PMA February 2010 : Page 33

Business & Marketing Interview: Fujifilm By Gary Pageau PMA magazine visited Fujifilm U.S.A. Inc. at its Valhalla, N.Y., headquarters on the eve of the company transformation into Fujifilm North America Corp. Taking part in the interview were Ryutaro “Ray” Hosoda, president and CEO, Fujifilm North America Corp. and president, Fujifilm Holdings America Corp.; Go Miyazaki, division president, Electronic Imaging Division; Masato “Mark” Yamamoto, division president, Imaging Division; Manny Almeida, vice president and general manager, Imaging Division and Electronic Imaging Division; and Camilla Jenkins, vice president, Corporate Communications. PMA: How will the new Fujifilm North America structure benefit customers? What changes can they expect? Hosoda: The creation of Fujifilm North America Corp. will allow Fujifilm to build a stronger presence in the North American markets, realize greater collaboration between businesses, and take full advantage of the skills and knowledge of our people. We don’t think our customers will experience any changes to service levels, the people they are used to working with, etc. In time, we hope to serve them even better. Similar Fujifilm products and services are increasingly being leveraged across catego- ries and regions. This new organization will help us serve multiple customers and mar- kets by tapping into a common product and service portfolio and the expertise of our entire North American workforce. PMA: Do you think your customers are interacting with more parts of Fujifilm, such as graphic systems? Standing: Go Miyazaki, Mark Yamamoto, and Manny Almeida. Seated: Ray Hosoda and Camilla Jenkins. Yamamoto: Yes, especially professional studio and lab customers. They used to work with just silver-halide products. Now, they are diversifying and using other technologies, like inkjet or other ink-based products. It is good news for our customers that our graphic systems and imaging products people are working more closely together now. PMA: How has the global economy affected the way Fujifilm does business in North America? Hosoda: The economy has affected Fujifilm globally and here in the United States. Fujifilm has suffered in the global financial crisis, especially because of the appreciation of the yen. At both levels, it has pushed us to move faster with reforms we planned for anyway. This would include the new North America organization, and similar steps we are taking to bring together the functions supporting our sales and marketing companies. I am in charge of bringing together the 13 companies. We know we can maintain and build competi- tive strength far more effectively together. A big part of our future will remain photo imaging, which Fujifilm believes is a key part of how we contribute to the advancement of culture, science, technology, and industry to enhance the quality of life for people worldwide. We are doing this through a strategy President Komori recently described in a news interview as a “5 +1” strategy. The “5” are businesses we have identified Continued on page 34 PMA — February 2010 — www.pmai.org 33

Interview: Fujifilm

Gary Pageau

PMA magazine visited Fujifilm U.S.A. Inc. at its Valhalla, N.Y., headquarters on the eve of the company transformation into Fujifilm North America Corp. Taking part in the interview were Ryutaro “Ray” Hosoda, president and CEO, Fujifilm North America Corp. and president, Fujifilm Holdings America Corp.; Go Miyazaki, division president, Electronic Imaging Division; Masato “Mark” Yamamoto, division president, Imaging Division; Manny Almeida, vice president and general manager, Imaging Division and Electronic Imaging Division; and Camilla Jenkins, vice president, Corporate Communications.

Hosoda: The creation of Fujifilm North America Corp. will allow Fujifilm to build a stronger presence in the North American markets, realize greater collaboration between businesses, and take full advantage of the skills and knowledge of our people.

We don’t think our customers will experience any changes to service levels, the people they are used to working with, etc. In time, we hope to serve them even better.

Similar Fujifilm products and services are increasingly being leveraged across categories and regions. This new organization will help us serve multiple customers and markets by tapping into a common product and service portfolio and the expertise of our entire North American workforce.

PMA: Do you think your customers are interacting with more parts of Fujifilm, such as graphic systems?

Yamamoto: Yes, especially professional studio and lab customers. They used to work with just silver-halide products.

Now, they are diversifying and using other technologies, like inkjet or other ink-based products. It is good news for our customers that our graphic systems and imaging products people are working more closely together now.

PMA: How has the global economy affected the way Fujifilm does business in North America?

