Panasonic interview: Learning from the fringe, taking small steps

Continuing a hectic schedule of interviews at this year's Consumer Electronics Show, Imaging Resource publisher Dave Etchells, senior editor Shawn Barnett, and features editor Arthur Etchells sat down with Darin Pepple, Senior Product Marketing Manager, Imaging at Panasonic Consumer Electronics Co.

Along with partner Olympus, Panasonic really got the ball rolling for the burgeoning Compact System Camera segment, and its cameras have proven popular not only for still imaging, but also with videographers looking for capabilities beyond what was available with typical video cameras. Darin discusses some of the customization that's happened around this, both in terms of creating a custom video rig with the camera at its heart, and in users' hacking of firmware for their cameras--something the company is uncommonly (and laudably) accepting of. Other points of particular interest include a look at the future for the company's Micro Four Thirds lens lineup, and for camera design in general--particularly as relates to connectivity--plus Panasonic's take on how 3D adoption is proceeding.

Dave Etchells: Last year was a hard year with the various disasters and tragedies around the world. How has that affected Panasonic, both your own production and your supply chain?  Is that starting to correct now?  How big an impact was there and how is it correcting?

Darin Pepple: Well, with the tsunami, we were impacted somewhat, mostly in our higher end models. We had some assembly plants in the area. We were able to get them operational reasonably fast, though, so the impact really wasn’t that great as compared to maybe some other companies.

DE: Yes, your Fukushima plant is inland a fair bit and it’s outside of the immediate area that had trouble with the reactors.

DP: It was some lens and basically just assembly. We picked ourselves up and got ourselves back going again. It was a great effort by the company.

DE: How about your supply chain?  I know that there’s a lot of supply chain in Thailand, like Copal, the shutter manufacturer. I think that affected a lot of people.

DP: We weren’t quite as impacted by it. There were a few models that obviously we had some impact on. But in terms of how we were able to recover; we came back. I guess you could say we had enough models to shift dealers into those models that weren’t impacted by it. In terms of the interchangeable lens type cameras, really we weren’t impacted. One minor lens, which slowed the announcement of one of the X lenses, was slightly impacted. But not bad overall.

DE: Speaking of the interchangeable lens cameras, we were pretty impressed with the GX1. What’s the projection for U.S. availability on that now?

DP: The GX1 actually started shipping just prior to Christmas, and we’re bringing in different builds of it now--one with an X lens on it; one with a traditional lens; a body only; two different colors. So it’s starting to flow quite nicely.

DE: That’s great. We're interested in how adoption rates are going for Compact System Cameras (CSCs, also called Mirrorless cameras) in the US market: It seems like CSCs have been very slow to catch on in the U.S. They’re huge in Japan, less so in Europe, and hardly at all in the U.S., but that seems to be changing. What’s your view of how consumer uptake is going with the category as a whole?

DP:  It’s true that in Asia and the Pacific Rim area the technology is definitely being adopted much, much faster, which is traditional. That generally happens. Europe is just slightly ahead of us. In North America--Canada and the U.S.--we’re just now starting to see, I think, a wider adoption of the technology. And I think as an industry and also as a manufacturer, more education in the area of what these things are will be needed for the consumer to understand the difference between and SLR and a compact system camera. For us, Micro Four Thirds is going to remain the backbone of it. It will continue that route.

DE: With the GX1, Panasonic really returned the emphasis more to the enthusiast market more than in some of its previous products. What other moves might we expect you to be making to compete with the likes of the Sony NEX-7 and some of the other higher end models?

