Author: Ben Debski

Boring financial jargon or critical info? Cardinal rules for investment writing

Posted on by Ben Debski

I recently shared a story with a colleague about a work dilemma which has stayed with me for over ten years. As a lowly marketing executive for a financial services firm, I was once asked to review the product brochure for a new pension fund. The fund was being launched by a funky, well-known brand, entering the market as a no-fuss, no-frills pension provider. My firm was acting as the responsible entity for the fund, which is how the brochure ended up in my hands.

The brochure was well-written and witty, cheeky even, and was certainly far removed from most of the dull financial disclosure documents that crossed my desk. I liked the way it simplified the product’s features and benefits, and didn’t use any finance jargon. However, as I made my way through the brochure, I became more and more uncomfortable. While focusing on plain language, they had skimped on details around the risks associated with the funds. Alarm bells really started ringing when I read the disclaimer title ‘the boring fine print’!

Bored to fears
Yes, financial language can be boring, but it’s also really important that people signing up to a financial product understand it fully – its risks as well as its benefits. People’s life savings depend on it. Not only did I feel the fund was glossing over important information that its customers needed to know, it seemed to be actively discouraging people from reading it. I was shocked by this cavalier attitude, and I shared my concerns with our legal team, who pressed the panic button and shut that party down (in a sedate and lawyerly way).

Financial language can be boring, but it’s important that people signing up to a financial product understand it fully

I was reminded of this story again this week, when a friend showed me a product she is creating for a financial services firm. The goal is to sell inflation-linked funds through a simple web interface. It gives you a choice between funds with different risk levels and, therefore, different potential outcomes.

The bit that troubled me was that the interface lets you enter an initial investment (let’s say £3,000) and then asks how much you’d like to make and spits out £7,500, £8,000 or £10,000 for you to choose from. It seems to me that most people will say “well, I quite fancy the £10,000, thanks very much”, but this really isn’t the full story of whether an investment is right for you. The programme doesn’t consider how soon the customer might need to access their investment, what other investments or assets they have or how comfortable they are with the potential for capital loss.

Now, I should explain that this web product has not yet been launched and has not been through legal and compliance vetting, so this issue will likely be picked up in review. However, it did lead me to ponder the challenge for these so-called ‘simple’ financial products in ensuring customers fully understand what they’re buying before they invest.

Write right
Do I believe that some financial language could be written more simply? Absolutely. Do I believe that this should mean skimping on product details? No way. Simple and clear writing does not need to be dumbed down. Good quality, plain-English writing can make complex, technical information accessible and clear for most audiences.

Here are my cardinal rules for simpler investment writing:

Use a simpler word if there is one. Don’t use ‘equities’ when ‘shares’ or ‘stocks’ will do just as nicely. And, unless you’re explaining the finer points of fixed income securities, don’t say ‘yield’, just say ‘income’.

Avoid acronym overdose. Finance is famous for unnecessary acronyms, and documents peppered with them are just the worst! If you must use an acronym, define it clearly the first time you use it. Even if you think it is in common parlance, be respectful to your audience and spell it out. Also, consider defining it in simpler words as well to make your writing more readable, e.g. “the individual savings account (the ISA or the Account)”.

Shorten sentences and simplify clauses. One reason that disclaimers and the other boring bits of financial documents seem so impenetrable is the long sentences that seem to go on and on and on. It makes them hard to read and even harder to understand, but there’s no need for it. Simply separating multiple clauses with a full-stop can help a reader to absorb complex information in bite-sized chunks.

Write well, right to the end. The promotional part of a brochure or disclosure document will quite often enjoy the loving attention of a marketing or communications department. Plenty of time will be devoted to crafting pithy taglines and captions, and you really don’t want to know how long the average product naming takes! However, this level of attention is rarely paid to the risk disclosures or disclaimers. These sections are usually drafted by the legal department and then left alone. Given how important it is that people really understand what they’re signing up to, the boring bits should also be written as clearly and simply as possible.

Following these rules will go a long way to making financial writing more accessible for everyone. In the meantime, be wary of products and brochures making promises that seem too good to be true. When it comes to financial decisions, it’s crucial that you’ve clearly understood the boring bits so that you know what you’re getting yourself into.

For more information on how to create compelling copy within the financial services sector, please visit www.strattoncraig.co.uk.

