A stalwart of the photography industry, Pentax has a long-standing reputation for quality optics and solidly-built camera bodies at affordable prices. (How many hundreds of thousands of photographers of a certain age cut their teeth on a Pentax K1000?) After an initially rocky transition to the digital era, Pentax has recently made great strides with their K-7 and K-x SLR models, and their 2010 digicam lineup includes some refreshingly different aesthetic designs. At PMA 2010, IR Publisher Dave Etchells and Senior Editor Shawn Barnett caught up with Ned Bunnell, President of the US division - Pentax Imaging Co. - and both an industry veteran and a serious enthusiast photographer in his own right. Ned shared some interesting perspectives on the industry as a whole and Pentax's place in it - Read on for all the details:

Dave Etchells, Imaging Resource:
Ned, you’ve worked in the industry for a long time now. Could you give us an overview of your background in the imaging business, and how that has informed your work at Pentax?

Ned Bunnell, President, Pentax Imaging Co.:
My background really started with printing. I started designing typefaces for a company back in Massachusetts. Did some work for Compugraphic, and, worked early on with NEC developing printers. Had always been a photographer, studied photography at San Francisco Art Institute, and so, shortly after working for NEC, I worked for Adobe systems, where I was doing international business development, primarily in Japan. And clearly I was interested in combining my knowledge of imaging with photography. And that led to opportunities at Polaroid, Canon, and now Pentax. So what I've really enjoyed is that I've had a whole career where I've been able to work in business taking advantage of my knowledge of imaging and photography, so it's been a nice marriage, one that I feel pretty fortunate to have had.

IR:
When I first met you, you were at Canon, when did you come to Pentax?

Bunnell:
I've been at Pentax for, it will be five years in April. They hired me as VP of Marketing, then promoted me to president two years ago.

IR:
With large electronics companies and traditional camera companies jockeying for position, where does Pentax see itself as most competitive, and what’s your strategy for growth?

Bunnell:
If you take a look at some of our new offerings, whether it's the Kx in four different colors, or some of our new compacts such as i10 or H90, one of our beliefs is we can focus on the advanced amateur who really wants to explore and expand their photography, but they also want to have a fun time; photography should be fun. We also think that from a positioning standpoint, Pentax's history and knowledge of building small, well designed cameras bodes well for us. Products like the Kx and K7 being the smallest SLRs out there, they match really well with our Limited lenses, our really small, fixed focal-length lenses. And that's an area that really, we don't think anyone else is focusing on right now.

IR:
On the digicam front, with their recent announcements, Pentax seems to be taking a different approach than the conventional silver-box-with-a-lens design. Can you comment on that, and how would you characterize Pentax's strategy in the digicam business going forward?

Bunnell:
With regards to the Kx, we really did see that this would be a product that was going to appeal to point & shoot families moving up to their first SLR. And, quite frankly, we didn't think that SLRs needed to be black. And we also felt that consume
rs moving up were so used to colors, and a choice of colors in their compact cameras that if we offered them a range of colors, it would make their transition a lot more fun and a lot more easy, and in fact we think it's working really well. If you look at the success of both Kx red and white, they've been vastly more popular than I think even we expected.

And then from a design standpoint, the new i10 has very retro look, a lot of people will say it looks like the earlier Auto 110. We did that primarily because we really do think consumers are looking at cameras today as fun, a fashion statement. And although a lot of people take photography seriously, we felt that there are a lot of other people out there that just want to buy a camera, and enjoy it, and make it a personal extension of who they are. And that so far has been working for us.

IR:
You said the colors on the K-x were more popular than you expected. I think you said something in New York about that some of the tests that you've done that you personally hadn't thought the red would be a big color, but it's this huge thing now for you?

Bunnell:
It's done really well. If you look at some online stores that track their sales, you know, it's been amazing that both the red Kx and the white Kx have been fairly high up in the most popular products, which for us, being a small player, we've never been in the top 25 of top selling cameras, and yet the red and white are up there. Black in not as high as the red and white, and it's interesting, the blue has not been as popular and I don't have a lot of data behind this, but our supposition is the blue is too close to being black and therefore it is not enough of a departure from the traditional SLR. Our thought is that people are really going for the color. And the other thing I think is happening is we're really tapping into the notion that families buying an SLR today, with the mother being the memory keeper, she's having a greater influence on the purchase decision, and therefore that's why we're seeing more red and white Kx's being sold.

IR:
You're quite an enthusiast photographer in your own right. What about Pentax's SLR offerings do you personally find the most exciting or enabling? What's exciting to you about the product line?