DP: When you look at the Sony NEX-7, one of the interesting things it does really well is video. And I think for the whole mirrorless category in general, that has been on of the hallmarks of it--to be able to shoot in still and immediately jump right into video. So there’s been a lot of interest in video from these cameras, even more so than from DSLRs. And I think what that camera has done; it’s probably really good in video. It has outstanding features. At the same time, its larger sensor technology still makes the lenses quite large. It still requires the fact of an additional adapter if you want to go in the direction of their hybrid focusing system. With our technology right now, we can use a slightly smaller sensor.  It’s only two thirds the size of an APS-C, but it’s still quite large: It’s eight times larger than a point and shoot, for example, and three times larger than a professional grade video camera. So we have the Micro Four Thirds system. [Compared to APS-C], it allows us to produce really small lenses, still extremely good optical quality, and at the same time make small bodies. They’re not so crazy small so that you can still hold onto them, but it allows us to, I think, go a little bit further in the future in terms of body size, lens size, and the combination of the two. So we think that the Micro Four Thirds system is still really the way to go in the mirrorless category.

DE: So a key selling point, then, is just the fact that Micro Four Thirds is more compact because of the sensor geometry and what that does for you with the lenses, yet you can still offer enthusiast level features and image quality.

DP: Right. With this size system, we don’t have to degrade edge detail. When you start getting into the APS sensor size, to compress the lens down to the size we’re at you do suffer some on edge detail. It softens up. You get a little barreling, especially on a zoom lens--although not so much on a pancake lens. And I think that’s one of the things that we’ve done well. We’ve been able to match the lens technology to the sensor technology without having to really compress the lens too much. And at the same time, we're able to maintain a really wide aperture on several of our lenses.

Arthur Etchells: So you don't have as much of a mismatch between the camera and its lenses as Sony does with some of theirs.

DP: Yes. The NEX cameras are a great technology in terms of their size, but then you can just see these massive lenses being mounted to them. It just seems like there’s something not quite right on that, on that scale.

AE: I guess the message might be that Micro Four Thirds is a great size for video, given that still cameras end up throwing away a lot of pixels for video anyway.

DP: Yeah. We have the GH1 and--that we re-introduced last year--the GH2 as sort of our video/top of the line product. And it really became a sweetheart product for much of the professional and commercial video world, because it was a low cost solution to them, yet you could mount it up with a PL-mount lens. You could hook it up with a boom mic. You could have video feed coming off it for both the director and the videographer. And it's interesting; you see a lot of people, who are basically hotwiring the camera, to push it even further.

AE: Yeah, souping up the camera, the GH2: I was wanting to ask your perspective there.

DP: It’s like a great car--you just want to soup it up and do even more with it.

AE: Yeah--It's like you have your little Civic that you've souped up. (Maybe the GH2 is more of a camera than the Civic is a car, but it's the same idea.)

DE: This is interesting, because in your product line you’ve kind of segregated the video focus from the still cameras, but now you’re saying that one of the advantages of the form factor, of this format is video. Will we see more emphasis in the non-GH series on video and video features moving forward?

DP: I think you’re already starting to see it, just in the way we lay the camera out. For example, we have the little red button that does the video, and we have it right next to, usually, the shutter release button for still images. As a consumer you want to take one device with you, and at the same time, you want it to be simple. So whether it’s the GX1 or a GF3 or a G3, you're able to shoot video at a really outstanding quality--keep in mind, you’re using a larger sensor than those in professional video cameras that you see shooting TV shows. And it’s in the palm of your hand. That’s amazing! To be able to go back and forth between high quality DSLR still-picture quality and high quality video, and it’s a consumer camera--I think that’s outstanding.

AE: What sorts of things might we see and what sorts of directions might Panasonic go with the successor to the GH2?

