AF100-Successor in 2015!!!!

[Bassman2003]

Two things: XLR is a multi-industry standard. Changing it would be absurd. People do not want to pay more, they are just trying to point out that Panasonic will not go there. This is different than people being stupid. You can demand all you want on an internet forum. Some of what you say is true but you are making some large assumptions in other areas.

One other point which is kind of overlooked. If "pro" cameras cost under $2,000 then rates we can charge are going to go in the toilet, even lower from where they are now. I think it is helpful to the industry to have pro and consumer divides. Because if "pro" gear really is pro it can never be consumer... No doubt consumer is coming up and becoming good enough for many but in my eyes consumer always stands for cutting corners. Pro is supposed to represent not cutting corners. If done properly, they can not cost the same.

 

[filmguy123]

semantics of pro and consumer aside... times are change. workflows are changing. In 10 years, if you are relying on price to separate you from the competition you are screwed.

I don't know everyone's market - but for most freelancers or small production houses... having camera gear and editing equipment will be about as impressive as having a pen and paper. Today a GH4 with a Rode Video Mic Pro, a MeFoto Tripod, a reflector, and maybe a fancy $400-$1400 worth of stabilization equipment (shoulder mounts, gimbal, etc.)... I mean... all around <$3500... with a laptop most people own anyway and a $30 Adobe CC subscription.. Throw in a touch more sound equipment, nothing fancy - a simple boom pole, maybe an XLR adaptor box, etc.. still well under $5K... now EVEN LESS if you buy used... well, you can do A LOT.

A LOT.

You don't need light kits if you are smart and use reflectors and have cameras with great lowlight and DR which we already have - and so much more so in a few years. Add to that color grading tools, etc.

My point is only, what is pro? Especially when we aren't talking big studios. Corporate videos, sports highlights, music videos, web promo videos, wedding videos, etc. If this is your bread & butter, you better be REAL good at it. It's gonna be just as diluted as the photography market. Only the very best will succeed to a truly profitable extent... and many very good will simply be told "we love your stuff, but we don't have the budget and don't need anything that fancy, uncle bob or our internal co-worker has some gear and will do it for us."

Well, I'm still doing my thing but I think the future is at least semi obvious... don't you? My point is only, worry about consumer and pro divisions all you want, we're talking semantics now. You no longer need a desktop editing suite or a fancy camera or storage intensive codecs or tons of extra gear or a crew even to put out astounding technical work that looks hyper professional. You just need talent. This is both good news and bad news, but it is what it is.

Companies will simply do what is profitable, and competition will undoubtedly change the dynamics of what that means. No doubt bigger companies would love to keep artificial price and feature divides between pro and consumer cameras, but lets be real - that ain't gonna last. It can't. Cause this is capitalism, in all its glory and in all its pitfalls.

 

[combatentropy]

harddrive, I agree that there are different market segments - certainly. And one segment may be "pro" vs "consumer". My larger point however his how these two bleed over. What I'm arguing against is the inherent conservatism that overtakes a company when they label a division "pro". You've been around for awhile, no? Hand on heart - don't we agree that the list of features that came over from consumer to pro and from pro to consumer is practically endless? The pro features migrating to consumer is a well-known story, so no need to hammer that point home, except to say, that as tech evolves, companies can educate the consumer, who then frequently demands formerly exclusively "pro" features. Reliability in particular... I don't think *anyone* pro, or consumer doesn't like reliability... the difference being that we don't need clunky "pro" solutions to reliability, because, guess what, the thing you point out as at the other end of reliability is "small size, cheap memory costs, low weight etc." - which the pro would also love as long as reliability is not compromised! And what happens in real life? Things go the other way too - from "consumer" to "pro", because those "cheap memory costs" are getting very, very reliable... we don't need P2 high priced memory - sure, I understand that many here love, love, love that idea, but I DON'T. It's BS. I said it, and will say again: it's BS. Because the reliability of cards has been going up and up and up - once upon a time it was only CF, then even SD became more reliable and now microSD - note, how many "pro" cameras now no longer use P2, but use SD - that's entirely thanks to consumer features migrating to pro - because the truth is that pros also like "cheap memory, small size, low weight etc." - as long as reliability is there... which the consumer in turn also wants - reliability; so when the tech is ready, both consumer and the pro meet in a new place - cheap memory, small size and low weight AND reliable... now BOTH can buy and BOTH enlarge the market! There are also stopgap measures like f.ex. recording to SD, but recording to two cards simultaneously - still cheaper than P2 and with double recording pretty much as reliable as P2. Eventually, you will have SD and microSD and whatever comes next be exactly or MORE reliable than P2. That too is the story of technology evolution - many times the old "pro" wasn't reliable at all, and years later we had a new solution - many of today's cheap consumer gear is way, way, way more reliable and cheaper than old fiddly, failure-prone pro gear of yesteryear. Consumer and pro bleed into each other, because the truth is that while each segment of the market may stress a different part of the package, at bottom they mostly agree: both pro and consumer want cheap AND reliable AND small AND light AND extremely capable and so on. The apparent differences are not as great.

