Lessons from the Camera Market

Unlike the PC (or even mobile phone) hardware market, the digital camera market is a hotbed of innovation and new ideas. New features, new formfactors, and new price/performance breakthroughs are being introduced at an accelerating pace, making the camera market currently the most vibrant technology market.

Just in the last two months, three new full-frame DSLRs have been introduced. Nikon, Sony, and Canon have brought professional features and performance that cost over $5000 a year ago into the sub-3000 dollar area, besting each other with the successive launches. What looked like a very compelling offering from Nikon just two months (the D700) ago is almost blown away by the latest Canon offering (5D Mark II).

Why then does the PC or phone market look so ho-hum in comparison?

One key factor is misguided standardization. Intel and Microsoft have gained near monopoly positions because the x86 hardware architecture and Windows have become de facto standards, especially in corporate desktops. While standardization can a good thing, these standards have been more driven by the needs of the industry than the needs of the users -- and copycat products have been produced by the thousands.

Users (well, most users) don't care for microprocessors. Users don't really even care for operating systems. They care for what can be done with the computers -- for most users the only really relevant area of standardization is document formats. We create documents with our computers and it is important that as many other users as possible can view and modify the documents we have created.

Camera's don't have standard sensors, standard processors, standard operating systems -- just about the only standard they share is the document format: jpeg. Because the camera industry has decided only on the relevant standard, the ultimate document format, it has allowed freer, more open, and more vibrant innovation.

The good news for PC users is that the PC industry is heading into the same direction. As computing migrates towards the cloud, document formats become the only really relevant standards and innovation in other areas becomes less restrained. Processors, operating systems, and even actual applications become less constrained and it becomes easier to start building special purpose systems that cater to niche needs -- at a reasonable cost. My system does not have to be the same as your system, as long as it can produce compatible documents.

This is something big companies do not necessarily want -- inertia has worked in their advantage in keeping the markets relatively stagnant and easy to control. When innovation becomes freer, smaller companies gain an advantage and become more competitive.

Now this is all fine and dandy, but someone please answer me a simple question. Should I stick to Nikon and protect my existing lens investments or jump to Sony or Canon for a clearly superior body for the same money? Choices, choices...