DP: Much has been talked about a successor for GH2. The GH2 has been out now for a little over a year, so people are wondering about the next model. There’s no one great thing I can say that we’re going to plan on and actually produce right at this time. Certainly, we’ll eventually produce something, right?  But I think what you’ll see from us is to continue on trying to get a better and better and better video output for it. The GH product almost has a split brain. When I talk to people and I read the blogs--I participate once in a while on a few blogs just to see what people have to say--and there are two distinct worlds; completely right down the middle, video and still,at the high end. So you have a lot of people who are saying, ‘I just want it for its still camera capabilities. And it’s got great dials and accessibility.’  And then you’ve got the video world. They don’t care anything about that. They like the fact that it shoots amazing video; that you can hook boom mics to it; that you can hook it up as a director or videographer link through an HDMI cable; that it’s a lightweight platform. I see a lot of sports and action type photography--and I’m not talking about football, soccer, or that kind of thing; I’m talking about race cars--hooking it up to the bottom of a small, remote helicopter and flying it around, that sort of thing. It’s a lightweight platform and if it does get wrecked you’re not out the money you are out with a big DSLR rig system, let alone a conventional professional video system.

AE: A small footprint, in terms of both size and price.

DP: Yes, and I think you’re probably going to see some more commercial applications in the future, such as wedding videographers--maybe they need a really great low light videography platform that maintains auto focus. Think about that, now: With a DSLR, if you’re going to go into a low light situation, such as a concert, where lots of laser lights are going and you’ve got the exposures changing constantly, you’ve got to track that exposure and change with it and you’ve got to somehow focus under low light conditions. That’s a lot to ask for from even a DSLR [or DSLR user] today. With our technology, with an X lens put onto it, it tracks like a proper video camcorder, for example, and it can adjust auto exposure in real time, following light changes really quickly. And at the same time, you’re getting just outstanding high-def quality video coming off of it. That, I think, is something that a mirrorless camera, or in our case the GH series, does really, really well.

AE: So there has been a lot of interest in hacking GH2s. Might you take to heart some of those optimizations they're making when you're looking at future developments?

DP: You know... Yes and no? We do take a look at what they do, and we take it very seriously, because obviously that's what the customer wants. There are some limitations within the hardware and within the system specifications. For example, the AVCHD format; you know, we have to stay within the confines of what that AVCHD format says. Yes, you can go outside that with some hyped-up features and firmware updates and that sort of thing, but then you're outside the normal specification, and for us as a manufacturer, we really have to stay within it. At the same time, we know the level that the sensors can handle, we know the amount of cooling it's going to take, and to push it past it's limits, you're going to degrade the life expectancy of the product. Now, with a hopped-up camera, you somewhat expect that. You know, it's just like a car; if you push your car to the limit, you know something's going to happen eventually, right? So, as a consumer, go for it! But as a manufacturer, we have to stay within the limits of the standards and what we know the system itself can handle long term.

AE: So there's the caveat that you might be doing bodily harm to your camera...

DP: Hey, have fun; have a good time! Listen, that’s what photography’s all about anyway. I mean, how many photographers just take a product as is?  They push it to the limits. That’s half the fun of photography. If you go back to the history of photography and you take a look at it, who started this stuff? Chemists, scientists, optics type people. They had a blast. It was a bunch of crazy technicians, that’s right. And if you take a look at the history of photography, it’s full of that. And I’m glad to see that that is still alive today. So I applaud them.

AE: Yeah, if you look at Apple at the beginning, it was a couple of guys in a garage. You look at them now, and it's very locked down, but it didn't start that way. It's interesting to see the passion of the consumers.

DP: That's right; we learn more from the fringe than we do from the center, right?

DE: Well, I guess one thing you can do as a manufacturer is that you can be encouraging and supportive of this sort of thing. That’s one thing that Sony has done with good success: They were very open about their lens mount, and very actively cooperated with makers of mount adapters, so now there’s a lot of adapters and people are using all kinds of bizzare lenses on NEX’s. Maybe this is an opportunity for Panasonic to somehow be similarly encouraging with the hot rodding of the GHs.