Ant Financial to roll out fintech in Indonesia

Posted on by Ben Debski

On April 12, Alibaba’s digital payments company Ant Financial announced a new joint venture with media conglomerate Emtek Group as it seeks to roll out fintech services in Indonesia. The companies will develop an array of offerings, most notably a payment service on BlackBerry’s Messenger platform (BBM), which still boasts 63 million monthly users in the country. Emtek’s investment wing, Kreatif Media Karya, will hold 61 percent of the new company, which will be available for e-commerce, over-the-top and online-to-offline merchants in Indonesia, the companies said.

“Ant Financial has proven its expertise in providing payment and financial services solutions to the massive and growing [base of] mobile device users in China and developing its partners globally. We are keen to replicate that success in Indonesia”, said Emtek CEO Alvin Sariaatmadja.

The Emtek move is Ant’s fifth international payments deal in the past six months. It forms part of a wider push toward expansion beyond China, where Ant currently boasts a 450 million-strong user base, thanks to its Alipay and digital banking services.

The Emtek move is Ant’s fifth international payments deal in the past six months

In November, the company invested in Thai firm Ascend Money in a similar deal to the Emtek move. Then, in February, it announced a $200m deal with Korean company Kakao Pay and made a similar investment in Philippines-based micro-payment firm Mynt. Ant is now bidding for US company Moneygram, although could be outdone by stiff competition from Euronet.

Indonesia’s fintech market is increasingly regulated to accommodate smaller start-up firms, with relaxed testing and funding rules for new companies being introduced in September and January respectively. That said, larger ventures like Ant’s still have a promising road ahead.

Given its existing foothold in the industry, the company has a good chance of developing a quality end product with Emtek. Moreover, Ant now has the support of Alibaba and access to Emtek’s wide portfolio, which boasts the hugely successful Bukalapak and Reservasi.com. Both will be useful when Ant comes to roll out its own service on BBM, with which both Bukalapak and Reservasi signed a strategic alliance in June last year.

Toshiba’s future is in doubt

Posted on by Ben Debski

After years of scandal and mounting losses from its nuclear division, Toshiba has warned its future may be in doubt after being unable to get its financials signed off by an auditor. Faced with a results deadline and fighting to avoid being delisted from the Toyko Stock Exchange, Toshiba has filed unaudited results for the April to December period.

The unconventional move comes after Toshiba’s auditors, PriceWaterhouseCooper Aarata, twice refused to approve its figures. The results Toshiba have released report a loss of JPY 532bn ($4.8bn) for the April to December period. The results also noted “there are material events and conditions that raise substantial doubt about the company’s ability to continue as a going concern”.

Toshiba’s current woes date back to 2015, when an accounting scandal revealed the company’s previous seven years of results had been inflated by $1.2bn. The scandal rocked the business and lead to the departure of several high-ranking officials

Toshiba’s woes date back to 2015, when it was found the company’s previous seven years of results had been inflated by $1.2bn

Westinghouse, its US nuclear unit, has also dragged down results. Toshiba bought Westinghouse in 2006, but following the Fukushima disaster in 2011 global demand for nuclear power substantially fell. In March of this year, Westinghouse filed for Chapter 11 bankruptcy, protecting it from its creditors as the division attempts a restructure.

Westinghouse is also the source of Toshiba’s struggles to gets its results audited; uncertainty surrounding the financial impact of Westinghouse’s takeover of constructor CB&I Stone and Webster in 2015 has delayed the approval.

Potentially offering a lifeline to Toshiba is Taiwanese chipmaker Foxconn, which was reportedly willing to pay as much as $27bn for Toshiba’s chip business according to the BBC. Toshiba is still the world’s second largest chipmaker, with its silicon used in a wealth of consumer electronics.

China cracks down on data transfer

Posted on by Ben Debski
China is embracing the information age by bringing its big government principles into the digital realm
China is embracing the information age by bringing its big government principles into the digital realm

April 11 saw China introduce a new draft law that cracks down on cross-border data transfer by businesses. The new rules require companies to obtain users’ consent before they send their data overseas, and block firms from exporting any data that is considered to be a threat to national security. Firms that transfer over 1,000 GB of data, or that transfer information that affects over 500,000 users, will also undergo annual state security inspections.

