The Luminous Landscape

A commenter recently inspired me to look in to LuLa and Phase One a bit more.

A quick peek around the network suggests that Phase One sent a demo unit of their new 100 megapixel 645 format camera to exactly one place, that being LuLa. This supports, rather firmly, the notion that LuLa is essentially a wholly owned sub of Phase One. The CEO of LuLa is a former Phase One guy, which is a bit of a tipoff, too.

Let's unpack that a bit further. WTF is up with Phase One? At first glance, they appear to be a small to medium sized company ($50M in revenue, a small number of millions in profits, in 2012) that makes extremely limited market cameras, and which should therefore be struggling for a bit before eventually dying off. This is because if you're mostly looking at photography stuff on the internet you get a very wrong impression.

Silverfleet Capital bought them in 2014 (majority stake, whatever, Silverfleet is calling the shots now). Silverfleet is in the business of buying companies and growing them. They help roll out new products, and do acquisitions, and ultimately sell the resulting larger company off at a profit. Silverfleet doesn't think these guys are circling the drain at all, they think there's growth potential.

Silverfleet thinks there's money, and quite a bit of of, to be made here. They think they can grow Phase One from $50M in revenue to maybe $200M in revenue in the next handful of years. Some of that's going to come from Capture One software, sure, but these guys are probably thinking in terms of shifting $100M+ in cameras (XF, repro, aerial), per annum, as a possible outcome, one to be highly desired. That's several thousand complete systems a year.

So here's what I was missing: Phase One isn't a medium format camera company. They're an industrial camera company. They sell aerial and repro cameras, as well as medium format systems for amateurs.

The 100 megapixel camera system makes perfect sense for aerial applications. More pixels translates into less flying time. The ROI on a 100 megapixel camera can be calculated in a moment, and is going to be very very good. Flying airplanes in extremely expensive. Massive color depth probably makes a lot of sense in the repro market. The whacky "vibration detect" system which can, optionally, fire the shutter only when vibration is low is almost certainly a feature for the aerial market, and so on.

So here is probably what happened: Silverfleet rolls in in 2014 when Phase One had a collection of products and platforms that were sort of separate. They probably shared a lot of bits and pieces, but not enough. Silverfleet funded the development of a shared platform (XF). A common set of hardware to house sensors, control software, communication protocols and connectors, etc. This is why the XF camera system presented on LuLa looks so industrial, austere, and frankly a little weird. It is an industrial camera, in a hastily drawn 645-style body.

The amateur camera platform is now a cheap add-on to what is probably the real business. Not to cheapen it too much, it's probably a million bucks a year or something to maintain the XF camera system in the product suite, but at 30,000 to 60,000 per, you don't need to shift that much kit to cover your expenses.

The fact that LuLa appears to be literally the only place that Phase One talks to, works with, suggests that either they're not taking it very seriously, or that they think LuLa captures very close to 100% of the potential market for this thing (i.e. the more or less traditional 645-format camera system, the XF). I am betting the latter, the Silverfleet guys are not in the business of half-assing stuff.

To be honest, I am starting to think the commenter who kicked this whole train of thought off ain't so dumb after all. The $12/year pricetag on LuLa might be in place almost entirely for the purpose of harvesting zipcodes from the user base.

In summary: Phase One is owned (for practical purposes) by a sharp bunch of guys fixated on growing Phase One over the next couple of years, and selling it to a bigger private equity firm or investment group. Phase One is therefore fixated on growing through more products, more markets, and (maybe) acquisitions. LuLa is owned (for practical purposes) by Phase One, and has recently switched to a for-pay model at a very very low price.

I'm not convinced by the strategy, the LuLa crowd knows how to get 100 megapixels, you take a dozen shots with the D810 and drop them in some photo merge thing. The XF camera system may be a status symbol in a certain very narrow way, but given that it looks like and is an industrial camera, that seems an unsure bet. This isn't a camera system that makes any sense, no matter how you slice it. The commercial photography market has basically no use for this thing, although I'm sure there are a handful of pros out there who have an application for it. Amateurs simply stitch up whatever they need.

The only play I can think of is some sort of purist thing. Some sort of "Get it right in camera" pitch, which will play to both the resolution and the color depth features. I think we can look forward to some articles on LuLa about making 30x40 inch prints, and bigger, and the Obvious Advantages, Nay, The Necessity of 100 Megapixels for this sort of Important Photography.

Also, keep your eyes open for LuLa plugging ALPA cameras. There's already a partnership in place, and ALPA is probably a natural acquisition target for Phase One, if the "sell cameras to retired dentists" business works out tolerably well for them.