Hosoda: The economy has affected Fujifilm globally and here in the United States. Fujifilm has suffered in the global financial crisis, especially because of the appreciation of the yen. At both levels, it has pushed us to move faster with reforms we planned for anyway. This would include the new North America organization, and similar steps we are taking to bring together the functions supporting our sales and marketing companies. I am in charge of bringing together the 13 companies. We know we can maintain and build competitive strength far more effectively together.

A big part of our future will remain photo imaging, which Fujifilm believes is a key part of how we contribute to the advancement of culture, science, technology, and industry to enhance the quality of life for people worldwide.

We are doing this through a strategy President Komori recently described in a news interview as a “5 +1” strategy.

The “5” are businesses we have identified As high-potential categories for growth: Medical Systems/Life Sciences, Highly Functional Materials, Graphic Arts, Document Solutions, and Optical Devices. The “+1” is the digital imaging business, including products and services such as digital cameras, digital printing, and photo books.

We leveraged the success of film to build the “5,” and today we are leveraging the “5” to reinvent the photo imaging business.

The economy may be difficult; but Fujifilm is lucky, because we began to expand into these new areas long ago. This has enabled us to pursue our idea of what photo imaging will be in the future.

Photography is who we are. In the United States, we have built a strong brand name during the last 40 years on our reputation in photo imaging. We have a household name people trust for quality. All our newer businesses take advantage of that asset.

Success in all our businesses makes it possible for us to continue to innovate and to invest in new products and services.

This is an advantage we bring to our retail, commercial, and professional photo imaging customers as well.

The economy may have slowed us down this year, but we remain committed to the +1 – and the other 5, too! We are committed to the culture of photography.

PMA: Fujifilm has a long history of “green” initiatives. Recently, the Greenwood facility has begun using methane from a landfill to power the plant and reduce greenhouse emissions. Can you discuss other ways the company is reducing the impact on the environment?

Jenkins: We have earned an excellent reputation as a company that has been good for the environment as long as there has been a Fujifilm. A lot of that has to do with living on an island and having limited resources.

A major focus for Fujifilm has been on energy consumption. Particularly notable measures include implementing a transformation in the type of energy used at major Fujifilm production plants, moving away from oil toward natural gas, landfill gas, and wind energy, which are all significantly reducing CO2 emissions for the company globally.

We have introduced an initiative here, called Fujifilm Unplugged, to engage our employees in achieving our goals.

Globally, we are working toward our 10-year target to reduce the energy consumption of our manufacturing facilities with large emissions – 10 percent by 2010.

In the United States, we are committed to reducing energy consumption 15 percent by 2011. This will reduce our GHG emissions by 29,360 metric tons of CO2 equivalent annually, which is approximately the same amount of GHG emissions produced annually by 2,351 households or 4,878 passenger cars. This will involve all Fujifilm facilities in the United States – manufacturing, distribution, and offices.

Fujifilm Sericol is a leading supplier of UV-cured inks, which are free of harmful compounds and consume less energy in the printing process. We’ve also developed new digital inks having no hazardous air pollutants, and allowing printers to emit lower amounts of harmful compounds.

Given the trends toward inkjet printing, we think this technology will give us a strong foundation for future growth and competitive advantage among retailers.

PMA: The fundamental ways consumers use images to share their memories have been uprooted. What is Fujifilm doing to lend stability to retailers and partners in this time? What are the new opportunities they may be missing?

Almeida: There is no question film usage has declined dramatically since 2003, and we’ll continue to see a decline.

The doubly bad news is, while every film consumer had to have their prints made to see what was on the film, today they get to choose what to print – and they are printing far less.

The good news for retailers is consumers are taking more pictures.

It’s certainly not the end of the industry, it’s a major reinvention. There is some really great news in the data we’ve been collecting.

First, we see lots of new moms coming into the marketplace in the next three years … a total of 54 million new moms from the Millennials, Gen-Xers, and even a few Baby Boomers. This influx of our core picture taking segment is good for photography and good for retailers.

The second bit of good news is photofinishing is not going away, it’s changing.

