Snap Inc.,

The New Canon.

Snapchat has made an emboldened move into the camera market with its application and the idea that the young consumer requires new devices and mediums for sharing images, stories, ideas and moments.

In 2016 Snapchat changed its identity to further its goal of moving from being a “Chat Application” (reliant on device vendors) to being a “Camera Company” — this change has set the company on a path that will forever impact digital imaging as we know it.

In 2006 I graduated as the first ever cohort through the Georgian School of Design and Visual Art (Ontario) “Digital Imaging” program, After I graduated I became the executive director of StillMotion, the company was one the first to win an Emmy by employing 100% digital imaging technology, it’s hard for me to stick to the idea that imaging will remain even a remotely professional field, software advances are far outweighing hardware advances. In this new world, stops of dynamic range no longer result from the quality of glass and size of image capture surface. During the early 2000s, the barrier-to-entry for camera companies was incredibly high and the market was dominated by three main players: Canon, Nikon and Panasonic. I see Snap becoming the new amalgamation of these companies. During my time at StillMotion, we worked diligently and with a mission to commoditize the professional imaging industry. After all, a brilliant artist or storyteller will never blames their tools.

In 2008 Canon earned 26 billion USD from its consumer camera offerings, down 11 billion USD from 2007. This trend of downward revenue from consumer camera offerings, generated by industry leaders, in optical imaging has continued into 2017. Apple and Google have begun to dominate the industry with Apple as the largest camera company in the world.

I believe that Snap Inc. is well positioned to invest the capital from its initial public offering to capture the multibillion dollar camera industry. Critics have noted the considerable infrastructure expense of the software platform that powers Snapchat and supply chain is the most difficult part of hardware development. However, I see Snap as a viable competitor to the traditional image capture industry.

Due to the investment by Apple Inc. in R&D into image sensors and synergistic software-defined image enhancements and low-cost high quality hardware, I see the incredible and continued drop in the miniaturization and cost of image capture components, coupled with an increase in device quality. Due to this, Snap is prime to capitalize on the ability to provide very high quality, fun, funky, and unique devices that are built to capture incredible images.

During a recent trip to Iceland with the Snap Spectacles, I was immediately drawn to two things:

(1) The quality, size, and uniquely interesting parabolic nature of the image off capture device itself.

(2) The ability to share said captured images with a pre-defined and pre-populated network of my choice.

There is a major issue for traditional hardware companies (Nikon, Canon, etc.) in entering a modern software-defined imaging world — they have failed to build network effect. While it seems like a “Hail Mary” to try and “pivot” into being a “camera company,” it feels like Snap has done what Canon/Nikon or even GoPro could not. Snap has created the network, the share, the “sticky factor.” Snap focused on enabling a compelling image capture and sharing environment. By doing so, Snap jumped on the idea that for some time now, the mobile device manufacturers have competed with the camera manufacturers. Now, Snap has expanded and re-defined their core competency.

In annual reports since 2008 when Canon Marketing Japan concluded a share exchange agreement with Canon Software Inc. making Canon Software a wholly owned subsidiary, Canon noted an increase in 8 billion USD towards the creation and implementation of software products to assist the professional photographer. and in a 2010 report noted that 50% of their R&D was being spent on Software for professionals. In doing so, Canon failed to see the forest from the trees and, in lightly competing with the likes of Adobe, tried to enter a space where Canon had no competitive understanding or advantage, had they spent that $8B on a consumer image share platform, today the company and it’s consumer lineup might look different. Comparatively, Apple and Google (a la Nexus) have become the forest. in 2015, canon noted that digital camera sales are down 12%, due in large part to a 22% decline in the “dying” compact camera market. I believe that Snap Inc is well-positioned to take this market and run with it. The idea of a general purpose, trendy and fun image capture device coupled with an immediate and viral sharing network provides a competitive advantage that is hard to beat.

Snap Inc. will likely face considerable competition from Facebook. Facebook, through its Oculus acquisition, has beaten Snap to the punch in one incredibly vital aspect of the hardware market: Supply Chain. Supply chain may be the most difficult area of hardware development because it requires time. If twitter had some direction, it to could pose a thread, however that seems unlikely.

What may be surprising to Snap would be competition from a company like Netflix or Amazon. Both companies have taken the time to understand how to operate their supply chain based on demand and relationships. It seems incredibly unlikely that Canon, Nikon, or any other traditional camera company for that matter, could work to build a software platform capable of housing any sort of image network off of their devices. It’s unlikely that the pro camera user will ever “upload” a “raw image” directly to the “cloud” — a user of the Canon Elph or Powershot has already abandoned their device for an iPhone or Android. Moreover, neither Apple nor Google have managed to successfully create a social network of worth, although the album, share and collaboration functions of iMessage are undeniably moving in that direction.

Snap also has the ability to distribute unique original content by major production houses and studios. This is potentially indicated by the CEO of Sony joining Snap as their president. Snap could not only become the new Canon, it may also have the opportunity to blend user-created content with a wide and targeted series of professionally produced “snap shows” or “second screens.” (For example, we know “A roll” and “B roll,” Snap becomes the “O roll” — online subplots that add to the context of the series — vis a vis MTV/HBO/YouTube/Degrassi/etc.)

All-in-all, I am very bullish on Snap Inc. and believe that they have a unique vision that matches a new reality. During the time I was in my late teens, Canon and Nikon dominated the consumer imaging market. For those coming of age today, the new consumer imaging market will be Snap Inc. It’s difficult for those in their 50s to understand what teenagers will want when they are in their 30s, but it seems Evan and his team have a vision that may very well disrupt digital imaging technology as we know it. As a teenager, it was very easy for me to deeply understand the impact of the switch from Analog Film to Digital Imaging, a change that allowed compaies like StillMotion to generate amazing revenue as we upend many traditional film businesses, and I believe what Snap Inc. is doing will capture the move from Digital-Defined Imaging to Application-Defined Imaging.