and a superb range of lenses. The electronic shutter, controlled by the Lens Control S, is possibly the most advanced, reliable, accurate and robust on the market and is used in industrial and scientific applications. DHW continue to innovate whilst delivering the highest quality, bespoke products that they are famous for.
The Rollei factory still employs some of the best and most experienced camera engineers; DHW is fortunate to have such a loyal and dedicated team. This is their biggest asset. With a little help from their friends, the future can be bright! I have had such positive feedback from Rollei enthusiasts since I began researching the brand in the UK, that it gives me great hope.
Of course, there is much to do and many possible solutions to the current financial situation. I for one, will be backing them all the way and trying to get the support of British photographers.
I have confidence that the Rolleiflex name will continue for many years to come.
Kind regards
Paul

[eronald]

Hello Paul -

 May I extend a warm welcome on behalf of the photographers of LL?
 I think we are all quite fond of the Rolleiflex brand and welcome the idea that the products are still around.
 Maybe you could outline the present-day digital options as this is the main focus of this forum ...

Edmund

I have just joined The Luminous Landscape forum.  
I hope I may be able to improve the situation of UK sales of new Rolleiflex cameras, lenses and accessories, having recently launched our website www.rolleiflex.co.uk
My son Adam and I have begun a new business based in London and our aim is to revive the Rolleilfex brand in the UK. I too found it difficult to find out about DHW's product range and prices and could not find a place in the UK to buy a new Rolleiflex. So we have become the exclusive UK authorised dealer of DHW Fototechnik products!
Many may think the timing of our launch to be strange, with the news of the manufacturer's financial problems. However, for the brand to survive, more sales are required, with improved marketing and communication. It our belief that we can assist in this way, by making the products much more accessible and easy to purchase. We also ship free anywhere in Europe.
With small companies, the budget for PR and advertising is always going to be small. However, promotion of such high quality products can be achieved through different means, in the 21st century, the web rules and social media has grown massively.
Are Rolleiflex cameras a suitable tool for professional photographers today as well as collectors and enthusiasts? Absolutely. The Hy6 Mod 2 and the X-Act2 are extremely versatile and robust. They have the benefit of film or digital backs and a superb range of lenses. The electronic shutter, controlled by the Lens Control S, is possibly the most advanced, reliable, accurate and robust on the market and is used in industrial and scientific applications. DHW continue to innovate whilst delivering the highest quality, bespoke products that they are famous for.
The Rollei factory still employs some of the best and most experienced camera engineers; DHW is fortunate to have such a loyal and dedicated team. This is their biggest asset. With a little help from their friends, the future can be bright! I have had such positive feedback from Rollei enthusiasts since I began researching the brand in the UK, that it gives me great hope.
Of course, there is much to do and many possible solutions to the current financial situation. I for one, will be backing them all the way and trying to get the support of British photographers.
I have confidence that the Rolleiflex name will continue for many years to come.
Kind regards
Paul

[eronald]

Hi Ronald,

Sad it has been deleted, your views are always interesting…

Best regards
Erik

Erik,

I think I deleted this one because it was repetitive.
Didn't know I had a fan club

There are a lot of special purpose hardware houses surviving on the fringes of the video and animation industry. Video has high data rates not found elsewhere in the prosumer industry, maybe several terabytes per hour,  and so you have people like RED or Atmos or AJA who have made their living designing fast hardware that can stream, process, store such streams at a reasonable price point. Boutique hardware still has a market here, even new algorithms and special mathematics such as wavelet encoding.

My feeling, about MF cameras as about the rest is that one can thrive as an engineer on making one special use device that is faster and better tuned or cheaper than the competition - but one cannot be competing on a general level. Rollei are lucky in a way because they have a recognized name and lens mount, know about camera bodies and can leverage the huge german subcontracting industry for lenses, but until someone cooks them a back they will be stalled.

A new body these days of mirrorless is basically just a box with a lens mount, but the back needs to be smart.

