By Ted Johnson
Thinking about the Sigma DP2 has made me continue to ponder the economics of camera manufacturing in the digital age. Electronics are not kind to low volume manufacturers. Components like sensors, LCDs, and the development cost of the software/firmware drop dramatically in price as volume increases. Furthermore, there is an economic benefit to having accumulated experience in designing cameras that isn't easily quantified, but certainly exists. Finally, if you have other products that can benefit from the technology, the cost of development is reduced on a unit basis.
I'm sure that's why cameras like the M8 are so expensive, and why they are not very refined electronically. And Sigma, which I feel is not overloaded with cash, has suffered even more. Another example is the Olympus Pen vs. the Panasonic G series: Olympus can't or won't spend the money on the high level of contrast autofocus that Panasonic has, so it is slower to autofocus. Also, the Olympus has a relatively crude LCD compared to the competition. I am sure these shortcomings are related to direct cost, accumulated experience and the ability to take the technology and apply it to other product lines. It's scary to think that Olympus is at a serious disadvantage vis-à-vis their competition, but I think they are, and will, over the long term, suffer for it.
It also means a fair price for an improved Sigma DP2 might be $1200, at which point Sigma might estimate they would sell 10 cameras, not 10,000. Which might be too bad: a $1200 camera that has the benefits of the DP2 with quick autofocus and file flush times is probably salable in decent volumes. But it takes a lot of guts in any corporation to price to value rather than pricing to demographics.
I was the general manager at Callaway Cars in the mid '80s during the Twin Turbo Corvette production. We charged $20,000 for the upgrade at a time when the base Corvette was $40,000. Plain and simple, it cost a lot of money to do the low-volume remanufacture required to make a good car. GM thought we were crazy and would never sell the option, but agreed to give us an option # and let us run with the program. We thought we'd sell 40 or 50 cars. We ended up selling 188 the first year! There are people who were willing to cough up the dough because they got a good product, but I can't tell you how many calls I got from shade-tree mechanics about how they could produce a better car in their garage. My response was, "okay, go ahead." They didn't have to worry about providing a warranty, sales and service support, and of course a car that was reliable and street legal. It takes a lot of money to do that and the customer ultimately has to pay. The smaller the production run, the more the customer has to pay!
The engine bay of an '87 twin-turbo Callaway 'Vette. Photo: vetteweb.com
The other thing that hits a small volume manufacturer is when something is wrong with the camera even after it has shipped to the public. Again, at Callaway's, we changed out many components in the engine to improve reliability, to the point where almost everything was new. But we still ended up having problems that were related to a timing gear at the base of the distributor. GM had changed the component to reduce cost, and basically the looser tolerance meant some—repeat, some—wore out faster than the original component. In the standard car, other than running a bit poorly, nothing else happened. In the turbo car, under boost, the retarded timing caused the exhaust gas temps to soar and could cause the car to catch fire! "Heat damage" was the euphemism GM used. Anyway, we had to buy a special race-prepped gear to fix the problem, which was expensive to say the least.
I'm sure Leica and Sigma have had similar types of issues to deal with in their development processes, which looks stupid to the public but which is the price of being small and taking risks.