Stop making sense!

 

[combatentropy]

If "pro" cameras cost under $2,000 then rates we can charge are going to go in the toilet, even lower from where they are now.

- Paul Rand charged $100,000 for graphic design
- Tom Cruise charges millions of dollars, bringing no equipment other than his own body
- carpenters, plumbers, and computer programmers are examples of everyday people who can charge quite a bit per hour despite equipment costing a few hundred dollars

Technology marches on. If your paycheck depends on equipment being expensive, you will be run over.

 

[OldCorpse]

Yep, combatentropy and filmguy123 are both right. The history of technology is that tools migrate downmarket - eventually you cannot differentiate yourself by your investment in tools. Once upon a time only a huge investment in tools allowed you entry into a profession, but costs of tools keep falling and eventually only your skill is left to distinguish you from the amateur. It's happening everywhere. You may not remember, but once upon a time, to record an album you needed a huge multi-million dollar studio. Today, a $1500 laptop is more powerful than some of those huge music studios from decades past. Do you realize how bitter those studio owner-producers were when the home studio arrived? Today you can still make a fortune as a producer - but all you need to bring in is your talent, because everyone has access the exact same cheap tools.

A word of warning: if you rely on the cost of your equipment to be able to charge high prices for your services, you will find yourself eventually outflanked by technology. There is one thing you cannot buy though: talent and skill and hard work. You need to earn it. Tools, are the least of it. If you go back in history centuries ago, it cost quite a lot of money to buy paints for fine art painting - the oils and the special coloring agents cost a fortune, not to mention cow vellum or other surfaces. Today you can buy brushes and paints and pre-stretched canvas for next to nothing... but top artists can charge millions for a single painting. It's not the cost of the tools that will keep you employed and richly rewarded.

So too with cameras. The cost of them keeps falling. Remember when RED used to be "cheap" at $25K, so cheap people were putting in orders for a camera that didn't as yet exist? Who would pay that $25K today for that tech? This happened during the existence of dvxuser, so memories should be fresh.

You can call me a fool and laugh all you want about the $1700. You can curse me, and you can call me a traitor for wanting to "devalue" the worth of the professional gear and so take food away from your mouth. But that's not me - and not about me. It's about reality and how it's always worked in the technical craft fields. The tools were always the least of it. As the saying here goes, it's not about the arrow, it's about the archer. The skill will keep you whole and employed and richly rewarded. The cost of the arrow will keep falling.

And so I say again: AF200 for $1700 FOR THE WIN!

 

[Bassman2003]

Well, that was not my point. My point was that if truly "pro" gear costs $1,700 then even more shingle hangers will appear in your market. Making it that much more difficult for anybody to get compensated for their work. It is healthy to have a barrier of entry for any business or marketplace imho.

Yes you need skill, talent, content is king, bla bla bla we have heard it a thousand times before. (It gets to be condescending when you preach it like nobody has ever heard it...)

 

[OldCorpse]

But just having the gear doesn't mean someone is competent. We all know the guy who bought a RED back in the day and immediately styled themselves a pro, having no actual skill. I think the point is the opposite of the one you're making. Anyone can buy gear, including expensive gear, and hang out a shingle. That doesn't make them a pro. Amateurs having gear does not increase competition for real pros. So lowering the price of the gear is not going to impact any real pros negatively. This is not condescending, it's reality. I wasn't being condescending. It's the same as in the example I gave of a music producer. Anybody can buy a laptop and load it up with software and call themselves a music producer, but who is going to hire them, unless they exhibit some skill? I don't see real music producers going hungry because some kid bought a laptop and are calling themselves a music producer. But I kinda like the other side of it too - I like that any kid can buy a laptop and exhibit a skill and talent if they have it - and that they don't need to be rich or connected to have a multimillion dollar studio to have a shot at a career. I'm for that. I'm for gear getting cheaper, so talented people are not kept out by artificial barriers. We all benefit, film and art benefits it's a win-win. But the point is that when you take the gear out of the equation, it becomes more fair not less fair - because now an incompetent but rich guy cannot use having the gear as a way of claiming competence, instead, talent and skill and hard work are rewarded, and gear is irrelevant. Sort of like the cost of paper and pen are not an obstacle to a talented writer - once upon a time, many centuries ago, writing materials cost a lot of money, the inks and the calf skins on which writing took place, and it was a real barrier for poor people... it didn't make the writing any better.