The total photo opportunity for retailers is actually growing and, we believe, has considerable growth potential. The photofinishing business peaked around 2003, with a value of $8.0 billion from film and digital prints. This same segment of film and digital prints will be only $3.2 billion by 2012, so it’s declining pretty steeply. At the same time, the total addressable market for a retailer in the photo category is growing, because it’s changing.

Photo books have been a huge focus at the PMA show the last several years. They continue to grow; but there are other products beyond that: gifts, calendars, banners, greeting cards, and customized print products resulting in an addressable market size of $7.8 billion.

We don’t see a sunset industry; we see a further reinvention of the industry.

Looking back 25 years ago, there were no minilabs in the market. You took your film to the drugstore, and it came back 7 days later. The minilab came in, and there was this incredible resurgence of photography.

The retailers who are addressing this expanded market – making banners, posters, mugs, pillows, etc. – are beginning to reap those rewards.

We believe there needs to be a transformation from a photo processing department to a personal publishing center.

Why shouldn’t this same retailer making folded cards also produce invitations, custom stationery, and business cards? What we think Fujifilm can offer is the widest range of technologies beyond silver halide, including dye sublimation, inkjet, and xerography. We are heavily invested in them all.

PMA: Industry people have been talking about books, pillows, quilts, and gifts for a long time.

Is there anything really new to reinvigorate the category?

Almeida: In part, it’s about this personalized publishing center. As an industry, we tend to fit things to the technology we have at that particular moment.

If you look at what’s going on, in terms of enabling technologies, silver halide, first and foremost, has been our traditional technology.

Clearly, from a processing standpoint – particularly as less film is being processed – chemical-dependent systems are less and less attractive for the retailer.

So, then, we have inkjet, our dry lab technology, which allows retailers to produce a print very conveniently in a machine that takes up a quarter of the space, uses less power, and costs less than a silver-halide machine. That’s not all.

There’s also xerography on the horizon. We leverage that technology today primarily to make books, calendars, and folded cards.

What if we could leverage that technology to make other products, such as business cards and letterhead? Why not help the retailers expand their services?

PMA: Many retailers in the industry – from single-store specialty dealers to chain stores – have been in business many years. What can be done to attract youthful thinking and processes to a new generation of retailers getting into the business?

Almeida: The first thing to realize is we, as manufacturers or retailers, are not the ultimate photo consumer. Those consumers are predominantly female, have young children, and are managing households and all the related issues. It is important to see the photo department through the eyes of this core target consumer. They have very little free time to stand in front of a kiosk. They want a friendly atmosphere with easy-to-use solutions, with unintimidating salespeople who allow them to customize the end product.

On the retail side, we have to be very mom-friendly.

It also means it’s not just about prints anymore. Prints are nice. We like making them, and we’ll continue to do so. The convenience offered by a retailer needs to be translated into these opportunities.

If I’m starting up a new business, I am looking for outlets and partners to make my letterhead, business cards, signs, and banners. These are the opportunities for retailers. It’s not a photo center any more; it’s a personal publishing center.

This is not an alien concept to our industry.

If we go back to the commercial labs, they had big dip-and-dunk processors.

Today, what are they? They are a hybrid between printing and commercial processing.

They offer signs and are printing on all types of substrates. They’ve transformed themselves, and those left are extremely successful. I think we can do the same thing with the retail side.

Miyazaki: Camera technology itself can be seen as an attraction for younger people. Take 3D photography. We have developed a new system using our advanced processor technology, together with Fujinon lenses, to deliver a 3D experience unlike any other. We can only begin to imagine what kinds of 3D prints and photo products stores will be selling In the future. This extreme evolution in photography makes the industry evergreen for younger generations, who look for the latest innovations.

PMA: How has Fujifilm integrated inkjet and other technologies from its medical and graphic arts division to the imaging division? How will these technologies and systems benefit customers?

Yamamoto: Fujifilm invests in original research and development, and has invested heavily in strategic acquisitions and collaboration to ensure the company stays ahead of the industry. This is demonstrated by its business portfolio, including Fujifilm Graphic Systems, Fujifilm Dimatix, Fujifilm Imaging Colorants, Fujifilm Sericol, and Fuji-Xerox. By acquiring high-end ink technologies, those businesses combined make a very good printing technology, which we can provide to the imaging side.

