How Cutting Costs Kills You

For quite some time I’ve received emails and queries that all fall into the “why doesn’t Nikon put Wi-Fi or GPS in every model?” 

Simple answer really: cost. The edict from above has been clear: cut costs everywhere. For the most part the camera designers have done exactly as asked, trying to remove components from the cameras as best they can. This led to the optional WU Wi-Fi modules, for instance, and the external GPS-1 option. Marketing could then say “yes, these cameras can communicate and mark positions,” but obviously only if the customer bought those extra cost (and often kludgey) options.

All this runs counter to the way I learned how high tech companies preserve their advantages: keep adding the latest tech so you can enable new features and uses plus solve more user problems. The best tech companies stay right at the forefront of this. Witness the iPhone, the original of which added a number of key sensors to the cell phone, but where each subsequent model keeps adding additional function via electronics (e.g. fingerprint recognition, haptic touch, etc.). 

I was reminded of this when someone sent me a link about the Waylens Horizon, a new dash cam system. Dash cams have been around for a while, and everyone’s been diving to the bottom trying to make them less expensive. Waylays added a 10Hz high accuracy GPS, barometer, 3-axis gyro, 3-axis accelerometer, and 3-axis magnetometer to their product, along with the usual Wi-Fi and Bluetooth. They went another step further and added OBD-II (on board diagnostics, which is that port that your auto mechanic plugs into to see why your check engine light came on), which allows the Waylays Horizon to automatically come on when you start the engine and turn off when you turn the car off, among other things. Oh, and it has a Retina-type AMOLED touchscreen display that you can actually see. A lot of tech in that little package, especially compared to the low cost providers that are basically trying to just build the cheapest possible video camera for a windshield-mounted position.

I had noted the Waylays Horizon when it was first announced, but didn’t pay a lot of attention to it until I started to try to figure out why the Nikon KeyMission and other other recent products just aren’t resonating right: not only are they late to market, but they appear to be classic Nikon (mostly) de-costed devices. I’ve already noted that the KeyMission 170 didn’t achieve anything that the GoPro HERO5 hadn’t. Well, de-contenting for cost is one of the reasons why.

Shouldn’t an action camera have the ability to record 9-axis motion in the EXIF data? Wouldn’t that be useful in post processing to do things like add data overlays and perhaps even correct motion? Heck, motion information done right can provide things like automated start and stop edit points for video, saving the user a step. Or it could talk to its mount and keep an action cam pointed where it’s supposed to be pointed. The list goes on.

As much as I’ve harped on SnapBridge lately, this is actually a step in the right direction. Only it’s too a small of a step and appears far later than it could have been taken. In the D3400, Nikon has de-contented again by leaving off the Wi-Fi portion of SnapBridge and just giving us Bluetooth LE. And yet here’s a gadget with Wi-Fi, high-end GPS, accelerometers, barometer, and more selling for US$200 less than a D3400. See the problem?

Something tells me that the camera companies still haven’t quite figured out the semiconductor and consumer electronics worlds. Yes, new electronics cost money. That cost goes down with volume. The volume goes up with utility. 

What we need is more embracing of technology, full and urgent software programs that make that technology do something beyond “snap an image with more pixels than before,” and more attention to the user problems that aren’t being solved. Heck, many of those user problems aren’t being noticed, just as many potentially useful technologies aren’t being embraced. 

Those things aren’t happening because “cut costs” is the number one mantra at the camera companies. Consider this quote from Nikon’s most recent Annual Report: “The expectations are that we will be able to achieve the target for reducing procurement costs, centered on the Imaging Products Business, of ¥30 billion over the three years from the fiscal year ended March 31, 2015, to the end of March 2017. Among others, the effect of the cost reductions in the Imaging Products Business has been significant, and we are addressing on an ongoing basis the upstream cost reductions, referred to as a “Design to Cost,” in the development and design stages.

And there you have it: “Design to Cost.” If a D3400 is to retail at US$650, then Nikon is designing this way: the camera sells to a dealer for US$550 on average, and they want a 45% GPM, so the D3400 unit cost to produce totally encumbered has to hit US$300, period. End of story. Can’t add anything to that product that might make it better without removing something else.

I’m all about cost constraints—ask anyone that’s ever worked for me just how tight I’ve run the ship—but they have to be applied in the right places, the right way. De-contenting product is not the right way, as it will tend to always just lead to a race to the bottom.

The question to ask in the tech world is this: what new semiconductor technologies are on the immediate horizon and what user problems do they allow us to fix? 

text and images © 2017 Thom Hogan
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