DP: We’re a cautious company, but we do take baby steps in those directions. This is an interesting point, though: You have the blogs and the websites and a lot of people creating these ideas and sharing their ideas out there. That's something that's available now to the consumer, to discuss these things amongst themselves. At the same time, we’re taking a look at it. We’re watching it, saying, ‘Okay, well, we need to start thinking about this. There’s a lot about it. It’s what the consumer wants. What can we do to make that a reality?’  At the same time, yes, there are going to be times where we just can’t go down that path; we have to let the consumer do what they want to do.

DE: How about your lenses?  You’ve done a pretty good job of getting a decent lens line-up put together for Micro Four Thirds. Where do you think you most need to flesh it out?  I understand that there are a couple of concept lenses that you’re showing here at CES?

DP: Right. So when we started the line-up of Micro Four Thirds lenses, we came out with that famous 20mm f/1.7 lens, right?  That’s a legendary lens. I’m convinced that over time people will look back and say, ‘Yeah, remember that lens?  That was an awesome lens, right?’

AE: Yeah--That's the lens I have for my GF1: It's maybe the best kit lens in history!

DP: Exactly, that’s what I mean: Everybody wants that one. It really put us on the map. Enthusiasts loved the GF1 with that 20. They love it. Now our lens line-up has definitely increased. We’ve introduced some novelty lenses, like the 3D lens, for example. We’ve introduced some low cost, entry point level kit lenses. And we’ve continued to grow our zoom line, the fish eye, that kind of thing. But now we’ve sort of reached that point that we have almost all the common lenses--we have a few Leica lenses; we have a few that are just Panasonic branded--and we introduced the X series. Why did we do that?  There’s a number of things, one of them, mainly, being video. When you twist the barrel of a lens while you’re shooting video, you mess up because you move the camera around and sort of jiggle the camera. And if you’re experienced with video, you don’t want to do that. Video cameras do that well because they’re electrically zoomed. So we’ve introduced the X series to incorporate both video and still capabilities--video zooming, video focusing through electronics. And with that, it’s hard for us to stamp the name Leica on it because we’re sort of outside the envelope of what they can actually work with us on. So we said, ‘Okay. Optically it has to be superior,’ including the superior nanosurface coatings that we put on it in the X series, and a greater use of aspheric elements. For example, on the 14-42 X lens, it has four aspheric elements in it. I mean, how many high end, pro camera lenses do you see having four aspherics?  Not very many.

DE: From what I understand, that’s really one of the core strengths of Panasonic, too: You’re one of the only two or three companies in the world that do aspheric glass molding on a production basis.

DP: That’s true. We have a technology for aspheric glass molding specifically and we’ve employed that to great effect with X series. So where are we going to go with this?  I think right now we have enough enthusiasts and even pros saying, ‘Hey, we want a zoom lens that doesn’t change aperture when we zoom’ that that’s a direction we need to go next. At the same time, we do need to introduce more budget lenses for entry level markets. So budget lenses, zoom lenses, and everything else. It's interesting: We do have a budget 14-42 and we also have a premium 14-45, and now we have an X series, an ultra-premium 14-42 X model, if you will. So we go across the board. We’re starting to fill in the gaps. By this time next year I hope to come back to you and say, ‘Look at our lens line-up now. We’ve added four or five more lenses.’  But exactly what comes next is hard to say.

DE: Is there a chart in the booth anywhere laying out a lens roadmap?

DP: We have two concept lenses in the booth. Both of them are conceptually the non-variable aperture types; a 12-35mm f/2.8 and a 35-100mm f/2.8.

DE: Yeah, basically the Micro Four Thirds versions of the classic 24-70mm and 70-200mm lenses; with constant aperture.

DP: When you do that [non-variable aperture], you do make the lens a bit bigger. Our concern has always been, ‘How do we keep the lens small and compact to stay in tune with the body styles of our cameras?’  After discussing it in great detail with the types of photographers who would really want a non-variable zoom, it turns out they don’t care. They want their non-variable zooms even if they have to be just a little bit bigger. So we’ve listened to that. That’s part of what we’ve been doing recently, showing the concepts around and saying, ‘Well, what do you think?’  Hands down, they say, ‘I’ll take it. I want it. Make it.’ 

