IR Publisher Dave Etchells and Senior Editor Shawn Barnett sat down at CES 2011 with John Carlson, Pentax Imaging Company's Senior Manager of Sales and Marketing to talk about the state of Pentax, and we discuss a few items sure to be of interest to Pentaxians.

Dave Etchells, Imaging Resource: What's Pentax's take on the compact system camera, or mirrorless market? Is it important enough to warrant ramping up for a whole new camera system for that, do you think?

John Carlson, Pentax Imaging Company: You know, it's something that I think Pentax is cautious about. We're looking at that market, but we don't have any firm plans. It's definitely interesting, and it's very popular in Japan, but that popularity isn't as strong here in the U.S. yet. So whether that translates into a mass market appeal, for Pentax, it's still kind of "wait and see."

Really, if you look at some of the advantages of that type of system as a smaller package, and you look at our K-x and K-r, they're pretty small cameras anyway. So they're not that much bigger than some of the mirrorless systems out there.

DE: On another front, we're seeing a lot of video, obviously, in the digital SLR market now. Video places a lot more demands on the cameras that shoot it, and it's required some manufacturers to release lenses that are dedicated to quieter and faster auto-focus. Are there plans for Pentax to come out with lenses that are optimized for video, and how important do you think that is for any new SLR lens that Pentax might develop?

Carlson: I think Pentax is in the transition stage with video, because we obviously have video recording with our SLRs. But during the video capture, we don't have auto-focus. We have worked with cinematographers, and on our YouTube channel we've got some pretty cool videos they've shot with the K-7 and K-5, and they would never use auto-focus anyway. So, when you look at it from a cinematographer's point of view, they wouldn't use auto-focus. When you look at it from a consumer point of view, though, they want it. Now, if you look at our SDM lenses, the focus on those lenses is virtually silent anyway. So if/when Pentax makes a step to have auto-focus during video, we've already got a system in place.

DE: The SDM systems and lenses.

Carlson: Yes.

DE: What percentage of your lens roadmap involves SDM -- because they're a little bit higher-end lenses -- as opposed to the inexpensive kit lenses?

Carlson: Yeah. We have about 27 different lenses currently and I believe 7 of them are SDM.

DE: That kind of percentage might persist then, you're saying?

Carlson: Yeah. Because it depends on the lens. If the next lens introduced is a limited lens, it likely won't have SDM. If it's more of a consumer grade or one of the high-end lenses, it will likely have SDM. So, moving forward, that's probably how the breakdown will be; kind of dependent on the size of the lens. If it's one of our smaller, compact limited models, it'll be the screw-drive. If it's one of the bigger zoom lenses, or one of our DA Star lenses -- the high-end lenses -- it'll likely be SDM.

DE: Got it. So it's not so much an issue of market segment in terms of consumer vs. pro or prosumer, as it is just the physical size of the lens.

Carlson: Yeah. That's the trend I've seen so far.

DE: The Pentax K-5 got quite a boost among enthusiasts, when DXO published their score for dynamic range on it: It really was about the best in the market. Have you seen that actually translate into sales? Did you see a bump from that?

Carlson: There's a huge demand for that camera, where it's kind of exceeded our expectations to the point that there are backorders. I mean, it's a good and bad situation to have. There's enough demand worldwide where production is, you know -- it takes so long to build a camera, and you can only build so many.

DE: That's very interesting. That's not a cheap camera, it's really the high end of your line -- so you're seeing strong demand for Pentax in the high end enthusiast market.

Carlson: Definitely, definitely.

DE: Speaking of high-end, let me switch to the 645D. We had one of those in the lab recently, and were frankly just blown away by the performance. It's apparently performed very well in the Japanese market, and it's obviously very early in the U.S. market yet, but is it meeting or exceeding projections here so far?

Carlson: I would say exceeding. We planned on a certain number, and that number's already committed at this point. The demand has been great, and we're looking forward to continuing in our next fiscal year starting in April, and getting it into more people's hands.

DE: So when you say that the amount that you planned for are already committed, that means that basically everything you've ordered from Japan is sold?