Funding an open source back hardware concept would be one way Rollei could get off the ground on a mirrorless design without upfronting the heavy software design costs. As a company, I think they should concentrate on what they do well: camera body mechanics, batteries, controls and contacts and mechanical mounts. If they offered a "kit" back with a pre-aligned Sony sensor, heatsink and sensor EMF shielding, and connectivity for a standard Linux-enabled FPGA board such as the Microzed or Picozed, I'm sure enthusiasts could get off the ground and create a tethered experimental back. The sensor itself could be a cheap "engineering grade" version with defects, so such a kit could be offered for less than $1K.

This is basically the electronics route pursued by the Apertus open source movie camera guys on Kickstarter.

Of course, if a commercial third party could be persuaded to provide Rollei users with reasonably priced backs that would be wonderful ...

Edmund

[artobest]

With small companies, the budget for PR and advertising is always going to be small. However, promotion of such high quality products can be achieved through different means, in the 21st century, the web rules and social media has grown massively.

Very true, so where are the Facebook and Twitter links on your front page so I can promote you amongst my friends?

Cheers, Peter (Proud Rolleiflex SL66SE owner)

Edit: I beg your pardon, they are there but so discreet I completely missed them. Good luck with the new venture - oh, how I wish I could afford one!

[Gigi]

There is also

http://rolleiflex.us/

Eric does a lot of business around the world.

[ErikKaffehr]

Hi Edmund,

Well this is a great idea. A reasonably priced digital back would give Rolleiflex a tremendous push. All the other pieces are there, already, I have never seen the camera but it seems the existing users love them.

Also, the camera is reasonably priced, so cost of entry would be attractive if paired with an affordable back.

Best regards
Erik

Erik,

…
Funding an open source back hardware concept would be one way Rollei could get off the ground on a mirrorless design without upfronting the heavy software design costs. As a company, I think they should concentrate on what they do well: camera body mechanics, batteries, controls and contacts and mechanical mounts. If they offered a "kit" back with a pre-aligned Sony sensor, heatsink and sensor EMF shielding, and connectivity for a standard Linux-enabled FPGA board such as the Microzed or Picozed, I'm sure enthusiasts could get off the ground and create a tethered experimental back. The sensor itself could be a cheap "engineering grade" version with defects, so such a kit could be offered for less than $1K.

This is basically the electronics route pursued by the Apertus open source movie camera guys on Kickstarter.

Of course, if a commercial third party could be persuaded to provide Rollei users with reasonably priced backs that would be wonderful ...

Edmund

[eronald]

Yeah, I think DHW or whatever Francke & Heidecke are called these days could grow a pair, supply a sensor box with connectors, and just circumvent the existing "open" MF back supplier(s).Open Source projects are doing very well in the industry these days, thank you, just look at the market share of Android and ... Windows Phone

I'm not very sanguine about an untethered back getting off the ground quickly, but tethered is a different story: If the sensor base kit was available, I believe the core of a tethered solution with liveview would be functional within 6 months, stable within about a year. I know an open source project that has debayering software fast enough to run in real time. The dev process would be fast because most of the software could run on the host thereby skipping the processing power and multi-tasking issues which would make an untethered embedded project technically hard.

For all I know, such a back might be useful for tech camera owners too, as they often shoot tethered.

Edmund

Hi Edmund,

Well this is a great idea. A reasonably priced digital back would give Rolleiflex a tremendous push. All the other pieces are there, already, I have never seen the camera but it seems the existing users love them.

Also, the camera is reasonably priced, so cost of entry would be attractive if paired with an affordable back.