Shawn Barnett: <grinning> So how does this happen?  You have Samsung NX-something or other; you’ve got the Sony NEX-something or other; you’ve got the Panasonic GX1 and the Canon G1 X, the Fuji X-Pro1, and the Panasonic X lenses--what’s next? X and 1--it’s the year or decade of X and 1’s.

AE: They all started out and they all wanted to call it the GX1 and then they’re like, ‘Well, rats, Panasonic just announced it, so...’  [laughter]

DP: Well, I think it’s safe to say that if you want a premium camera, you’ve got to have an X in it.

DE: Speaking of premium cameras, in the fixed-lens category, there’s been a lot of activity lately in the category of cameras with large sensors and fixed lenses. In Fuji it’s the X100 and obviously Canon out now with the G1 X. What are your thoughts on that category?  Is that something that you think it will be a long term part of the market or is it a transitional form?

DP: Obviously, we’ve cast our lot with Micro Four Thirds. We still think you can obtain the same optimum image from a Micro Four Thirds that you will from an APS-C. Why do we say that?  Well, in terms of everything above APS-C and full frame; the level of development, the R&D that goes into those sensors has been very limited, whereas in the point and shoot sector, the very tiny sensors, massive amount of R&D has gone into those to improve those because they have low light issues. So now, we as a company are focusing more and more and more on what can we do to Micro Four Thirds to take it to the next generational level. So I think you’ll see from us, in time, a greater emphasis on taking Micro Four Thirds and sort of leap frogging or even going further ahead with the technology. You see this in the difference between the GH2 and the G3, for example, or even the GX1. The GH2 has a full digital Micro Four Thirds 16 megapixel sensor, whereas the GX and the G3 have analog 16 megapixel Micro Four Thirds sensors. The numbers are the same, but the technology is vastly different. Now, what the digital version gets you is far better video--far better, faster readout rates--but it’s a lot more expensive. So between the two cameras you get a better video read on a GH2 than you will with a G3, for example. But at the same time, for still pictures, they’re pretty close because we have been able to take the image processors in the G3 and the GX and take them up a significant level, having learned what we did with the GH2 when we built it. We took them and even created a better image processor, technically, than is in the GH2. Now, we can apply this technology to the GH2 sensor in the future, and you can imagine what we can do. I think we will reach that level very soon.

DE: On a technical level, what makes the cost difference between the digital or analog readout?  Is it more mask steps or just a different process that has lower yield?

DP: I’m not really sure the exact manufacturing, but there’s a lot more onboard processing. It sends a much cleaner signal to the processor, so the processor doesn’t have to do as much work, whereas a purely analog sensor pushes off more work to the processor.

DE: Going back to the idea of the fixed lens camera, do you think it would make sense for Panasonic--is there a place in the market for a camera with a Micro Four Thirds sensor but a fixed lens?  Are there arguments in favor of that? Perhpas it would be even less bulky or a better match between the lens and the sensor or have some other benefit?

DP: Take a look at the LX5, for example. It’s not a Micro Four Thirds sensor, but it is larger than our average point and shoot sensor. We put an f/2.0 lens on that. We did a firmware update to it to improve image processing, to give it a better 3D modeling of color, and to get much faster frame rate data out of it. And we actually turned the LX5, which was already a great camera, into an absolutely superb camera just by doing a firmware update. That kind of goes back to my earlier comment about how we can take things to the next level. It’s not all in the sensor, but in the way we do image processing as well--far more intelligent work. So do we really need to shovel a Micro Four Thirds into a next-generation LX? I don’t know, but I don’t think that will be needed. I think the consumers would say, ‘Yeah, that would be awesome, that would be great.’ And then the next question would be, ‘How do I go to 10X, how do I make this zoom even more?’