Carlson: Yes, it's either in consumer's hands or in dealers waiting for people to buy them. The sell-through has been great.

DE: That's great to hear. From what you've seen so far, how much business do you think the 645D might represent for Pentax relative to the K-7, K-5, K-r SLR market?

Carlson: Unit-wise, it's pretty small, but because it is a more expensive camera, in dollar volume, it counts for a lot. I wouldn't say it's a huge portion of our business, but it is something that we're going to continue, simply because it's surprisingly strong in our sales.

DE: I think it surprised a lot of people, certainly us included. When we were shooting with the 645D, we felt it really opened up a whole new world of appreciation for what can be done with equipment at that level. We've never seen remotely that kind of detail in our test targets, so it really made a believer out of us. Given the fun that we had with it -- we all found it very engaging as a camera -- what kind of customer are you finding attracted to the 645D, including perhaps those that you didn't expect to be interested at all. Has it opened up new markets?

Carlson: I wouldn't necessarily say it's opened up new markets yet, just because it was a fairly limited number of cameras we've had so far. I think it's film 645 users who still have the lenses -- and 67 users, to a certain degree -- still have the lenses, and are looking for a body to support those lenses. One thing we've found is, we brought in the same number of the 55mm lens as we brought in bodies, and we've got 55mm lenses sitting there that we have not sold yet. So, the tie ratio between bodies and lenses with this new 55mm is not 1:1.

DE: So clearly, there are going to a lot of people that are already using 645 lenses.

Carlson: Exactly. At this point in the market, that's exactly what we expect, because that demand has been out there for a while. So if you look at the photographers who did have the 645, it's a lot of landscape and fine art type photographers. The 645 was always designed as a field camera, and I think that it's continuing that tradition as of right now. I think that will expand once we get more ...

DE: Once you get more of them out into the channel, it will start expanding who's using it.

Carlson: Yes.

DE: Just the fact that 645 would make me want to go out and actively take pictures says something. I deal with cameras all day, 6 days/week. For my one day off, I'm not usually motivated to pick up yet another camera. But that one has enough of a certain something that I'm tempted...

Carlson: Right. I mean, I've been shooting for a long time, and when I started Pentax, it was all 35mm. Then I saved up to get the film 645, and it totally changed the way I shot. I had to be more patient and set up the shot -- this film was expensive. Then when digital came out, I went to the digital cameras we had. When this came out, the little I've been able to shoot with it, I've gone back to that way of shooting where I kind of slow down and compose a little bit more precisely. You get that big frame in the viewfinder and it's really cool.

DE: Pentax Japan has suggested that it's working on tethering software for the 645D, for studio usage. Can you say anything about when this might be available, and also whether that functionality could be extended to other models in your DSLR line-up, like the K-5?

Carlson: They really haven't communicated with us on availability or what they're working on. We've communicated with them that it's necessary, because there is demand for it. We're also looking at third parties that we could work with to get something in place. We recognize that it is very important, and we've got a hole there right now. Pentax is a smaller company, and our resources are pretty limited, so it's not a front-burner item, but it's at least on the back-burner.

DE: That actually leads directly to my next question, which is third-party software, and whether Pentax sees that as being something good. Do you suppose at some point, Pentax might provide an SDK (Software Development Kit) for its camera controls?

Carlson: I don't anticipate an SDK, but we're more than willing to work with anyone out there to provide them equipment to reverse-engineer something.

DE: That's very encouraging to hear. Pentax has cooperated with Adobe to create Photoshop / Lightroom profiles for all of its current DA Star and limited lenses, and actually a fair selection of 645 lenses as well. Can we expect to see this cooperation continue, and will profiles be extended to include Pentax glass that doesn't merit the DA Star and limited labels?

Carlson: I think so. I think we have a pretty good relationship in Japan with both Adobe and Apple, for their software. We try to get the equipment in their hands as soon as possible, so they can update their profiles. It may be just a matter of a backlog as to why there aren't profiles for some of the other lenses, but it's definitely something we've worked with them on.