The law will “secure personal information and the safety of important data, as well as protect internet sovereignty and national security”, the Cyberspace Administration of China said.

While the restrictions on cross-border data transfer apply to all firms, they’re likely to affect foreign companies the most

November last year saw China introduce new restrictions to counteract hacking and cybercrime in sectors deemed ‘critical’ to national interest. The April 11 rules are an extension of these, since state intervention now applies to all network operators, not just critical ones.

The move is a further step towards data localisation, the practice that sees information being kept in the place where it came from, rather than being freely moved and exchanged. This trend is not unique to China, but it is becoming more pronounced in the country.

“The strongest international standards to protect data privacy are determined by industry consensus, draw on global best practices, and are largely blind to where data is stored or transferred”, said Jake Parker, of the US-China Business Council.

While the new restrictions on cross-border data transfer do apply to all firms, they are likely to affect foreign companies the most. Consequently, they could be part of a wider crackdown on foreign businesses and may indicate a small step towards protectionism.

That said, this would not be the only reason for the introduction of the new laws. China has long been concerned with internal security and keeping information under control. Moreover, the rules will affect both foreign and domestic companies. Therefore, they mostly indicate that China is rapidly adapting to the information age by transferring its existing policy of big government into the digital sphere.

Agricultural drones need time to take root

Posted on by Ben Debski

The world’s population is forecast to reach 10 billion by 2050. Consequently, agriculture needs to keep pace. In safeguarding future generations, farmers now face the gruelling tasks of maximising output, minimising prices and, in the process, protecting the environment. Technology will be essential in reaching these goals. In fact, it is already being innovated to suit. Orange-picking robots with pneumatic arms are shaking trees in Florida, and high-nutrient super vegetables have been grown in Israel, while improvements in land surveying are also driving change.

Enter agricultural drones, which are nowadays well suited for data collection. In farming, they are simply known as ‘ag drones’. They come in all shapes and sizes, and offer a variety of different solutions. For example, the 700g eBee RTK is a popular choice for surveyors that want to cover a lot of ground fast, as it makes 3D maps by taking pictures with its downward-facing camera. These images can then be used to estimate crop volumes. Meanwhile, heftier drones like the Terra4 Quadcopter perform entirely different tasks, flying low and spraying pesticides. Similar models are even fitted with cameras that scan for insects before spraying, processing data at lighting speed.

The main advantage of agricultural drones is that they can increase yields

“The end goal is a fully autonomous drone that could take off, fly itself, take pictures across a known area of farmland, upload the information into the cloud, process in the cloud and provide you a map the next morning that says ‘this is what you need to do’”, said Dr Jonathan Aitken of the University of Sheffield. Steps have already been taken in this direction in Japan, where drones work increasingly with self-driving tractors, feeding them information about the landscape.

Promising signs
The main advantage of drones is that they can increase yields. For one, farmers can get a better idea of soil quality by surveying their land before planting. “We can take detailed footage of how fertile the ground is, and check for areas where irrigation systems are not working”, said Andrew Linford-Garcia of Droneworx. After planting, drones can help with crop maintenance. For example, drought and dryness can be detected with thermal imaging cameras, while chlorophyll can be measured by filtering ultraviolet rays. Fixing problems is also more cost-effective when specific issues are identified. “Drones allow you to avoid putting things like fertiliser and pesticides across everything in order to get your benefit”, Aitken explained.

Drones are also more efficient when it comes to livestock management. At present, they mainly use thermal imaging cameras to spot cattle in bushes and buildings. Individual animal tags are also read from the skies. “We can take a high-resolution photo of [a tag] from 100m away, shooting in 6k with a 20x optical zoom”, explained Linford-Garcia. In the future, it is easy to imagine that each animal could be tagged with an RFID chip that is readable from a similar distance.

Present obstacles
Given the pace of technological change and the grand designs of ag drone developers, only a few things stand in their way. The first is the set-up cost. Roughly $1,000 can buy a drone that straddles the professional and consumer markets. That said, farmers might have to pay much more for higher-end models, depending on their needs. For example, the high-quality eBee RTK would cost a 3D mapper $25,000. Further expenses then come as a result of regulations. In the US, the combined cost of registering as a drone pilot, taking the aeronautical knowledge exam and buying drone liability insurance can be up to $1,200. That also presumes you pass the exam. “There’s quite a high skill level needed among the personnel required to operate the systems”, said Aitken.

