To: DownSouth who wrote (2421 ) 6/2/1999 11:44:00 PM From: Ausdauer Read Replies (1) | Respond to
Links in the Value Chain: The Essential Features of a Digital Darkroom This is the third installation of my investment case for flash memory and digital photography. The content of my discussion will follow the table below. I am also including links back to prior chapters so as to facilitate participation by thread members who may have missed earlier portions of this presentation. Table of Contents Message 9880779 Tornado Watch: The Unrealized Potential of Flash Memory in Digital Photography and Portable Consumer Electronics Message 9878229 Discontinuous Innovation: The Fossilization of Kodak, Fuji and Agfa? Message 9897772 Links in the Value Chain: The Essential Features of a Digital Darkroom How the internet, electronic commerce & communication, and the concept of a family PC have created an ideal platform for digital photography and other portable consumer electronics. value in value chain is something that every discontinuous innovation must do. In doing so the innovation must both fundamentally disrupt the establishment of a favored technology and, at the same time, strenuously avoid disrupting the continuity of the user's daily life. This is best achieved if a killer application facilitates the disruptive forces of change while at the same time creating no ripples or wake that could rock the placid environment of the end-user.The Internet as a Value Platform value platform sturdy enough to support the weight of evolving applications and services in an effortless and undisruptive manner. However, digital photography is not unique in this respect. For example, a technology offering great value which can be easily superimposed on this value platform is the concept of an on-line brokerage. Most consumers have the needed skills to operate and maintain the infrastructure (essentially a phone line and a PC) to allow the discount brokerages to disrupt the full-service market without exacting any cost on the end-user. Digital photography follows this paradigm. For many it represents a "killer application" which has matured in parallel with the maturation of internet services (ISP's) and the acceptance of the desktop PC as a standard home appliance.Kodak Photomat Kiosk is antiquated and begging to be replaced. Digital photography fits the bill.value chain graphically represented on page 140 of our investment guide compartmentalizes the necessary set of products and services into three general categories. The product providers (the gorillas who produce the product), the service providers (integrators of the technology and curators of the sales channel), and the customers (you and me). You and me because digital photography appeals to the mass market comprised of the above average consumer. Similarly, if we were to fill in the generic blanks for the links which constitute the digital photography value chain we begin with the digital camera manufacturers. Because this market is not a proprietary market it occupies the box labelled "product". The technology which represents the purest form of a discontinuous innovation is flash memory. CompactFlash and other forms of flash memory represent THE FIRST LINK in the digital photography value chain. They are the enabling technologies which have represented the rate-limiting step in the formation of the value chain.The critical observation that must be made is the fact that CompactFlash also represents THE LAST LINK in the value chain. As a consumer product created by the semiconductor industry this type of relationship is unprecedented. In essence, it is the first semiconductor which will likely become a household appliance with all the benefits of visibility in the consumer market place and the corresponding mass demand. Adoption Complexity and the Digital Darkroom digital darkroom is a digital camera and a laptop computer. As long as the laptop has a PCMCIA expansion slot and a modem one is adequately equipped. The CompactFlash card (and any other form of removable flash memory) has been designed to fit into a type II PCMCIA slot and possesses "plug 'n' play" capability. Desktop PC users need a CompactFlash card reader or like device for "developing" their images. The CompactFlash card itself is reusable and, for all intents and purposes, inexhaustible. It represents a perpetual roll of both color and B&W film. Thus, the intrinsic value of such a card is inestimable. And by nature of its compatibility across several consumer electronic device platforms its value is incalculable.Simply stated, it is the golden link at both ends of the value chain.