DE: So it's not like the DA Star and limited lenses are ones that whose users are most concerned about lens profiles and image corrections and things, and the profiling is prioritized for that.

Carlson: Yeah, exactly.

DE: As resolution increases, improvements in lens quality obviously have to follow. Will we see some more new lenses from Pentax, as well as revisions of older designs, as higher resolution sensors come out?

Carlson: There's been a change over the last few years. We used to release our lens roadmaps pretty regularly. We don't see those quite as often anymore, or even at all, so it's a bit cloudy out there in the future. (laughs) But, you know, we're always -- Pentax started out as a lens company, so that's something we're going to continue to develop; new lenses. What they're going to be, it's hard to say.

DE: Yes, I remember from way back, even in the early 35mm days, that Pentax was always known as kind of a lens company -- great glass and that kind of thing.

Carlson: What we'd like to do in 2011 is highlight the pairing of our limited lenses -- because they're something unique to Pentax, they're not something that everyone has -- to the nice, compact bodies that we have. You may see that more in dealers.

DE: More of an explicit pairing in the marketplace, rather than just "Buy the camera, and then we also make these lenses."

Carlson: Yeah.

DE: That's a very appealing combination, the small body and the little pancake lens or other small lens for it.

Carlson: Yes.

DE: Where does Pentax see its primary market pressure for new lens designs? I'm curious how the industry is shaking out on this. Is there more pressure for low-cost lenses for new DSLR adopters, or is it more that you're seeing demand for higher-end lenses on the enthusiast's side of the market, or is it some split between the two?

Carlson: It’s interesting, because it is split: For our cameras like the K-x, K-r, and the… I don't want to call them entry-level, because they’re definitely more than entry-level -- but the photographers who are buying those typically do not buy a lot of other lenses. We sell those cameras with the 18-55, and sometimes with the 50-200 as well, in a 2-lens kit, and a lot of times, that photographer doesn't go beyond that for lens purchases. With the high-end SLRs -- the K-5, the K-7 -- it's a totally different story. They're either buying new lenses or using their really old K-mount lenses. They're really lens connoisseurs. It really just depends on what part of the market you're talking about.

DE: So it sounds like the demand for new lens designs or new lenses come from the high-end users, because those are the people who are actually using multiple lenses.

Carlson: Exactly. To be honest, Pentax has always taken its own path on lenses. If you look at our focal lengths, they're not like a traditional 50-200mm; on the high end, it's the 50-135mm. If you add in the crop factor, that's essentially a 75-200mm lens, if you're comparing it to film, but it's got this unique zoom range, and Pentax has always done that. If you look at the limiteds, they're these “off” numbers -- the 21, 43…

DE: Stepping away from SLRs and back to compacts for a moment, here's a question we're asking a lot of people: We're seeing compacts really getting squeezed in the market. On the one hand, you've got cell phone cameras that are becoming better -- they're still not even equivalent to a low-end point-and-shoot -- but they're becoming better, and a lot of people, that's where their picture-sharing is coming from. Also, cell phone cameras tie in very well to social networking and online sharing. On the higher end, you've got the SLRs, and a lot of people that were formerly digicam users are going to SLRs. How do you see the digicam persisting and evolving in the next few years as it gets squeezed from these two directions?

Carlson: I don't think they're going to go away, I don't think cell phone cameras are going to replace them. What we've seen, where our own success is, is with cameras like our waterproof models. The W90, the W80 before it – that camera has done extremely well for us. That's one area where we've seen growth -- tremendous growth -- where the rest of the market is flat or contracting for compacts. I think it's product like that that's a solution to a problem that people don't know they have, until they drop their phone into the pool or drop it in sand and it stops working, something like that. Waterproof cameras, they're going to solve that problem. It also, for Pentax, has been kind of a style issue, where over the last couple of years, a lot of cameras have the same features, to be perfectly honest with you, with the compacts. People want to be unique and different, so if you can make the camera unique and different like the RS1000, or you have unique styling like our H90, where it looks like a museum piece almost rather than a camera. You'll see us continue with that.