A second obstacle is data management. A single day’s flying can gather up to 60GB of information. An obvious bottleneck in terms of moving this data around is the dearth of high-speed web access in the countryside. An even bigger problem might be a simple lack of technical know-how. The information gathered by drones needs proper analysis in order to be used to its fullest. Here, user-friendly apps can only help to an extent. Really, farmers will need to dedicate lots of resources to data analysis if they want to work with drones efficiently.

Considering these prices, hurdles and skill requirements, the costs of mapping and monitoring crops can outweigh the benefits for individual farmers. Consequently, many prefer not to handle drones themselves. Instead, they often turn to outside specialists – agricultural service providers – who already have the necessary skills and equipment. The cost of a day’s surveying from specialists that offer data collection and processing is around $1,000. For farmers, this is much cheaper than buying their own drones, since mapping and surveys are only needed a few times a year.

Still, this cost-saving solution could be undermined by a more fundamental problem: some people just don’t like drones. This is partly rooted in data protection concerns. If information regarding yields, plant health and biosecurity were to be leaked online, a farmer could effectively lose their trade secrets

$1,000 can buy a drone that straddles the professional and consumer markets, but farmers will pay more for higher-end models

“Drones are very new and they’ve got a lot of bad press. There’s often bad news with collisions and near misses… a lot of people are wary of them, which really they shouldn’t be”, said Linford-Garcia.

Green shoots
At present, for many in the industry, the obstacles are substantial. Older farmers have been particularly slow to embrace drones, Linford-Garcia said. Most of Droneworx’s customers are young and are more adaptable to new technology. Typically, they are entrepreneurs who were not born into agriculture, but rather transitioned from other industries and now manage multiple farms. If autonomous drones do end up surveying every field and herding every sheep, it is these individuals that will most likely have spearheaded the change.

Big business will also lead the way, as the hefty set-up costs make more sense for large landowners. Each drone will have more acres to cover, which will justify its price. Moreover, the savings that it will bring with more targeted pesticide and fertiliser deployment will start to add up more more quickly. Such businesses would also find it more feasible to invest in dedicated data analysts or even full-blown automation. Ultimately, this could mean that external experts are bypassed entirely. In the process, drones will have killed-off an industry almost as quickly as they created it.

If full automation someday occurs, drones will have been important in making it happen. In doing so, they will increase productivity, potentially making food available for millions more people. For now, agriculture is in a transitional phase, as drones create jobs and a new generation finds its feet. It should also be remembered that these new farmers are following in the footsteps of the pioneers before them, which were the first to use laser beams to conduct land surveys and to hook their sprinklers up to computers. Now, as then, agriculture is being pushed to adopt new productive technologies thanks to population pressure. When drones eventually overcome their growing pains, they will help to resolve existing supply problems and realise their potential as a force for enormous good.

AT&T places $1.6bn bet on 5G

Posted on by Ben Debski

On April 10, US conglomerate AT&T announced a $1.6bn deal to buy wireless start-up Straight Path Communications in a big bet on the future of 5G technology. Straight Path shareholders will receive $1.25bn from the deal, which is due to close by April 2018, subject to approval by the US Federal Communications Commission.

“The acquisition will support AT&T’s leadership in 5G, which will accelerate the delivery of new experiences for consumers and businesses like virtual and augmented reality, telemedicine, autonomous cars, smart cities and more”, said AT&T in a statement.

The offer of $95.63 per share represents a 162 percent premium on Straight Path’s market value. The news caused the company’s share price to skyrocket from $36.48 on April 7 to $91.32 on April 10, while AT&T’s value dipped a little.

Straight Path is one of just a few wireless carriers to hold substantial airwave rights to 28 GHz and 39 GHz bands

Straight Path is one of just a few wireless carriers to hold substantial airwave rights to 28 GHz and 39 GHz bands, an important aspect of 5G technologies. It is generally thought to have multi-billion-dollar potential, which partly explains the high premium paid by AT&T as it doubled down to see off rival bids.

Verizon is presently AT&T’s main competitor when it comes to 5G, having boosted its ownership of the millimetre band spectrum to 575 MHz in February with the acquisition of XO Communications. In comparison, the purchase of Straight Path was AT&T’s second rights acquisition in that spectrum this year, following its purchase of FiberTower in February.