Bottom line, it simply is not true - factually not true - that expensive gear is better for working pros; yes, it is a barrier to entry, but not a barrier against incompetents who are rich. The gear being cheaper is a good, not a bad thing - now a pro can focus on doing the work, instead of investing in gear... I'm glad pen and paper are so cheap, that way the barrier to good writing is not dependent on the cost of pen and paper... can you imagine if a working writer had to spend a fortune to buy the tools to write? It would not benefit anybody, except the financially advantaged. So I'm all for gear being cheap - for the sake of everyone, the old pro as much as the aspiring newbie.

AF200 for $1700 FOR THE WIN!

 

[Mike Harvey]

AF200 for $1700 FOR THE WIN!

A PX270 style backend with a large sensor (which is what most people are clamoring for) for $1,700 just is not going to happen. It's not. Panasonic would only lose money on such a proposition. That's not even realistic. If it were realistic, someone would have already produced it.

And given the pent up demand for the FS7 and what it's selling for, why would Panasonic sell such a camera for $1,700 (even if it were economically feasible, which I doubt), when they can sell it for $5,000 and still sell a ton of them?

This argument is becoming silly. Panasonic is going to sell their cameras for as much as they can to maximize profit. If you sell a widget for $10 and can sell 500 of them, or sell them for $20 and enough people would still value it enough that you could sell 350 of them, what makes more sense?

 

[mcbob]

Panasonic would indeed sell a ton of fully-featured professional large-sensor cameras for $1700. They'd gain lots of market share.

I could book every last hour of my year if I worked to my highest ability and only charged $12.50/hr. I'd gain lots of market share.

Somehow I don't think either situation would turn out very well.

 

[OldCorpse]

And given the pent up demand for the FS7 and what it's selling for, why would Panasonic sell such a camera for $1,700 (even if it were economically feasible, which I doubt), when they can sell it for $5,000 and still sell a ton of them?

This argument is becoming silly. Panasonic is going to sell their cameras for as much as they can to maximize profit. If you sell a widget for $10 and can sell 500 of them, or sell them for $20 and enough people would still value it enough that you could sell 350 of them, what makes more sense?

That's nonsense. Ten seconds of thought should tell you that - or two seconds. Demand for cameras is elastic, full stop. Yes, there are people who would buy FS7 for $8K, but there would be more people who would buy it for $3K and yet more for $1K - that's so obvious it's shocking you need to be told that - how many seconds of thought do you need to realize that there are more people who can't afford $8K for the FS7 than people who can? It's mathematics. There are plenty of people out there who would love to buy the FS7 but can't afford it at $8K. As to those who would buy the FS7 at $8K - so what? There's always people who would buy stuff at almost any price - when the iPhone was first coming out, people were paying 5, 10 times as much to be the first to have it, and in China before it was available, people routinely paid 4 times as much for a smuggled one. Did that mean there was demand for the iPhone in China at 4 times the price in the U.S.? Yes, of course, but no sane marketing person would then point to that demand and say "see, we should set the price of the iPhone 400% higher, because 'pent up demand' is there!". That's nonsense, because ultimately more money is made by keeping the price lower for more people to buy. How do we know it? Because that's what happened in China - when the iPhone finally came in, it took off when the price was lower.

This is the whole luxury market vs mass market argument all over again. Yes, there is a luxury market, and there are companies that concentrate on that. Just as there is the "pro" market in cameras. But the consumer market is almost always more profitable ultimately due to volume that is garnered by lower prices. Everybody knows this in f.ex. fashion, where a designer has $10K dresses, but the design label makes their real money by going cheaper into chain stores for the mass consumer. There's even a saying, "you get rich by serving the poor" - because the number of rich is small, and even if you charge big prices it's ultimately less than taking a little from a lot more people.

You could say that Sony are selling all the FS7 cameras they can make - but that only speaks to their poor production capacity and misjudgment of the market. If you believe in your product, expand your production capacity. It is entirely mathematically clear that they would sell more FS7 cameras at $4K than at $8K and more still if cheaper still. In the end, it's all about how much you make at the very end - by selling few at high price or more at low price.

AF200 for $1700 FOR THE WIN!

 

[DLD]

In the pre-electronic music era - i.e., what we might now call classical/opera/operetta/big band era - an opera singer had to have major pipes just to be heard. If the last row did not hear a singer, then he was useless. That changed with the arrival of microphones and amplification in the 1930's. Then, crooners like Bing Crosby became popular because, while they couldn't shout over a band, they had no problems singing into a mic.

When the electric guitar and guitar amps because affordable after WWII, the world welcomed (what we know now) as rock-n-roll. At that point, a couple of dudes (or blokes) with a Strat and a Fender (or a Vox) began to replace 30-40 piece brass bands.

The same has long been going on in the image acquisition industry with affordable DSLR/DSLM cameras surpassing film cameras, SDXC media surpassing film processing, etc. In the "moving pictures", this revolution has been slowly gianing steam since the mid-1950's when AMPEX introduced the first video tape recorder. Soon, soaps, TV news/talk/live sport shows were shot on video rather than film. By the 1980's, video replaced film in porn (don't laugh ... at one time, it was a huge industry) and low budget projects. Subsequently, the digital revolution took another dozen steps forward in music, photography, "film", etc.