Best regards
Erik

[EricWHiss]

Hi All,
I've just come back from a week at the factory, so sorry I didn't have a chance to contribute to this thread with real information until now.  I had a chance to meet much of their staff and can say these are really good and dedicated people, some of whom have spent most of their working lives with the company.  Their products as we know are quite good, and from being their representative I know that they have a loyal following world wide. It seems the bigger challenge has been making people (who don't frequent forums such as this) aware that new cameras are still available and getting the cameras into shops where people can handle them.   The sales with almost no marketing and PR whatsoever has kept the company in business,  profitable for 3 of the last 4 years.   I belive with a bit more promotion of their cameras, they would be able to continue to do well, but more digital options for their entire range of cameras would be an important ingredient in the mid and long term.   About half my customers now are using only film, and film use among both the pros and amateurs that I am in contact with seems to be picking up,  though it's hard to know if this is a continuing trend or not.

The company has bounced in and out of insolvency a number of times in its 90+ years of operation, and in many ways DHW is better positioned than it has been previously.  They are actively looking for buyers/investors.  There has been some real interest and therefore my outlook is positive. When there is more news, I'll gladly post it.

[Lacunapratum]

I had just posted on another forum about the longevity of the Hy6 bodies.  These are great bodies that have their repairs as all the others, but they rarely fail catastrophically.  At least mine haven't.  And that's real comforting when you take them on a trip.  And how many medium format bodies are you willing to carry on a trip?  In fact, a Hy6 spare isn't even too heavy.  But knowing about their performance and reliability vs. for example the Pentax bodies, I'd say the Hy6 clearly wins. 

[JV]

About half my customers now are using only film, and film use among both the pros and amateurs that I am in contact with seems to be picking up,  though it's hard to know if this is a continuing trend or not.

Eric,

Just some words on this.

I also mainly bought into the Hy6 to shoot film.  I was looking for an improved Hasselblad V and as such the Hy6 has not disappointed.

Before buying the Hy6 I was concerned about two things:

    -) limited wide angle options with the 40mm being the widest lens (not counting the fisheye)
    -) no support for Phase One backs

These concerns are still there for potential buyers alhough it sounds like the 35mm might eventually still reach us.

Although as above-mentioned I bought it mainly to shoot film my plan was to also pick up the next generation Leaf back.

This didn't happen for a number of reasons:

    -) no longer a rotating sensor which IMO is essential if you want to shoot 645 on a 6x6 camera
    -) AFi mount only available in 60 and 80 MP (I don't need and don't want 60-80 MP backs)
    -) I already had a Hasselblad H4x/P30+ combination which in my eyes and given the two reasons above was better suited to shoot 645

Summarized, I love my Hy6, it is a magnificent camera and it is not going anywhere...

but to invest in a digital back solution a fair amount of things would need to change (see above) ...

and obviously I would additionally like the digital back to be 56x56, high ISO and affordable as well...

Joris.

[ErikKaffehr]

Hi,

DHW could deliver an open interface to the camera with well documented connections and protocols and making them perpetually royaltee free. That would make it feasible for any interested company to develop an MFDB for the Hy6. Question is of course if such a back is a reasonable investment for any vendor. It much depends on probable number of sales.

Would Sony make such back, R&D costs would be very low as they could reuse most of the existing technology of theirs. Same would apply to Ricoh, of course, but Ricoh already has a pony in that race (Pentax 645z).

Best regards
Erik

Yeah, I think DHW or whatever Francke & Heidecke are called these days could grow a pair, supply a sensor box with connectors, and just circumvent the existing "open" MF back supplier(s).Open Source projects are doing very well in the industry these days, thank you, just look at the market share of Android and ... Windows Phone

I'm not very sanguine about an untethered back getting off the ground quickly, but tethered is a different story: If the sensor base kit was available, I believe the core of a tethered solution with liveview would be functional within 6 months, stable within about a year. I know an open source project that has debayering software fast enough to run in real time. The dev process would be fast because most of the software could run on the host thereby skipping the processing power and multi-tasking issues which would make an untethered embedded project technically hard.

For all I know, such a back might be useful for tech camera owners too, as they often shoot tethered.

Edmund