“Between these two deals, [AT&T] should have a similar amount if not more. This spectrum is for fixed wireless and is the basis of [Verizon’s] 5G strategy”, said Wells Fargo analyst Jennifer Fritzsche.

The deal will also be a boost for the FCC, which agreed to settle an investigation into Straight Path in January in exchange for 20 percent of the proceeds of its future license sales. It is important for serious players like AT&T to make land-grabs like this as early as possible in order to stay competitive in the long term; in mid-2020, 5G technologies are expected to be rolled-out globally, with 24 million subscribers forecast by 2021, according to telecoms analyst firm Ovum.

Some also think 5G could be the last big step-up for the foreseeable future, given gradual upgrades to 5G could make the leap to 6G unnecessary. Consequently, if AT&T can establish itself as a major stakeholder in the technology now, it could start reaping long-term benefits very soon.

YouTube blocks ads on smaller channels

Posted on by Ben Debski

Amid a growing number of advertisers pulling their support from YouTube, the Google-owned company has announced new measures designed to reassure businesses the platform is safe. Users with fewer than 10,000 total views will not be able to run the service’s programmatic advertisements with their content. This move may provide advertisers more confidence when spending with the service, but YouTube’s creator base is unlikely to be supportive.

YouTube’s plans, which the company said have been in development since November last year, were detailed in The Wall Street Journal. With this focus on bigger channels, the company said it can ensure advertising runs alongside appropriate content. Channels that have over 10,000 views are a minority on the service; data company Pex estimated only 12 percent of YouTube channels reach this threshold.

Previously, almost any YouTube channel could be approved to run advertisements through the company’s network

The move represents a significant change in stance for the company. Previously, almost any YouTube channel could be approved to run advertisements through the company’s network, and subsequently generate a small payment. YouTube said the decision was designed to prevent channels that steal content from generating any revenue.

The decision is also likely to prevent advertisements from appearing alongside content that includes hate speech, with a number of advertisers pulling their budget for the service as the issue has gained significant attention. With a far smaller pool of videos running with advertisements, YouTube will have a far easier job of policing its service

The decision will be welcomed by companies keen to guarantee that their content doesn’t end up supporting offensive or hateful content, but it is unlikely to be welcomed by YouTube’s creator community. With a threshold now in place, aspiring YouTube stars will have a long road to prove themselves before being able to profit from their work.

With this decision, YouTube is continuing its transition from free-wheeling start-up to a business that behaves a lot more like a traditional media company. It is now also offering a subscription tier with exclusive content, and in some US markets even a cable TV package.

Huawei wins $11.6m patent battle against Samsung

Posted on by Ben Debski

On April 6, Chinese phone manufacturer Huawei won $11.6m in damages from South Korean rival Samsung in a patent infringement case. A Chinese court ruled that Samsung had infringed upon Huawei’s intellectual property rights by copying technology from a handheld product called Huawei Device. Three of Samsung’s units, including Samsung China Investment, are now required to contribute to the total damages payment.

The technologies in question are Huawei’s 4G communications technology, its operating systems, and the software that underpins its user interface. Huawei has over 50,000 technological patents and alleged that 20 of Samsung’s products, including the Galaxy S7, were in violation of the rules. Consequently, Huawei claimed that Samsung had made $12.7bn through 30 million sales of these products by the time the case was filed in May 2016.

Huawei is currently suing Samsung both in China’s Shenzhen district and in California for 4G patent infringements

“Over many years, Samsung Electronics has pioneered the development of innovative mobile technologies through continuous investment in R&D to provide consumers with a wide selection of innovative products. We will thoroughly review the court’s decision and decide appropriate responses”, said a Samsung spokesperson. Meanwhile, a Huawei representative said that the decision protected intellectual property rights and would allow the company to make a return on its investments in research and development.

While this particular case has come to an end, the two rivals continue to grapple with each other in multiple courts around the world. Huawei is currently suing Samsung both in China’s Shenzhen district and in California for 4G patent infringements. Meanwhile, Samsung began countersuing in July 2016, also claiming patent infringements relating to six Samsung devices.

Huawei had a shaky week in the run-up to the court win. On April 5, the UK High Court ruled that Huawei must pay a global license fee to California-based patents holder Unwired Planet, or face a sales ban. Still, at a proposed rate of just 0.03 percent, negative publicity was the main effect of the ruling.