DE: That obviously has an impact on camera size and part of the appeal of the LX5 is that it really is a pocket camera, but with very good image quality.

DP: Right. Now all of a sudden we make the body bigger. We make the lens bigger. Which one does the market really want?  At that point, why not just step up to the GX because the size isn’t that much different. With the X lens technology having such a compact lens, we’re virtually at the size of an LX5, but with interchangeability.

DE: Certainly compared to the other large sensor, fixed lens cameras, the GX1 is that size or smaller, probably.

DP: Also, just to be blunt, it helped us differentiate the GF series from the G, GX. You know, the GF1 really, if you wanted to go back and rename it, it was really a GX in its design, right?  But we’ve taken GF1 in a different direction. We’ve taken it to the mass consumers; we’ve consumerized it quite a bit, made it more like a cell phone. It’s touch control, devoid of buttons. But there are still a huge number of customers that are huge fans of GF1 and they wanted their dials back. They wanted a little bit more tactile feel to it. They wanted something traditional looking in a range finder. And so we brought that back with GX1. We recognized that we needed to go back to our roots and do that.

DE: That’s something really interesting, actually; industry-wide, all of a sudden there's this retro thing that’s happened.

DP: Yeah. What's old is new.

DE: Consumers really want the retro look.

AE: Looking at the changes industry-wide, for a long time there were point and shoots and there were SLRs, and there wasn’t very much experimentation in the middle. Panasonic was on one of the first companies to look at rethinking what an SLR should be and whether you even need a mirror. What is your perspective on why this sort of experimentation is happening so broadly now?  Why are all these manufacturers rethinking the need for the mirror, and beyond that, even what sensor size is needed. Why are we seeing this now?

DP: Obviously, what getting rid of the mirror really did for us was to be able to simplify the camera, for one thing; getting better video; and no longer having separate hardware components that does focusing, exposure--we let the main sensor do all that work. Now that requires a lot more computing power, but what it did eliminate was component errors or mismatch or whatever you might call that. Situations where one component is not calibrated to the other component and the system is not as stable.

AE: Electric and mechanical stuff is expensive to do and calibrate.

DP: Exactly. Take a look at an SLR, even a high end one--what’s the first thing you want to buy?  It’s a lens calibration tool. Why?  Because the [autofocus] components are separately calibrated. With mirrorless camera technology, what the camera sees is what’s going to happen, so when it focuses, it’s almost dead on 90 percent. With SLRs, and even the best SLRs, when you go to a wide aperture, like f/1.4, you’re only about 60 percent accurate in focusing--only 60 percent. Think about that. If you’re a wedding photographer with a $5,000 camera and you're shooting 60 percent--in low light--six out of ten pictures will work. That’s a little frightening. So when we come to a technology like this, suddenly we’re 90 percent accurate under low light and at the same time I can just switch back and forth to video without any mirror lockup issues. It focuses accurately and it track-focuses. I can adjust color filtration on the fly. I can even adjust the frame rates, in the case of the GH series, so that I can slow or speed up action in videos. So I think that, even though it is small--and it may be really difficult for a professional photographer to say, ‘I can use this as a main line camera,’ because it’s difficult to walk into a job with a camera a third the size of an SLR and say, ‘This is a professional camera’ (unfortunately, that’s the reality)--but the reality is that the image data coming off these cameras is every bit as good as that from a professional camera.

DE: Actually, that’s an idea for a whole other accessory. Instead of a grip, you make a box. You put a Micro Four Thirds camera into it and it looks like a full-size pro full-frame camera.

DP: [laughs] All right. I’ll make that recommendation!

DE: It’d be like the equivalent of chrome rims or a spoiler or something on your car.

DP: It might be a generational thing.; who knows? The younger generation will probably say, ‘Why aren’t you shooting with a mirrorless camera?  I want video. I want the same shot in video and a full resolution still image at the same time. I need that.’

