Vivitar Digital Camera

Intel sets up imaging operation for non-PC applications; selling more chips is the goal

New Orleans--A contingent from Intel was at the Photographic Marketing Association (PMA) conference here last week quietly launching a campaign in the digital camera market.

In a joint interview, Don Whiteside, GM of Intel's new Digital Imaging and Video Division, and Len Wegner, who heads the digital components portion of the division, laid out the company's strategy to drive the digital camera market--and sell a lot of Intel chips in the process. "Ours is a new division chartered with being shepherds of Intel's digital imaging strategy," Mr. Whiteside said. "Much of that strategy we used to refer to as our 'visual computing PC' (platform). My group is expanding our view of digital imaging beyond the PC and looking at what additional value we can bring to the market, what additional businesses we can create."

"This business was put into the Intel New Business Ventures area. Intel will continue to invest heavily in the core PC platform," he added. "We will invest to be sure the connected PC platform connects. Non-direct PCs are under my domain. It was put off separately so we could focus on it, recognizing that the business paradigm is significantly different from the PC business." Mr. Wegner commented that: "We are offering a complete reference design in order to minimize the time-to-market delta. In order to do that in a quick and efficient manner, we had to focus on a few key collaborators." Intel announced last November that it is partnering with Lighton, Aztec and Samsung for various digital camera technologies. Using partners reduces the time to market significantly, Mr. Wegner said. Whereas it would take 18 to 24 months without the collaborative effort to bring a new camera to market, that time is reduced to six months through the collaborative effort.

The Polaroid Connection

At PMA Intel, with Polaroid Corp., unveiled a partnership for Polaroid to use the Intel 971 PC Camera Kit, which includes the recently introduced Intel CMOS 971 sensor; PC camera embedded processor, logic and firmware; flash memory miniature card; and PC camera utility manager software. Polaroid expects to offer digital cameras based on the Intel platform by 2H98, targeting the low end of the market in terms of price and feature set.

Michael Bernstein, senior consultant for emerging technologies at market research firm Semico Research, commented: "When Intel introduced its 971 CMOS sensor in late 1997 it was missing a key element, endorsement by a major camera manufacturer. Now, with Polaroid in its camp, Intel has gained acceptance and recognition for its technology.

"Polaroid contracted with an Asian manufacturer, believed to be Samsung, to build the camera, so it did not have to commit major resources to fund this new product," Mr. Bernstein added. The Intel/Polaroid team face stiff competition though on a variety of fronts. More than 24 companies, including Agfa, Kodak, Ricoh, SoundVision, Vivitar and others, are now selling about 100 digital camera models in the U.S., according to PMA. And, at the chip level, "Intel is one of many semiconductor companies trying to apply CMOS to this space," Mr. Whiteside admits.

Visionary Or Resource Wasting?

Because the digital camera market is still nascent, however, it remains to be seen whether Intel is a visionary company helping create a market or whether the company is squandering precious resources that could be used instead to battle AMD, National Semiconductor/Cyrix and Integrated Device Technology/Centaur which are all battering at the castle walls with low-end x86-compatible processors for the fast growing segment zero (sub-$1,000) PC market.

Although Intel is jumping into digital cameras with both feet, many analysts don't think that market will develop to any significant degree for several years. Jonathan Rosenzweig, an analyst at Salomon Smith Barney, is quoted in industry reports saying that consumers are not going to be to quick to move to digital. "I don't think you're going to see digital imaging really take off for quite a while." That jibes with industry projections.

According to PMA statistics, 350,000 digital cameras priced at or lower than $1,200 were sold in 1996 and sales are expected to slowly increase to about 4 million units by the year 2001. Even that number, however, is a small fraction of the 50 million cameras that are sold annually, according to industry estimates. Intel's Mr. Whiteside says Intel knows it is going to be a long haul and it is prepared for the ride. "Our belief is that Intel needs to play a leadership role in the digital and video imaging industry.

"The fundamental reason we are getting into this business is that digital imaging is, whether you talk to Intel or any industry analyst, an application that is going to bring new users to connected visual computing. It is in our best interest to accelerate this and make it cost-effective. Getting in on the ground floor gives us the best opportunity," Mr. Whiteside said.

COPYRIGHT 1998 Cahners Publishing Company
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