A collaborative approach to technology development and resource sharing across these companies has begun not only to drive revenue and market presence, but technology and product innovation.

Fujifilm also has invested in its own inkjet paper manufacturing facilities, building on a legacy of cost-efficient manufacturing, and expertise in thin-film coating technologies having established a company leadership presence in photographic film, triacetate cellulose film (for LCD screens), magnetic tape (for data storage and broadcast video), graphic arts and X-ray films, quality thermal photo paper, and Crystal Archive photo paper.

Its investment in output quality begins with its proven suite of software applications and algorithms referred to as Image Intelligence. This carries through to the engineering of printing hardware, and generations of advanced chemical and manufacturing science that goes into the manufacture of chemistry, colorants, inks, and paper media. The Fujifilm collective investment in technology and manufacturing contributes to development of products that cost-effectively deliver high-quality output across multiple media.

As a result of the broad printing technology and service portfolio we have, Fujifilm can offer the broadest range of solutions to customers.

Almeida: As Ray Hosoda mentioned earlier, Fujifilm has many companies operating in the United States, across a range of industries. Most of our customers have never heard of them, because they have very specific technologies, some of which are only OEM suppliers. For example, we own a company called Fujifilm Dimatix, which makes inkjet heads capable of printing with FDA-approved edible inks.

These are the inks and inkjet heads used to produce a photo cake. At the same time, we’re able to leverage our own developed ink colorants into our dry minilab systems.

If you look at the landscape of the industry, some companies are very heavily invested in silver halide; others are invested in laser-based xerography or inkjet. We have chosen to be heavily invested in all three. Which one will ultimately dominate?

It’s difficult to tell, but we are prepared to support this industry and be in it for a long time.

PMA: Recently, Fujifilm has been heavily promoting its SeeHere.

Com portal. What is the objective of this site? Will it allow for printing through Fujifilm retail partners?

Almeida: SeeHere.com is about maintaining brand presence at the consumer level. In the good old days of photography, 10 to 15 years ago, there was a significant green presence on the shelf. Today, there is much less film; and it’s much more difficult to have a unified brand presence to the consumer.

SeeHere.com is not about selling direct to the consumer. In fact, SeeHere.com is now directing consumers to brick-and-mortar retailers for in-store pickup of photo gift items ordered online. This is the part of the program we want to expand. Our ultimate goal with SeeHere.com is to continue to engage with retailers. We have a long history of supporting brick-and-mortar; it’s still a strong part of our future.

PMA: Fujifilm is one of the few companies involved in multiple image capture platforms: 35mm film, one-time-use camera, digital still, and even instant (Instax). One of the hottest capture categories, however, is one Fujifilm doesn’t participate in: digital camcorders. Is this something the company is considering?

Miyazaki: Digital still cameras and digital video cameras are very close. In most cameras, we have some kind of movie function. Some cameras have moved toward CMOS sensors, which makes it easier to shoot full HD video on digital cameras.

Therefore, we have no plans so far to offer a digital camcorder.

Fujifilm has made a strategic decision that all our new digital cameras this spring will have an HD capture feature.

Most digital cameras already have movie mode, and advances in video technology and high-capacity media are going to drive the trend of using one device – a digital camera – for shooting short movies. There will be no need for consumers to have two cameras.

PMA: You mentioned CMOS.

Fujifilm has a leading CCD sensor, the Super CCD. How well does that handle video?

Miyazaki: We will still continue with Super CCD chips for extreme picture quality, and the migration toward higher megapixels will continue; but, there are things a CMOS sensor can do better, such as handling high shutter speed. Both technologies will have their position. Almeida: Twenty years ago, if you shot video with a dedicated camcorder, you shot video for 30 minutes or 45 minutes. These were the movies mom and dad made, and they were painful to watch.

Shooting video has changed dramatically.

Today, it’s short clips that are put on the internet. This year all our digital cameras will capture HD video. We will make it easier for the consumer to shoot highquality stills or HD video in one camera.