AE: Looking at the high end of the interchangeable lens camera market, you recognize that you left the enthusiast customer and sort of departed from the mold of the GF1, the GF2 and the GF3. The GX1 has returned to that, although some people have kind of criticized the price level. But when you’re looking at some of these other camera that are coming out, the X-Pro1 I think is about $1,700 body only, and you look at the NEX that’s being advertised for about $1,200 without a lens. If you’re looking at these, these very much more expensive cameras do have unique capabilities beyond body, view finder, and whatnot. Might we see in the future some experimentation in the higher level niche camera or do you intend to keep the GX1 as the top level of its product line?

DP: Well, the GX1 really falls between some of our products. It’s the range finder form factor; very cool looking in terms of retro; really great sensor. But at the same time, there's the G3, which is very similar in a lot of ways--same sensor--one level down in the image processor; fold out LCD; built in view finder; it’s got stereo; and it’s got a button placement and dial placement that’s popular with the photo specialty crowd. Now, at the same time I can add an electronic view finder to the GX if I wanted to. That’s an option. But I’m seeing kind of two worlds happening here: There are those who want the cool factor of a GX, kind of an exclusive level. Not everybody has one; I have one. At the same time, if you’re a person like myself and wearing bifocals, having a camera that doesn’t have a view finder that I can put up to my face can be sometimes a little difficult, so you’re kind of nodding your head, up and down, to look at the LCD. So right now, those two cameras can live in the same world. At the same time, the GX has a few extras; some processor tricks in it, and a few things like that, that do add expense to the body frame. And it is more exclusive.

DE: I’m not sure if this is something you can answer or not, but looking at basic sensor technology in the point and shoot category, backside illuminated (BSI) sensors have been out in the market quite a bit. It had been my impression that Sony actually had blocking patents on this technology, but now we’re seeing backside illuminated from some other sensor manufacturers. I’m not sure what you can tell us about that. Will we see BSI technology in Panasonic point and shoots?

DP: BSI in point and shoot business--I’m trying to think of the model we have that has that... Oh, I know; the FZ150.

DE: Oh, that’s a BSI now? Okay.

DP: Yeah. You look at the data that comes off that camera--and that’s one reason, by the way, we’ve gone from 14 megapixels in the prior model down to 12 in the current one. And we’ve maintained the Leica optics on it. And as a result, we got really great video out of it now. It’s an amazing camera. So yeah, we do utilize the BSI technology. And as I kind of said earlier, that the technology drive in the smaller sensors has been amazing over the last few years. The amount of R&D and effort to improve the low light capabilities and get the great color out of those things--that attention when placed into Micro Four Thirds will take us to the next level.

DE: This is a little bit of whimsical question. Last year we saw a lot of talk about 3D industry wide. We suspect that was largely driven by the television sides of the CE companies. It doesn’t look to us like 3D has really caught on with consumers to any great extent. What do you think the next big thing is in cameras now that 3D is maybe receding a little bit?

DP: 3D--it’s interesting. All the cameras have it, whether it’s a swipe mode or with our CSC types, it’s through the lens. I think the output hasn't really caught up with the input, if you will.  We can take a lot of pictures with 3D now, but to view them is a little more difficult. Not everybody yet has a 3D TV, but what you’re starting to see is suddenly 3D phones; 3D gaming systems--lots of portable devices. And if I can take a picture and view it in the real world while I’m out amongst my friends in 3D, I think that will proliferate the use of 3D far more than the actual camera itself. If 3D is dead, then why do they keep introducing all kinds of new 3D products--you know, constantly--tablets, cameras, phones, gaming systems. [laughter] So it’s getting there. It’s getting there.

DE: Speaking of phones, this is a question I skipped over and meant to ask earlier. Obviously cell phones are crowding the low end of the market. They have a lot of advantages in terms of connectivity, but digital cameras still have the longer zoom, better sensors. What’s your view of how phones and cameras can co-exist and even cooperate over the next couple of years?

