Keane Insight

HP draws a perfect picture with digital studios

The global digital imaging revolution is gaining critical mass, and India is a significant market, and one that’s growing fast. The digital imaging market comprises the production, manipulation and communication of images with a computer, digital cameras, scanners, printers, copiers and multi-functional office automation products. The Indian digital photography market is alone worth Rs 120 crore (inclusive of the grey market) and is growing at the rate of 70 percent, according to IDC.

Realising the growing importance of digital imaging, last year HP India launched its digital studio initiative. The concept envisaged selling a personal computer, photo printer, scanner, digital camera and Photoshop software as a package to existing studios or new entrepreneurs for setting up digital studios.

In a little over a year, HP has established 1,710 digital studios in 36 cities across the country. Through these studios, HP is currently touching two million customers every quarter, and has plans to increase this figure to over one million customers per month within the next quarter.

Describing the venture, Ashwini Agarwal, country manager, consumer peripherals, HP India says, “The sky is the limit in terms of potential. More customers are opting for HP digital than Polaroid prints in India.” It is understood that the company is targeting about 2,000 digital photo studios by end of this year. Though a recent entrant in the market, what is helping it win over users and customers is the ease of use, low cost and mass appeal of these photo studios and digital solutions.

Low cost

Photo labs need five pieces of equipment to put together a complete solution: a digital camera, photo printer, film scanner, a PC and software. While the competition has been intense in the area of digicams, the past six to eight months have witnessed increased competition in the area of developing and printing digital photographs. Besides coming out with new products/solutions, leading players like HP, Kodak, Canon and Epson are also looking at setting up digital studio labs.

“I believe the factors that are driving people to opt for HP Labs are quick return on investment, faster turnaround time, ease of printing, and richer colours,” says Agarwal. Talking about prospects, he says the falling prices of components in the package are going to further enhance its appeal. “In a year’s time, the price of the package, which was around Rs 1.5 lakh, has come down to Rs 70,000-85,000 and is expected to fall even further.”

The large format printer also gives photo studios the capability to produce very large prints that are not possible using conventional photography. There is also the flexibility to click photographs of different sizes for everything from posters to passports.

According to him, at these digital studios one can get a set of five passport-size photographs for about Rs 50 vis-à-vis Rs 50-60 for a set of four in Polaroid studios. And while such a set of photos in Polaroid costs the studio about Rs 38, in the digital format it would cost only Rs 8-9, thereby ensuring a fat margin for the studio.

Target audience

The company is initially targeting commercial photographers, who are estimated to number around four lakh in India. Besides analogue photo studios, HP is targeting street photographers, tour operators and even schools, where students’ photos are required to make identity cards.

In the next phase the company is looking at targeting the home segment, so it is working on different mass appeal digital solutions. According to Agarwal, this strategy will help HP gain a wider presence and remove misconceptions about digital photography being tricky/difficult and expensive. The company has adopted a village and is looking at different areas where digital solutions can be implemented. “We are planning to touch a couple of million home users in the next two years,” he reveals.

To further strengthen its presence in the market, HP has also introduced its Photosmart and HP business inkjet printers. This move is expected to challenge capital-intensive digital photo labs by delivering competitive running costs at an order of magnitude reduction in capital investment.

Besides reaping rich dividends in India, the digital studio initiative has helped HP receive a lot of international attention. Enthused by the tremendous response to its initiative here, HP is now rolling out a similar project in China in consultation with the Indian unit.

Competitors

There are other players—Sony, Canon, Kodak, Olympus, Epson, Casio, etc—in the market, who are either offering digital cameras or collaborating to offer combined solutions. Kodak is the largest player (with a 55 percent share) in the photography market in India, and feels that HP still has a long way to go. Says Manisha Sood, business manager, digital and applied imaging, Kodak India, “The info imaging market can be divided into three categories: devices, services, and online printing. HP and Canon are limited to the devices category with their digicams, scanners and printers. However our presence is much larger worldwide, so there is no question of competition.” To tap the market further Kodak recently introduced online printing, whereby an individual can order a print online by sending his photograph to the Kodak website. This would be couriered to a customer in a day’s time at a very reasonable cost, inform Kodak officials.

Canon has developed a three-pronged strategy to grow its revenues and achieve its ambition of becoming the country’s foremost digital imaging company by 2005. To start with, it will be building a strong presence in the Indian photo printing market, which consists of over 1,00,000 photo studios. Canon has introduced a ‘camera direct printer’ in the sub-Rs 10,000 category. These printers deliver a 2 pico-litre quality output, and the scanners scan four times faster than prevailing industry standard. Second, the company is penetrating the commercial corporate market segment with its technologically-superior and cost-efficient products that deliver a higher lifetime value. Thirdly, Canon dominates the laser MFD segment. The company is looking at a market share of 20 percent in the next two years.

Meanwhile, Kodak has launched its doc printer, which can spew out 6x4 prints. By next year it is planning to introduce a printer that will enable the printing of passport-size photos.

However, Casio feels that their cameras can fit in very well with the HP Photoshop initiative since they have everything except digital cameras. According to Kulbhushan Seth, chief manager, market planning, Casio India, the company is trying to work out some tie-ups.

ec@expresscomputeronline.com