All of these steps lowered the cost of entry. There are more budding photographers, writers, musicians and porn stars (I blame the selfie craze) out there and it has indeed resulted in a dilution of the product and the corresponding wage levels.

But you can't put the genie back in the bottle. Technological advance is what it is.

PS. As I had said a few posts earlier, I don't think we will see a major manufacturer with a $1,700 pro model with the expected AF-200 specs this season (i.e., between now and the 2015 NAB). But I could see someone like Black Magic release an updated Cinema Camera or lower the price on the 4K Production Camera to under $2,000.

And that would almost be pro, right?

 

[OldCorpse]

Panasonic would indeed sell a ton of fully-featured professional large-sensor cameras for $1700. They'd gain lots of market share.

I could book every last hour of my year if I worked to my highest ability and only charged $12.50/hr. I'd gain lots of market share.

Somehow I don't think either situation would turn out very well.

But nobody is talking about selling at a loss. I doubt Panasonic is losing money selling the GH4 at $1400, and that's a very capable camera. What we're talking about is the inertia at the pro division that has no incentive to invest in R&D manufacturing and processes to bring prices down, because doofuses are willing to pay a lot and demand little under the self-defeating delusion that "expensive makes it pro!" and "better keep it expensive, otherwise the unwashed masses will compete with us, the pros". The consumer market has pushed R&D into making products at a lower price - relentless pressure is why we have shocking stuff like computers that cost less than $1K and are insanely complicated and insanely more powerful than the room size IBM computer that could barely add 2+2. If we kept listening to the "expensive is pro!" crowd, we'd still sit next to that useless big IBM room-size computer. Thank God, for the pressure from the consumer market! That's how we got cheaper electronics. Now we need to bring that mentality to video cameras. There is absolutely no earthly reason for a "fully-featured professional large-sensor camera" to cost any more than $1700 and still make a fat profit.

As to you booking jobs and charging only $12.50 an hour - that is exactly the source of your confusion. That is why you don't understand this. Because you think it is comparable, when IT IS NOT. Your labor is not elastic and not scalable. You only have one person (yourself) and only 24 hours in the day - there is only ONE way for you to make more money, by charging more money for your time. That is NOT the situation with mass production, consumer goods and electronics where efficiency of scale in manufacturing, returns on R&D and so on are completely not comparable.

By giving that example, you have revealed why you don't understand why a "fully-featured professional large-sensor camera" can cost $1700 and still make a ton of profit for the manufacturer, while working for $12.50 an hour is a loser for you.

AF200 for $1700 FOR THE WIN!

 

[OldCorpse]

PS. As I had said a few posts earlier, I don't think we will see a major manufacturer with a $1,700 pro model with the expected AF-200 specs this season (i.e., between now and the 2015 NAB). But I could see someone like Black Magic release an updated Cinema Camera or lower the price on the 4K Production Camera to under $2,000.

And that would almost be pro, right?

Well, $1700 by NAB 2015 would be a stretch, but not much longer, IMHO. Of course that's all dependent on Panasonic making the commitment. The sooner they do, the sooner we'd see it. The reason is simple - it takes time to revamp the entire concept of their R&D research and manufacturing process. You can't do it overnight. They can't produce a $1700 an AF200 camera we'd all like today, but the longer they wait to do this, the longer it'll take. That's why they should start planning today so they can deliver a $1700 soon (though not by NAB 2015). As I see it, Panasonic really has no choice. It's either that - make that commitment, or die on the vine, and have to abandon that space entirely to the likes of Sony. We all lose in that scenario. And Panasonic cannot survive by retreating into ever smaller niches in the market with ever fewer products - that's a recipe for death, or near death a la Hasselblad. High prices will just not do it anymore for cameras - they need volume at a price.

 

[Mike Harvey]

But nobody is talking about selling at a loss. I doubt Panasonic is losing money selling the GH4 at $1400, and that's a very capable camera. What we're talking about is the inertia at the pro division that has no incentive to invest in R&D manufacturing and processes to bring prices down, because doofuses are willing to pay a lot and demand little under the self-defeating delusion that "expensive makes it pro!" and "better keep it expensive, otherwise the unwashed masses will compete with us, the pros". The consumer market has pushed R&D into making products at a lower price - relentless pressure is why we have shocking stuff like computers that cost less than $1K and are insanely complicated and insanely more powerful than the room size IBM computer that could barely add 2+2. If we kept listening to the "expensive is pro!" crowd, we'd still sit next to that useless big IBM room-size computer. Thank God, for the pressure from the consumer market! That's how we got cheaper electronics. Now we need to bring that mentality to video cameras. There is absolutely no earthly reason for a "fully-featured professional large-sensor camera" to cost any more than $1700 and still make a fat profit.