Samsung came off decidedly worse on April 6. The court defeat adds to the company’s ongoing woes, which include a high-profile corruption scandal. Samsung has also been struggling in an increasingly competitive marketplace, as regional competitors emerge to challenge its dominance.

Nowadays, it would seem that phone manufacturers are more inclined to sue one another on intellectual property grounds in order to protect their finances. Reputation and brand image are also at stake in such cases, and are arguably even more important. With the April 6 ruling, Huawei has recovered a little in these terms, while Samsung continues to take a bruising.

Germany takes aim at fake news and illegal content with €50m fines

Posted on by Ben Debski

Angela Merkel’s cabinet has approved a landmark bill intended to curb the spread of fake news and hate speech on social media. Under the new legislation, social media sites such as Facebook and Twitter could be hit with fines of up to €50m if they fail to remove misleading fake stories and other illegal content.

With the draft bill having been approved by the German cabinet, it is likely that the legislation will pass before the nation’s federal election in September. Given the impact of pervasive fake news on last year’s US elections, there is a growing concern among the German political establishment that false reports could similarly influence public opinion as Germans head to the polls.

Facebook boasts around 29 million users in Germany, where it already faces stringent rules on monitoring illegal content. Prison sentences are currently enforced for Holocaust denial and inciting hatred against minorities, and the proposed bill will further strengthen the nation’s existing hate speech laws.

Under the legislation, social media sites could be hit with fines of up to €50m if they fail to remove misleading stories

“Social network providers are responsible when their platforms are misused to propagate hate crimes and fake news”, said German Justice Minister Heiko Maas in an emailed statement. “There should be just as little tolerance for criminal incitement on social networks as on the street. We owe it to the victims of hate crime to manage this better.”

In approving the bill, German officials argued that social networks have been slow to act on both fake news and hate speech. A recent survey by the German Justice Ministry showed that Facebook had rapidly deleted or blocked just 39 percent of criminal content on its site, while Twitter only managed to delete one percent of offensive posts. YouTube, meanwhile, was cited as a strong example of how to tackle online hate, with the video-sharing site removing 90 percent of illegal postings within one week of them being uploaded.

Under the proposed legislation, social networks would have just 24 hours to delete or block criminal content, and seven days to respond to less clear-cut cases of abuse. Failure to respond rapidly would not only see a company fined up to €50m, but would also put individual corporate officials at risk of a separate €5m fine.

The death of digital photography

Posted on by Ben Debski

In February, Nikon – the world’s second-biggest camera manufacturer by market share – published a notice of “Recognition of Extraordinary Loss”. The statement admitted that, over the last nine months of 2016, the company had lost $260m. Following this announcement, Nikon’s share price plummeted 15 percent and loyal customers were sent into a panic. Photographers tend to invest a lot of money in a camera system, purchasing multiple lenses and camera bodies designed to work together. For the millions invested in the Nikon system, the announcement exacerbated existing fears about the decline of the digital camera industry and it’s key players.

Promuser’s Global Digital Camera Report for January 2017 confirmed total digital camera production is dropping steadily, and is currently less than half the most recent high-point: the 45 million units produced in October 2014. The number of units shipped is also falling: it was down 1.6 percent year-on-year in January, with no signs of improvement for the rest of the year.

Innovation stagnation
This decline is curious, at least in the way it has played out. Aside from Nikon, few if any leading manufacturers have acknowledged there is any problem. The former cancelled its planned DL series of mirrorless (high-end compact) cameras in the wake of the loss announcement, but market leader Canon released its newest professional model (the EOS 5D Mk IV) in September last year. The camera was universally recognised as an excellent, capable piece of technology, but a unifying feature of reviews was the suggestion Canon had not changed enough from the previous model (the Mk III) to justify the upgrade.

Camera reviewer Ken Rockwell said of the new release: “I’m so impressed that Canon chose to introduce this 5D Mk IV. Canon didn’t need to; it already has [most features] covered in the 5D Mk III. The 5D series sells very few cameras compared to Canon’s [consumer level] DSLRs, so we ought to be glad that Canon actively develops new models that don’t do much for profits (and eat into sales of other Canon cameras), but give us all more camera choices.”