We have done focus groups on our new models with young moms. They like the fact they don’t have to carry a separate camcorder.

They are busy; and their purses are already filled with a wallet, a phone, etc. PMA: Camera phones are also a growing factor in the “capture” end of the market. What role is Fujifilm playing there?

Miyazaki: Our sister company, Fujinon, which is well-known for its lens technology, is one of the major suppliers for higher-end camera phone lenses. That is a fast-growing part of the company.

Almeida: That will also give us significant advantages in our camera line going forward. Fujifilm digital cameras are leveraging Fujinon in a big way. Long zooms will be more and more important with digital cameras, now that we reached the 12- to 14-megapixel range.

Fujinon technology puts us in a great position for slim, long-zoom products as we move forward.

PMA: The digital camera market remains a very competitive and crowded space. What is Fujifilm doing to stand out?

Almeida: We have conducted various focus groups to better understand consumer requirements from specifications to fit-and-finish to color. This has become increasingly important.

This year, everyone has a 12-megapixel camera; and next year, everyone will have a 14-megapixel camera. So what is going to set them apart? Fit-and-finish will, as well as targeted marketing, such as youth.

One of our new models for the spring will be an extremely stylish camera with a 5x internal optical zoom. It has a dedicated HD video button, a larger shutter button, and the control panel is much more intuitive and easier to use.

It may sound strange, but fit-andfinish and design are going to be the real competitive differentiating features as we move forward, especially for entry-level cameras.

We will also introduce a “four-wayproof ” camera – waterproof, shockproof, dustproof, and freezeproof. It has a nice-size shutter button for underwater use and a 5x internal zoom. This is a real difference-maker for us.

We are not necessarily going to market this as a waterproof camera. It’s for everyday use. If it gets dropped into a cake at a party, no problem – hose it off.

Fujifilm will have 14 cameras in the spring, including a superzoom, fixed-lens category.

PMA: The DSLR is a hot category, and one Fujifilm has participated in for the pro market. Is this something you are looking at getting into again?

Almeida: We’re always looking at it, but our focus is going to stay on the fixedlens mount.

All our findings will be reflected in our 2010 spring product line-up to clearly differentiate our products.

The new line-up will include models for the Semi-Pro, the Tech Guru, the Fashionably Hip, the Adventurer, and the Everyday Picture Taker. These camera users will enjoy advances in Feature Sets, Ergonomics, and Technology.

PMA: The new Fujifilm FinePix Real 3D system is impressive.

Skeptics say 3D has been around for many years, and has not been popular with mainstream consumers. Was all the Real 3D system developed by Fujifilm?

What will Fujifilm be doing to grow this market? What is Fujifilm doing differently – such as the Nvidia partnership – to grow the market?

Miyazaki: The skeptics are right in the sense the technology has still not gone mainstream, but this is a familiar pattern. New technologies start from industrial areas and are eventually adopted by consumers when the price and infrastructure are right. Think of how video systems used in TV stations later became a consumer product. This shift is beginning to happen with 3D.

This is a Fujifilm technology. We have been working on 3D for 5 years or 6 years. Fujifilm has invested in a range of 3D technologies, including support of the motion picture industry move to 3D projection – an industry-wide effort that will help theater owners bring 3D to their customers very quickly and affordably.

The digital camera market is still growing on a worldwide basis; but, at some time, it will start stagnating. With 3D, there is a way to create new demand and bring photography to the next stage.

As to the FinePix Real 3D system, I believe the infrastructure for viewing images at home, such as PC monitors or televisions, will be the key to its growth.

As you are aware, 3D movies in theaters are becoming increasingly popular. Many TV manufacturers are starting to show 3D televisions at exhibitions. Electronic manufacturers would like to use the huge capacity in Blu-ray systems for 3D movies at home, which will bring in new demand, including 3D-compatible TV systems.

I believe we launched the Finepix Real 3D product at the right time. The infrastructure to view 3D images is still limited; however, we have many partnerships aimed to expand the infrastructure in the near future, which will grow the audience significantly.

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