As to you booking jobs and charging only $12.50 an hour - that is exactly the source of your confusion. That is why you don't understand this. Because you think it is comparable, when IT IS NOT. Your labor is not elastic and not scalable. You only have one person (yourself) and only 24 hours in the day - there is only ONE way for you to make more money, by charging more money for your time. That is NOT the situation with mass production, consumer goods and electronics where efficiency of scale in manufacturing, returns on R&D and so on are completely not comparable.

By giving that example, you have revealed why you don't understand why a "fully-featured professional large-sensor camera" can cost $1700 and still make a ton of profit for the manufacturer, while working for $12.50 an hour is a loser for you.

AF200 for $1700 FOR THE WIN!

But there is only a finite market for any product, and economies of scale aren't infinite. Computers and cameras aren't the same... everyone wants a computer. Not everyone wants a 10bit 4:2:2 S35 camera with XLR inputs. The market for an iPhone is potentially 6 billion people. The potential market for an AF200 is, what, maybe a couple of million globally? And there are other cameras competing, both directly and under it in the SLR space. Even the PX270 has a bigger potential market than an AF200.

We are a small market. We are a niche market. You can't keep bringing up "economies of scale" when there is no scale for us.

By the way, a year ago an iPhone 5S cost $213 in just materials. Nevermind the costs of construction, shipping, R&D, marketing, and whatever else. Now imagine if it were built in Japan (expensive) instead of China (cheap). Apple listed it on it's website at $650. Material costs were 1/3 of total retail price. Do you really think a Japanese produced AF200 is only going to cost $560 in just materials to build from the get-go?

Or think of it this way... years after the AF100 was released, after the manufacturing process has matured, after they've seen their return on investment probably a few times over, B&H still lists an AF100a for $4,100. The FS100 is $2,500. Don't you think at this point, they would be selling those cameras for cheaper if they could? I mean, imagine how many people would jump at a brand new FS100 for $1,200? It's more than paid for itself at this point, and there are plenty of folks who would still buy it at $1,200. But they (Sony) probably can't make a profit at that price point... years after they've seen their return on investment. How in the world do you expect Panasonic to make a profit with a much more advanced camera with much newer tech and much higher costs at $1,700?

 

[OldCorpse]

We are a small market. We are a niche market. You can't keep bringing up "economies of scale" when there is no scale for us.

You underestimate the size of the market. Here's a hint: it's about equal in size to the camcorder market. You say the consumer doesn't want pro features and quality. I think that's mostly not true. Just listen to people talk - how many complain that their camera can't take pictures/video indoor at lower light. Blown out footage. Noise in the footage. Shaky footage. Bad focus. Poor exposures. And how is that different from what pros want: low-light capability, clean high ISO, big dynamic range, stabilization, focus control? And what pro is going to object to the cam being smaller and lighter, especially if the footage can be stabilized? Honestly, if you gave the average camcorder buyer a small, light camera that had all these "pro" attributes, they wouldn't complain, they'd thank you. Now, it's true, not everything pro is what the consumer desires, but some of it is down to inertia and poor innovation - true, the consumer doesn't want XLR, but who can blame them... XLR is a clunky stupid solution to a legitimate problem - the answer is to come up with a good non-clunky solution... seriously, have you looked at an XLR connector - it's like something you'd design with the technology rooted in the last century... someone mentioned how XLR is a standard in many industries (like audio) - but doesn't mean it can't change - once upon a time we had PS/2 and serial connectors for printers and peripherals, huge clunky things with screws, and those were standard, but then came USB and that died away plenty fast. We need a secure high-throughput balanced connectors that are not the size of a radio from the 1930's. It's called innovation - something sadly lacking in many "pro" divisions.

So yes, there is a much bigger market and economies of scale. You can buy camcorders for barely $200. Sure, they're cr@p, but they don't have to be - technology marches forward... those $200 cr@p camcorders are still a dream machine to someone from the 1950's. There is absolutely no technological reason why you can't have a "fully-featured professional large-sensor camera" for $1700 - except the inertia and lack of innovation and being comfortable in a small niche... that's the reason they keep selling those old cameras you mentioned for outrageous prices - because they never invested in lowering production costs and innovation and market expansion... it's drones in offices and bean counters who often are the impediment, not the scientists and engineers and tech people.

 

[harddrive]

That's nonsense. Ten seconds of thought should tell you that - or two seconds. Demand for cameras is elastic, full stop. Yes, there are people who would buy FS7 for $8K, but there would be more people who would buy it for $3K and yet more for $1K - that's so obvious it's shocking you need to be told that - how many seconds of thought do you need to realize that there are more people who can't afford $8K for the FS7 than people who can? It's mathematics.