The response perfectly encapsulates one of the market’s main problems: a lack of innovation. Unlike in other stagnating areas of technology – such as laptops and televisions – no complete alternative has yet superseded digital cameras. They are still widely used and appreciated, especially at a professional level where tiny smartphone cameras cannot compete, but the incentive to regularly upgrade is being eroded.

Metrics that once drove camera upgrades, such as megapixel counts and sensor sizes, are being widely called into question. Canon users, for example, spent many years clamouring for greater megapixel counts, culminating in 2015’s EOS 5DS and 5DSR models with staggering 50.6 megapixel sensors. Around the same time, Fujifilm set about releasing a range of attractive, functional cameras with much more humble 16 megapixel sensors (now increased to 24 megapixels), but still marketed at professionals. The range was a critical and financial success, proving that ergonomics and build quality matter more than abstruse technical specifications.

“I think people looking for billboard-size prints may be attracted by larger sizes”, said professional documentary photographer Kevin Mullins. “I find the Fujifilm size to be fine though; I’ve had images from these cameras printed at three metres wide, and I find the size of the cameras liberating.”

The fact is most high-end digital cameras are exactly the same as one another, and the same as older models from the last five years

The rise of Fujifilm as a serious competitor to Canon and Nikon, alongside other mirrorless manufacturers such as Sony and Olympus, has spread customers much more thinly than before. Manufacturers need significant innovation in order to stand out, and yet innovation is exactly what the industry is currently lacking. Canon makes its own digital sensors, but the majority of other major manufacturers (including Nikon and Fujifilm) actually use Sony sensors, making the market surprisingly uniform. “I’m not a camera engineer, but I think there may be some head-scratching going on in the labs regarding which direction to take technology”, noted Mullins.

It’s often obscured by superficial features, but the fact is most high-end digital cameras are exactly the same as one another, and the same as older models from the last five years. What’s more, there’s little prospect of them changing much in the near future. As a result, there’s little incentive to upgrade as often as manufacturers would like, which is behind sluggish sales and rapidly stagnating production levels.

“If you’re in the market to buy a new camera and don’t have one already…you’ll struggle to make a bad decision”, wrote tech journalist Vlad Savov for The Verge last year. “But if you already own a camera from the past half decade, you probably won’t feel any urge or need to upgrade. Digital imaging technology has matured [and] maturity brings with it a sort of developmental stagnation.”

Tangible and true
The problem manufacturers face now is how to move on from direct innovation. Launching new models with obscure specification tweaks is barely keeping leading brands afloat – a radical rethink is required. Fujifilm, continuing the imaginative streak that saw the company rival the dominance of Canon and Nikon, may have found the answer.

From vinyl records to Hollywood films on celluloid, analogue media has made an astonishing comeback. Photography, not so long ago, was also an entirely analogue process, and film photography is now being embraced in a big way by consumers looking for something new. Indeed, it may sound strange to describe film as ‘new’, but a 2015 survey by UK manufacturer Ilford Photo found that 30 percent of film users were under 35 years old, and 60 percent had only started using the medium in the last five years. This burgeoning trend has not been lost on Fujifilm, and the company has started to put significant weight behind its Instax range of instant film cameras. Though launched in 1998, sales have only recently taken off: in 2004 only 100,000 Instax units were sold, whereas 2015/16 saw the figure skyrocket to five million.

“In an age where we are caught in a maelstrom of digital images, with hundreds of slightly different takes and edited shots across social media, the simple joy of a physical, printed photo is really appealing”, said Chris Chater, Fujifilm’s Instax Business Manager for the UK and Europe. “There’s an increasing appetite for analogue media – people will always yearn to have something physical.”

Instax cameras are firmly marketed at a young demographic, with bright plastic bodies and fashionable limited editions in collaboration with the likes of Michael Kors. This strategy, a world away from the fusty, specification-focused world of digital cameras, has proved incredibly successful – in the 2015/16 financial year, Instax cameras outsold Fujifilm’s own digital cameras almost four times over.

Professionals are taking note too: “I will often take an Instax Share on a job and print some images to give to a client there and then. They don’t replace full resolution prints, but it can be nice to get a print direct from the camera and hand it straight to the client”, said Mullins.

Slowly, this astonishing success is being recognised by competitors. German luxury camera maker Leica, whose flagship products easily clear the £5,000 mark, recently launched the Sofort – an instant camera only slightly more expensive than the Instax range, and squarely aimed at marketing the concept to a more serious, adult crowd.