DP: With a phone, I see it as more opportunistic photography, or disposable photography, if you were. It’s just something I’ll take a picture of, upload it to my Facebook or email it to a friend, and then it’s in cyberworld. So what; I’m done with it and move on. Where there is still a desire, even amongst those who use their phones, to have a mainline camera for those important moments, for those zoom capability, the flash capability, the really low light functionality that still does not exist, despite all the applications you can install on your camera phone. It just doesn’t exist yet. When you take a picture with a camera phone and you look at it on the LCD on the phone, it looks great. Now you take the same picture with a camera and you view it on the same panel, it still looks great. Print them both, blow them up, make them onto a big screen, one falls apart. Guess which one falls apart?

DE: One thing that we’re seeing is that there is starting to be some interaction between cameras and phones, where they sort of "cooperate" more to allow people to get images up online. Is there any thinking inside Panasonic to move in that direction?

DP: We have, actually: We introduced something called the FX90. The FX90 has Wi-Fi built in and it is compatible with both Android and iPhone through an applicant called Lumix Link. It allows you to link the phone with your camera so that when I take a picture I can determine on the camera which one I’d like to save to the phone as a backup source, or go straight through the phone and then use the phone’s cellular connectivity to go to a cloud service; to your Facebook, your Twitter, YouTube, whatever you have, right?  And so now I have great optics. I have a very slim, portable, Leica grade optics, with flash--the very things that don’t exist in a phone today.

DE: How’s that being received and do you think that’s something that will propagate further through the line?

DP: I think it’s the future, basically. A lot of photography is Wi-Fi connectivity with other devices. It’s still not there yet, because it’s quite expensive. As an industry, I think, early on we went down the path of saying, ‘Well, let’s connect it directly with the mobile service providers.’  That didn’t work because you had to pay an extra service to do that and nobody wanted two contracts. But to just simply tether it to a phone is an easy thing to do. Now, what the service providers in the United States do in the future to try and drive revenue from that, we don’t know. But at least we’ve given the option to the consumer.

DE: You say it’s expensive. Is it expensive from a bill of materials standpoint?

DP: Bill of materials, and also there’s additional work that needs to be done in terms of development because of the nature of Wi-Fi--connectivity, ease of use, etc. While we could take the low cost approach in terms of putting it in a simple camera, but for the most part the type of person looking for that right now is somebody looking for a premium product. They’re looking for a better product than their phone, because they already have within their phone that simplicity of taking a picture, but having that disposable nature to it. They want a premium product with a better image.

DE: The standard last question--what’s your crystal ball say about the economy and how we’re looking for 2012?

DP: Despite all the disasters that happened throughout the world this year, the market grew for both SLR and compact system cameras. It grew. That’s saying a lot considering the impact those two disasters had. But at the same time, the point and shoot sector declined significantly. And when I talked with dealers across the country, they said we did a really great job in high end cameras and SLRs this year. Customers wanted to step up. Maybe that’s a function of the cell phone becoming more that opportunistic low end choice. Not everybody has one yet, so there's still some market [for basic point & shoots]. I think some 60 percent of the market is done volume under $200. So there is still a need. It’s still very big. Unfortunately, that 60 percent is less and less and less each year, although there's still a big chunk of it left. So at what point do we as an industry say ‘Okay, well, we just need to kind of move out of that and leave it to another device (whether it’s your tablet, your phone, or some other device) for opportunistic photography, and focus on  higher end, mid-grade, or ultra high end photography.’  I don’t know the answer to that yet. I do know that in a very, very difficult year, in a very difficult economy, there were some success stories and it was mostly in the high end.

DE: So maybe a similar kind of story, you think; a continuation of that trend in 2012?

DP: Quite possibly.

DE: Great, we'll cross our fingers along with everyone else for that. Thanks for taking the time to meet with us!

DP: Thanks for having me!