Yes, obvious, but so too should be that you rapidly get into a law of diminishing returns. Up to a point the more you sell, the cheaper the unit cost of manufacturing can be, so the more you sell, the cheaper you can sell them for. But that's only true up to a point, and I suspect the economics work out something like an exponential curve where there will be a unit cost figure you'll never better even as your sales volume approaches infinity!

It therefore follows that for a given product there is going to be a price that it is never going to get below - not without making a loss.

There are plenty of people out there who would love to buy the FS7 but can't afford it at $8K.

Indeed - and indeed it follows that the more you cut the price, the more will get sold. But it comes back to the law of diminishing returns. I've no idea what the actual sales figures for the FS7 are, or it's unit cost, but let's imagine I'm making widgets in my garden shed. The more I make, the cheaper they are per widget, and the cheaper I sell them, the more I sell. We'll assume the cost per unit includes not just cost of manufacture, but advertising, distribution etc. I suspect that I'd see something like this:

No widgets-------Cost per unit-----Selling price-----Turnover------Profit
1----------------£10----------------£12----------------£12------------£2
10----------------£6----------------£7.50--------------£75------------£15
25----------------£5----------------£6----------------£150------------£25
100-------------£4.50--------------£5.25---------------£525---------£75

So far, so good. Your approach seems to have worked. Cutting the price has had the effect of increasing sales, and by a combination of cutting the per unit margin and production economies of scale then the increased volume has meant that despite the decreased margin, the final profit has continued to rise. So this would seem to bear out your theory, wouldn't it?

Unfortunately, in the real world other factors come in to play. Let's further assume that I've already worked out (cost of raw materials etc) that there is no way I could ever get my cost per unit below £4, no matter how many I make. *BUT* I extrapolate, and do the figures for 250. My estimate tells me that I have to get the selling price down to £4.75 to make the extra sales, and I estimate the cost per unit for making 250 will now be £4.25. My margin has now gone to just 50p/unit - but for 250 units, that's £125 profit, so I'll still be better off than charging £5.25 and selling 100, won't I?

But let's assume this is where the real world comes into play. My salesmen start to tell me that they will have to go much further afield to find 250 interested customers, so increased costs. It starts to become less a case of "how much?" but "sorry, I don't want one at all, thanks". Then (horror) I find out that someone else is selling "super-widgets" - made of brass! - and selling them for only £4.50! I cut my prices, but (with margins already low) soon find I'm selling each at a loss and......

OK, a flight of fancy and very simplistic, but I'd say it illustrates some very important principles. Yes - cut the price and sell more, but only up to a point. You'd sell more FS7s by charging $6K than $8K - but how many more? In that case, a lot of people may still think it's simply too big and heavy a camera for them. You would get extra sales - but would they be enough to compensate for the lower selling price per unit? Markets may be elastic - but only up to a point. And there will come a point where the cost of making each unit just can't be brought down further by making more, which sets a lower ceiling on what you can charge, even if you know reducing the selling price would result in more sales.

I glossed over how our widget manufacturer knew how much to charge to make a given no of sales. In the real world it's far more difficult, and getting it wrong can be very expensive. And silly though the brass "super-widget" scenario may seem, in principle it's exactly what does happen in reality, and exactly what can destroy the best laid plans.

In the context of this thread, then the FS100, and later the C300 may be seen as "brass super-widgets". The FS100 came out with timing very close to the AF100 actually reaching market, and whilst the AF100 may still have had some advantages (ND filters being the most obvious), the FS100 was the winner in other respects - most notably the s35 sensor, overall image quality and things like low-light ability. The effect was to seriously damage predicted sales targets of the AF100.

 

[Mike Harvey]

We are a small market. We are a niche market. You can't keep bringing up "economies of scale" when there is no scale for us.

You underestimate the size of the market. Here's a hint: it's about equal in size to the camcorder market.

There is no camcorder market anymore.

I know no one who isn't at least a semi-pro that has bought a camcorder in years. Those that do have a camcorder have old ones simply to play old videos on. The average consumer is using their smartphones now to record video. Why plunk a few hundred bucks down on a camcorder when you have one in your pocket that is good enough all the time? A few have a GoPro because they're outdoorsy/adventure types, but by and large most people are going to their smartphone as the quality is more than "good enough". That is where the consumer market is going. That simply isn't going to translate straight over into our market. Producing something like an AF200 is a completely different animal than making a smartphone. And relying on the economies of scale in a rapidly shrinking market isn't going to help lower costs.

As far as "They just need to design something to replace XLR", that ignores the fact that it's a long established industry standard. You're going to need to design something that is going to replace the audio inputs on every pro-level camera, every piece of audio equipment, every recording facility, hotel, church, and dozens of other applications. It is the default standard in the video/film industry, the audio industry, and the music industry... and it's that way in one industry in large part because it's the standard in other industries. Even if you could do something like that AND make it industry standard in multiple industries, you're looking at well over a decade (if you're lucky) for it replace XLR. XLR is fully entrenched... and will be for a long time... because it's simple, everybody else is using it, and it works. If they figure out something to replace XLR, and the multiple industries that use it decide it's worth the cost and headache to switch, then great. But in the meantime, I still have to have a camera that I know is going to work with all of my existing audio equipment, and is going to work with the house system when I record events.

