Last week, I went out and bought a new camera for myself. I’m a frugal kind of guy – this doesn’t happen often. Once a decade really. I knew what I wanted, did my homework and I was very pleased with my purchase. This episode provided strong examples of at least 4 major issues going on in digital business strategy today.
1) The end of the camera shop
I’m old school – I wanted to talk to a camera guy in camera store. For me that’s part of the enjoyable shopping experience. I found one – and the service was great, but of course there aren’t many camera shops anymore – even in London. In 2013 the last major UK chain shut its 137 stores (the brand name was bought from the liquidator and a handful of new stores were opened). The power of e-commerce to replace most of the physical stores in some categories of goods, is most visible in electronics and white goods. Its not all bad news. This year AO.com (appliances online) floated on the stockmarket (“IPOed”) valuing it a £1.3Bn. This is the creative destruction effect of e-commerce, or e-business.
But e-business is not digital business. That’s the confusion. These e-commerce retail disruption effects are not new – they started over 15 years ago. Gartner defines digital business as: The creation of new business designs by blurring the digital and physical worlds. That physical aspect manifests itself in the digitalization of products as they become part of the internet of things.
2) A digital product can be digitalized more
My old camera was a digital camera. So in some ways, my purchase was not a transition from the analogue to the digital product world – that already happened. But my previous camera was an SLR. It had a digital sensor rather than film – but it retained the old analogue method of looking directly through the image lens to frame my shots. That old method was a mirror, allowing my eye to see down the barrel of the lens until the last moment before the shutter opens. The mirror is then mechanically flipped up out of the way – allowing the light to fall on the sensor or film. My new camera replaces that with an entirely digital alternative. The eyepiece contains a tiny, high resolution screen and the image from the sensor is continuously sent to it. I frame my shots just the same as an SLR – but the mirror has gone. Consequently – the whole camera is smaller and considerably lighter – even though it retains all the manual controls and interchangeable lens options you expect from an SLR system.
3) Digital products use smartphones as remote controls
My new camera can connect to an app via WiFi. I can use the app on my phone or tablet. The app controls the camera. I can focus, zoom and shoot remotely from the phone or tablet. I can view images and send them on. The utility of the product is improved – but the camera maker does not have to provide a physical remote control device. The app is a free download to the consumer. More value, same price! This idea is gaining ground in other categories. For example BMW offers an app that can ‘precondition’ your car – you use to it remotely start the aircon or heating, a while before you get in.
4) Digital products cry out for digital services – but, manufacturing companies struggle.
My camera is fantastic. It does lovely computational effects like “HDR“. The app remote control is cool. I have duly registered the camera with the makers website, for my extended warranty – but there ends the relationship and probably, there ends the revenue stream.
Oh they might sell me one more lens, or a spare battery I guess. But through the whole highly enjoyable un-boxing and registering process – not once did the camera maker suggest where I might store my photographs, or what services could be applied to them. Maybe I’ll store the images with Apple, or Dropbox or Flickr - why does the camera maker not seem to care? I like the in camera HDR and I’m hooked – but its not the best possible. The camera’s little processor can never compare to the compute power of the cloud. I want more advanced effects – I’d even pay a small fee to post process some images. How much would I pay? 5 us cents per image certainly; 25 – maybe. I want to show off my new photos and to tell everyone how pleased I am with my new camera – yet the manufacturer provides no place for me to help celebrate and advocate.
Makers of products must learn to create and manage ongoing services that help the customer get value and add value through the usage life of the thing. If they don’t others will. Those others have the opportunity to control the bulk of the customer value experience over the useful life of the product. That gives them more mind-share and in the end they will use that to gain value chain control over the industry.
P.S. We are often more obsessed with the technology, than the value it brings. That value is in information. So the question you want might to ask me – “what camera do you have?” is unimportant. Here’s the answer to the better question – “what kind of pictures can you get?”. The images are information and information is value. They will be around long after the camera model is a forgotten historical footnote.