As digital camera sales continue to slow and manufacturers struggle to excite consumers, the key players would do well to stop ignoring the rebirth of analogue media. The potential for growth is clear, and the opportunity to take film camera sales away from the second-hand market is staring camera makers in the face. It will take courage to invest in what many still see as a ‘dead’ medium, but the rewards are clear to see – an exciting, largely untapped market awaits.

Apple loses its Imagination

Posted on by Ben Debski

On April 3, Imagination Technologies announced that Apple, its biggest customer, will stop using its hardware and intellectual property in devices such as iPhones, iPads and Apple Watches. Apple plans to have phased out Imagination graphics chips in about 15 to 24 months’ time, replacing them with its own in-house hardware.

“Apple has asserted that it has been working on a separate, independent graphics design in order to control its products”, Imagination said in a statement. Imagination’s share price fell 70 percent in a single day on the back of the news, to its lowest level since 2009. Its market capitalisation plunged from £754m to £290m.

Apple is a crucial partner for the UK firm, owning a 9.5 percent stake. Its £60m royalty payments last year accounted for about half of Imagination’s annual revenues. “The loss of this revenue stream will have a material impact on the financials of the company”, Investec analysts said.

Imagination is planning to talk with Apple about alternative future arrangements. If these fail, it could bite back on copyright grounds.

“Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information”, the company said. “Imagination believes it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights.”

Apple is a crucial partner for Imagination. Its royalty payments last year accounted for half of Imagination’s annual revenue

Imagination had been doing well so far this year, launching graphics technology for self-driving cars, smartphones and virtual reality devices in March. It was even predicted a 25 percent share appreciation by investment analyst Jarnardan Menon of Liberum, thanks to this diversification.

The sudden nature of the revelation only adds to the blow. It remains to be seen whether Imagination will be able to rally itself for hardball negotiations and a potential legal campaign against the Silicon Valley giant. Apple regularly fights and wins against tough odds, having recently seen a patent ruling in China overturned that put its entire Chinese production operations at stake.

Imagination will struggle to recover from the break with its biggest partner, even if it wins in court. A scaling-back of operations could be on the cards in the short term as it steadies the ship. In any scenario, Imagination will struggle to regain the footing it had before April.

Tesla overtakes Ford in market value

Posted on by Ben Debski

On April 3, electric vehicle manufacturer Tesla celebrated a significant milestone, as its market value overtook that of Ford for the very first time. Tesla delivered a record 25,000 vehicles in the first three months of 2017, sending shares in the company soaring. Ford, meanwhile, saw a 7.2 percent drop in its March sales, which in turn negatively impacted shares at the firm.

At the close of trading on April 3, Tesla had a market value of $49bn, while Ford was valued at $46bn. This historic valuation sees 14-year-old Tesla surpass industry stalwart Ford in value, suggesting that investors are betting on a greener future for the auto industry.

While Ford sold almost 6.1 million vehicles in 2016, US car sales are slowing to a plateau, sparking concerns over the future of the traditional auto industry. Demand for affordable electric vehicles is on the rise, with Tesla shedding its start-up label and beginning to emerge as a large-scale manufacturer. The company’s first-quarter sales have set a new record for the firm, with vehicle deliveries up 70 percent on the same quarter last year.

US car sales are slowing to a plateau, sparking concerns over the future of the traditional auto industry

This strong performance has ignited investor interest, with the stock market responding positively to the carmaker’s growth potential. Just last month, China’s Tencent purchased a five percent stake in Tesla for $1.8bn, demonstrating a vote of confidence in the pioneering firm.

The company has set itself an ambitious growth target for the next two years, aiming to deliver 50,000 cars in the first half of 2017, and 500,000 by the end of 2018. These targets may prove challenging for a company that has previously missed many of its sales deadlines, but Tesla’s strong start to 2017 stands it in good stead for scaling up its operations.

This year, Tesla plans to begin production on its fist mass-market vehicle, the Model 3. The vehicle will be significantly cheaper than the firm’s current offerings, aiming to make eco-friendly driving accessible to the average consumer. With founder and CEO Elon Musk ramping up production capacity at Tesla, the company could soon be competing with the industry’s biggest players.