The camera business has been a bane for Samsung Electronics, a leading maker of television sets and mobile phones.
Samsung's affiliate Samsung Techwin fell behind top-tier Japanese firms and incurred huge losses in its camera unit, which triggered the firm to spin off its camera business into a separate company on Feb. 1.
Samsung has focused on low-margin, low-end compact point-and-shoot cameras. It failed to respond to the rapidly-growing market for digital single-lens reflex (DSLR) cameras, analysts said.
With the new company, Samsung Digital Imaging, set for listing on the local stock exchange today, it announced the launch of a family of new cameras, called the Hybrid NX series which are DSLR-like compact cameras.
Samsung also set an ambitious goal of catching up with Canon, Nikon and Sony by 2012 as the electronics unit did with Japan's Sony in the TV market.
But industry officials raise questions about whether Samsung is ready for DSLR-like cameras. They said the entry barrier for the camera market is high because camera technology is hard to acquire.
Samsung, which entered the camera business in 2004, has heavily relied on Japanese camera maker Pentax for its DSLR cameras.
"Samsung does not have key camera technology," an industry source said on condition of anonymity. "Samsung will be able to enter the DSLR market, but it will not be easy for the company to significantly penetrate into the market."
Echoing his comments, Harrison Jo, an analyst at Mirae Asset Securities said, "Many people want to buy cameras from either Canon or Nikon, not Samsung. Even I do not want to purchase Samsung cameras."
Unproven technology
Samsung is seeking a breakthrough in its loss-making business by entering uncharted waters -- hybrid cameras.
The idea of a hybrid camera is intriguing at first glance.
It is lighter and smaller like a compact camera, while offering good image quality similar to a DSLR camera.
"Samsung's new NX Series bridges the gap between a DSLR and compact point-and-shoot digital camera by combining the benefits of both in one new model," Samsung said in a news release.
The new cameras may appeal to consumers hoping to buy a DSLR for its image quality, but do not like its bulky and heavy body, industry officials said.
"It is a good niche market," another industry source said, asking not to be identified.
"It is good news for women and other consumers who want the quality of a DSLR, but want a smaller and more portable camera," he said.
Samsung dubbed its new camera series "hybrid," as if they are entering new digital camera category. But hybrid cameras are very similar to "Micro Four Thirds" cameras, developed by Panasonic and Olympus last year. Panasonic brought the industry's first MFT model -- the Lumix G1 -- to the market in Nov. 2008, while Olympus's model will be introduced in the latter half of this year.
Unlike other MFT cameras, Samsung's new camera boasts a large image sensor found on many DSLRs, which enables good image quality.
Samsung said the hybrid camera market will account for more than 20 percent of the total digital still camera market by 2012. But it is uncertain whether the nascent market will take off, observers said.
"Nobody knows if people will buy them. The G1 is kind of in a no-man's land at this point," IDC analyst Ron Glaz was quoted as saying by CNET last month.
Concerns over lens choices
Experts also question if Samsung will be able to offer a diverse choice of lenses for its hybrid cameras due to the lack of its expertise in the DSLR business.
Samsung said the NX series will offer interchangeable lenses unlike compact cameras, and it will offer its own lenses for the new cameras, but it has no word on how many lenses it will offer.
"Samsung is not an optical technology firm. It is difficult for a company to secure a lense line-up if it is not based on optical technology," an industry source said.
He said lenses are an important factor in choosing DSLR cameras.
Whether the hybrid cameras will be able to satisfy both compact camera users and DSLR users is another question.
There are already entry-level DSLRs, which are relatively smaller and lighter than traditional DSLRs. It remains to be seen whether Samsung's hybrid cameras will be light and compact enough to convince entry-level users to buy them. Samsung's new camera looks like a DSLR rather than a compact camera, while its rival Olympus' MFT camera looks more like a compact camera.
For DSLR users, an MFT camera is far from being attractive because it misses some key parts of DSLRs such as a mirror box and an optical view finder.
Samsung's ambitions
Despite widespread skepticism over its camera business, Samsung said it aims at grabbing the top position in the digital camera market by 2012 by spearheading the hybrid camera market.
"With the release of the NX Series, a digital camera that combines the strengths of a DSLR and compact digital camera, Samsung Digital Imaging will become a global leader in the new hybrid digital camera market and achieve the company's goal to become the global leader in the digital camera market by 2012," Park Sang-jin, CEO of Samsung Digital Imaging Company, said. Samsung is also shifting to mid- and high-end compact cameras.
Analysts were split over whether or not Samsung will be able to achieve its goal.
Christopher Chute, an analyst at IDC, said he believes that Samsung will be able to join the ranks of top companies.
"To break into the top three, having a mid- to high-end product line is necessary," he said in an email interview with The Korea Herald.
Samsung said the environment is turning favorable to the Korean company as its Japanese rivals are struggling with the surging yen, which hurts the price competitiveness of their products.
But Samsung's cost advantage falls far short of helping the company turn the tide against Japanese camera manufacturers, analysts said.
"The company may benefit from the difficulties of its competitors, but its DSLR business has been a failure so far," Jo said.
He said Samsung's new camera unit is unlikely to produce tangible results in the short term. "No one would think that Samsung would be able to become the No. 1 camera maker by 2012," he said.
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