Snapchat shows why being a product company is a dangerous idea

In 2014, unbridled optimism swept through Canon’s headquarters. Six years since the launch of the first iPhone by Apple in 2007, the Japanese camera maker made record breaking revenues in 2013. Despite the threat from smartphone manufacturers, Canon doubled down on its focus on high-end digital single-lens reflex cameras (DSLR).

That strategy had paid off. Even when Sony’s point-and-shoot compact cameras were fast becoming irrelevant, Canon’s DSLR reigned supreme among professional buyers. Canon’s camera business alone, was raking in more than US$14 billion, following a three-year streak of consecutive growth.

That success didn’t last long. As Samsung and Apple aggressively upgraded product functionalities, many professional photographers also began to use smartphones. Sales of DSLR soon plummeted. Last Friday, Snapchat put another nail in the coffin.

The mobile app startup, best known for self-destruct videos and pictures, has unveiled pair video-capturing sunglasses, aptly named Spectacles. The Specs, for short, can record circular videos with a 115-degree field of view and send snaps to the mobile phone app to be viewed. Priced at US$130, Specs are affordable enough for anyone willing to try.

The camera industry, pioneered by Eastman Kodak more than 120 years ago, is definitively giving way to smartphones and wearables.

Fortunately for Canon, this won’t be the end. For a long time, Canon and Nikon have leveraged their core research in optical science and branched into fields such as lithography – the industrial printing process of microprocessors that power our laptops and smartphones. On that side of the business, Canon and Nikon are selling multimillion-dollar machines to Intel, IBM, Samsung and the like. Why Canon didn’t move faster into this area is anyone’s guess. But ideas popularised by Wall Street and business schools certainly share part of the blame. Chief among them is the concept of conglomerate discount.