Shawn Barnett: Mike Pasini [IR newsletter editor] asked about whether Android OS is starting to be a concern for cameras, or if Pentax would be interested in producing a camera with an OS in it.

DE: Is there a future for programmability in cameras? Do you think we'll start seeing that in the market?

Carlson: My gut feeling is that it's still a couple years out. I think there's potential there, just because it can work -- we see it in smart phones. But my gut feeling is, it's a couple years out.

SB: What about connectivity to Android platform or iPhones, things like that?

Carlson: I think the biggest issue with connectivity is, what standard do you use? In discussing it with our engineers, that's always been the big question -- do you use Bluetooth, do you use wireless of some sort? What do you use? We have compatibility with the Eye-Fi cards, with all of our cameras pretty much now. So, there's one solution, but as far as what's the best solution, I don't think we know yet. Pentax has always been a really conservative company, we don't want to jump too far.

DE: You don't want to get out ahead of the market and end up tied to the wrong standard: You don't want to be the Betamax of phone connectivity.

Carlson: Exactly. So… you know, it's going to happen, it's just a matter of how it happens.

DE: Thinking about it, really, the cell phone manufacturers have not been particularly welcoming; it's not on their agenda really to make it easy for people to bring images in from an outside device. They're focusing on their own internal cameras, and many of the carriers in this country keep the phones very closed.

Carlson: Yeah, it's difficult to get that image off their phone. I found a cool solution; I got an HP printer for a present, and I can email from my smart phone directly to the printer, connected to the wireless network at my home, and then it’ll print it out. But then, coming from my cell phone camera, the quality of that image isn't great. (laughs)

DE: Talking about sharing, do you see anything in the products coming for 2011 that will help customers share their images? Social networking is huge, people want to get their images online, and for many people it's just a disconnect; it's in the camera, and there's a computer over here, and how do you get it from the camera to Facebook?

Carlson: Yeah, we're addressing that with that relationship with Eye-Fi, different ways to get images out of the camera, without having to sit down at your computer, plug it in, and transfer the images manually. That's really the extent of it. Pentax has always been an imaging company, so it's always been about the image, and the best image. For social networking, 640x480 -- that's enough. Our cameras can do so much more, and that's what we've always focused on.

DE: Worldwide currency fluctuations have gotten pretty extreme over the last year or two. How do you handle that as a manufacturer? It must make planning really difficult.

Carlson: Yeah, it definitely does. A market price for a product is the market price, and there's not much we can do about that, so we have to find creative ways to absorb it internally, whether it's cutting costs here or there, or working deals with retailers -- there are all kinds of ways around it. The good thing is, our parent company looks at the business on a consolidated basis, where we may not be making as much but they might be making more, or vice versa.

DE: Ah, so they kind of look beyond the exchange rate to what the overall end-to-end profits are.

Carlson: Yeah. We definitely have demands upon us to sell a certain amount and maintain a certain profitability, but they also look at it on a consolidated, worldwide basis.

DE: The past couple years have been pretty tough ones on the U.S. economy, but things seem to be coming back a bit now. How did holiday sales look for Pentax, and what are you looking for as we head into 2011?

Carlson: What we've seen is that 2010 actually exceeded the forecasts, from some of the market resources out there. So that was good, especially with the interchangeable lens cameras. When we looked at our results for the calendar year, it blew away both the forecasts and the actuals based on NPD data, where compacts were up -- I would say -- around 20% in units and dollars; and for SLRs, we were up 30-40%. So, 2010 was definitely good for us. We have the same forecast for next year. It's the same kind of situation with compacts where it's a contracting market because of price erosion, and increase in the SLRs. So looking at that, we really think we'll do well...

DE: Your projections are that the economy's coming back, and 2011's going to be strong.

Carlson: Yeah.

DE: That matches what we've seen. Our own traffic has been up significantly over last year, so that's encouraging.

DE: Thanks for your time, good luck in 2011!

Carlson: Thanks, same to you.