I mean, look at how long it's taking m3/4 to become entrenched and get manufacturers onboard with. The mount alone is brilliant in it's versatility, yet it's taken forever to get other manufacturers on board because they all have their existing product lines (and customers) they need to support. You really think something as standardized and solid as XLR is going to be abandoned figuratively overnight?

 

[Mike Harvey]

Yes, obvious, but so too should be that you rapidly get into a law of diminishing returns. Up to a point the more you sell, the cheaper the unit cost of manufacturing can be, so the more you sell, the cheaper you can sell them for. But that's only true up to a point, and I suspect the economics work out something like an exponential curve where there will be a unit cost figure you'll never better even as your sales volume approaches infinity!

It therefore follows that for a given product there is going to be a price that it is never going to get below - not without making a loss.

Indeed - and indeed it follows that the more you cut the price, the more will get sold. But it comes back to the law of diminishing returns. I've no idea what the actual sales figures for the FS7 are, or it's unit cost, but let's imagine I'm making widgets in my garden shed. The more I make, the cheaper they are per widget, and the cheaper I sell them, the more I sell. We'll assume the cost per unit includes not just cost of manufacture, but advertising, distribution etc. I suspect that I'd see something like this:

No widgets-------Cost per unit-----Selling price-----Turnover------Profit
1----------------£10----------------£12----------------£12------------£2
10----------------£6----------------£7.50--------------£75------------£15
25----------------£5----------------£6----------------£150------------£25
100-------------£4.50--------------£5.25---------------£525---------£75

So far, so good. Your approach seems to have worked. Cutting the price has had the effect of increasing sales, and by a combination of cutting the per unit margin and production economies of scale then the increased volume has meant that despite the decreased margin, the final profit has continued to rise. So this would seem to bear out your theory, wouldn't it?

Unfortunately, in the real world other factors come in to play. Let's further assume that I've already worked out (cost of raw materials etc) that there is no way I could ever get my cost per unit below £4, no matter how many I make. *BUT* I extrapolate, and do the figures for 250. My estimate tells me that I have to get the selling price down to £4.75 to make the extra sales, and I estimate the cost per unit for making 250 will now be £4.25. My margin has now gone to just 50p/unit - but for 250 units, that's £125 profit, so I'll still be better off than charging £5.25 and selling 100, won't I?

But let's assume this is where the real world comes into play. My salesmen start to tell me that they will have to go much further afield to find 250 interested customers, so increased costs. It starts to become less a case of "how much?" but "sorry, I don't want one at all, thanks". Then (horror) I find out that someone else is selling "super-widgets" - made of brass! - and selling them for only £4.50! I cut my prices, but (with margins already low) soon find I'm selling each at a loss and......

OK, a flight of fancy and very simplistic, but I'd say it illustrates some very important principles. Yes - cut the price and sell more, but only up to a point. You'd sell more FS7s by charging $6K than $8K - but how many more? In that case, a lot of people may still think it's simply too big and heavy a camera for them. You would get extra sales - but would they be enough to compensate for the lower selling price per unit? Markets may be elastic - but only up to a point. And there will come a point where the cost of making each unit just can't be brought down further by making more, which sets a lower ceiling on what you can charge, even if you know reducing the selling price would result in more sales.

I glossed over how our widget manufacturer knew how much to charge to make a given no of sales. In the real world it's far more difficult, and getting it wrong can be very expensive. And silly though the brass "super-widget" scenario may seem, in principle it's exactly what does happen in reality, and exactly what can destroy the best laid plans.

In the context of this thread, then the FS100, and later the C300 may be seen as "brass super-widgets". The FS100 came out with timing very close to the AF100 actually reaching market, and whilst the AF100 may still have had some advantages (ND filters being the most obvious), the FS100 was the winner in other respects - most notably the s35 sensor, overall image quality and things like low-light ability. The effect was to seriously damage predicted sales targets of the AF100.

There are a few things that you're missing out on

Now that you're producing 100 widgets, you're going to need more people to make them, box them, and ship them. You're also going to need increased machinery and facilities for production, as well as warehouse space. That all is going to cost money. Oops... there was an earthquake and flood, and one of those shiny new facilities was destroyed.

Your competitor's brass super-widget is eating away at your market share, so not only are your sale folks having to travel farther, but your marketing in general is going to cost more... especially after there was a batch of faulty ones that earned you bad press and complaints on widgetuser.co m

Your manufacturing facility is located on a highly populated island with fewer natural resources, so you have to import everything... and a trade war just broke out with the nation that supplies a lot of your raw materials.

But overall, this is exactly the point... economies of scale only go so far, and ignores a lot of market realities.

 

[OldCorpse]

harddrive, all your points are valid. Of course, in charting for maximum profit, you need to do curves - how much more are you selling at what price point, because otherwise you might find yourself taking too little from those who are willing to pay more and not getting enough extra customers at the lower price. You are 100%. I am aware of this - it's marketing 101. I didn't want to get into all the subtleties, as a message board is not an ideal medium for essay long posts - so necessarily I'm simplifying stuff. But to put it more cogently: I am proposing that the curves Panasonic is drawing are too sharp, i.e. they are pricing too high and leaving money on the table. Now, you are also correct that there is a lot of gamble here - what if things go wrong (as you point out with AF100 and FS100), so they need to build in enough flexibility to withstand some adverse events, but hey, nothing ventured, nothing gained.

The issue here is that this is getting all a bit abstract. There is concrete tech available. There are economic realities. Unfortunately, unless we have access to a huge amount of very specific information, a lot of this is going to be speculation. I try to be as informed as I can be, but even I have to make guesses and estimates. All of us do. Some speculate $5K and some $1.7. It's all - I repeat - all speculation. The only differentiation is in trying to see the broader picture, which is why my figure of $1700 is grounded on the best evidence available (and even so, it's still speculation!). Some companies take a leap into the field, and blow out all assumptions, like Google did when f.ex. they came up with free 1GB email... I'm old enough to remember what a revolution and unthinkable tech and business model that was, in a world where you often paid for email service and got like 5MB storage. Or Black Magic blew everything open price-wise again, to shocking levels. Heck, for all the criticism they garnered, even RED was a shocking development at a shocking price. What I'm saying is that you can't look at what the landscape is today in product and say "whelp, I guess that's the only realistic product range, with price variation of 10% either way!", which is what most people on this board are doing. They see the FS7 at $8K or the C100, and figure, whelp, that must be it - no option, thems the prices, bub! And that's just wrong. You have to look more holistically - what is the market, what is the tech available in individual components, what is the supply chain like and what are the manufacturing processes like. Because if you don't, you'll be perpetually caught with your pants down when yet another company comes along and completely upends the market at a price you can't believe. But it's not magic (despite the name of the company, lol) - the tech was there all along, you just needed someone to put it together.

Same here. There is no reason at all to settle on the $5K price - people do, because they see other cameras at that price, but that's very faulty evidence. If that were true, there never would be any progress - you'd always say "well, that's the price and that's the product!". So forget what cameras cost today. Think of what the cameras are going to cost tomorrow, based on the technology developments. Samsung has a very interesting sensor in the NX1 - do you imagine for one second that they fully exploited what's inherent in the technological options that open up? Not by a mile. And that's just one tiny example. One reason the prices of cameras are what they are today, is because those companies are vested in a certain model and technological structure... which is why it often takes an outsider like RED or BM or Google or Apple who don't have that dead weight of legacy systems to hobble them - they're new to email, or phones, or cameras etc., so can think fresh from scratch.

This is what I'm saying - look at the technology stack, look at the fact that software and computation are insanely - INSANELY - underutilized by camera companies (not surprising, their core competence does not include software development), look at the tremendous, TREMENDOUS possibilities of lateral tech that's been developed for other industries and how they can be brought to bear on new cameras and then weep at the pi$$ poor job the old dinosaur "pro" divisions are doing. It's a crime. Believe me, $1700 for a "fully-featured professional large-sensor camera" is incredibly generous.

AF200 for $1700 FOR THE WIN!

 

[OldCorpse]

Now that you're producing 100 widgets, you're going to need more people to make them, box them, and ship them.


Nope. It's called robots, and automation, and rationalization and process optimization. See what Amazon is doing in their warehouses - it's beyond belief, and they're poised to do more. In fact it can be the opposite - with more volume, you can now justify an investment in robotics and the kind of scale that brings costs down even below to what you were paying out for smaller volume in absolute terms!

You're also going to need increased machinery and facilities for production, as well as warehouse space.

The entire history of technological development is arguing against you. And that includes innovation in process - for example, the Japanese were able to handle *more* product with *less* warehouse space, by the innovation of JIT - Just In Time. And so on. The mistake you are making is a common one - of extrapolation. Extrapolation that does not account for dynamic systems is bound to lead to absurdities. One famous example - at the end of the 1890's an urban planner calculated that given the density and size of New York and how fast it is developing, in 20 years the sheer amount of horsesh|t from all those horse carriages would fill all the streets up to waist level and all movement would stop. Only he didn't count on the automobile - capable of moving more people with 0 horse waste (but other kinds of waste... and now electric cars... and tomorro?). Lesson - you can't do straight line extrapolations of dynamic systems. Innovation is inherently dynamic and changes all parameters unpredictably.

AF200 for $1700 FOR THE WIN!