Bunnell:
Actually my start in photography, in the 60s, I was actually a stringer in Boston, working for the Boston Globe. So I was shooting black and white and covering the Vietnam war protests, so I've always been somebody who was a very minimalist photographer. You know, rangefinder, only two lenses, and so, I really enjoy, and I don't have to be paid to say this, I really enjoy our small compact cameras and I actually adore our Limited lenses. I'm not a zoom type of photographer, and so I love our 31mm, I love all of our compact lenses, because it suits the way I was trained as photographer.

IR:
Since the merger with Hoya, Pentax’s development cycle seems to have accelerated and products have become better focused. What changes in culture or management have you seen since the Hoya merger?

Bunnell:
I think the biggest change for anybody working at Pentax has been that Hoya has brought a sense of accountability to anybody that works at Pentax. And, also an understanding that you need to make a commitment to product plans, you need to make a commitment to the channel, and above all else you need to make a commitment for doing the right thing, which also results and leads to making sure you can be profitable. So, they have really forced us to be much more aggressive in our thinking and be very, very careful that if you're going to make a decision, you're going to stick with it. So, I would say what Hoya has brought to us is accountability, demand for more efficiency, and demand for doing things more quickly
than probably historically Pentax has been used to.

IR:
Pentax has always been kind of an engineering oriented company, and now Hoya is maybe a little more business focused?

Bunnell:
I think it would be fair to say that people have always thought of Pentax being primarily an engineering-driven company. And, although this goes well past my time at Pentax, we typically were the sort of company that would bring out one camera this year, and then three years later bring out another camera, and there wasn't any real relationship to the cameras and the notion that you had a product line. Hoya is helping us develop a product line strategy, which makes a lot of sense for us from a business standpoint. It also makes more sense for our retailers. They know who we are now, they know what products we have, they know they can expect we'll be replacing these models in a certain time period. So, a lot more disciplined business approach.

IR:
The K-7 was a major leap forward in terms of features and capability for Pentax. Was that a direct result of the Hoya merger, or was it under development well before that?

Bunnell:
I would say the development of K7 had started obviously before the Hoya merger. But the focus that Hoya had placed on us to make absolutely certain we had all of the right features was probably the most telling sign there was the beginning of an influence by Hoya on our design strategy.

IR:
There have been some rumors of Hoya potentially spinning off Pentax as an independent company. What do you see for the future?

Bunnell:
There have been a lot of rumors, and I guess best way to answer that is our COO Hiroshi Hamada I think aptly pointed out, this is probably three months ago, that Pentax was a really small company, and that we probably could not exist on our own due to the tremendous pace and investment in technology. So his strategy is that we will have to partner with more people, to be successful. I think a lot of people misconstrued that to say that they're going to sell us off. I think he was pointing out that we're not a giant company, where we have all the components under our roof, and we will have to partner with key people to help us stay competitive.

IR:
I understand. So people took the statement of forming partnerships with others to sound like they were trying to spin you off. It really is just stating the fact that you need to tap into resources more broadly, then?

Bunnell:
I think it would be respectful to say that Pentax has had a wonderful history, but because it's been a small company, we probably weren't as focused on the bottom line as we should have been. Hoya, as I mentioned earlier, has been getting us to really understand what the cost of business is, and how you have to be profitable, and quite frankly their statements have been misconstrued. It really comes down to Hoya is a profitable company, they want all of their divisions to be profitable, and they expect their management to deliver on their ROI necessary for them to continue to invest in us. So a lot of people can say "Oh, they're going to sell you off." We don't see any signs of that happening. They expect us to deliver a profit, and that's traditional economics.

I think in the past, and the reason I enjoy my position is, on one hand I'm a photographer and I think I certainly understand the needs of a photographer, and I enjoy my photography. But on the other hand, I was highly influenced by my father, who was a Wall Street investment banker, and so I do have a pretty keen understanding of business, and so in my position, I have to go between thinking about what is right for photography, what is right for influencing the design decisions and then also what is right from a business standpoint. And so I think the old Pentax, we only thought abou
t our photography and cameras, but not about the economic consequences and I think Hoya is saying you have to do both.

IR:
How long has it been since the merger?

Bunnell:
Two years. It would have been two years in April. We might have to check the dates.

IR:
So, coming up on two years after the merger now, how is Pentax doing financially?

Bunnell:
We just reported that we are close to breaking even in this last quarter, so clearly we are headed in the right direction.

IR:
Great. Especially to be able to have made that amount of progress in the down economy. It's quite an accomplishment.

Bunnell:
It's been challenging, but it's working. Two things I think you're seeing happening is we're more disciplined than we ever have been as a company, and we're also taking risks that we never would have taken before. Ergo, the Kx in 4 colors, or the Kx in 100 colors in Japan. I dare say two or three years ago, you wouldn't have seen us releasing the i10, the retro cam that looks like the Auto 110. You wouldn't have seen us release the H90, which is a minimalist design. That's another benefit I think of Hoya, forcing us to think differently.

IR:
People are curious about what's going on in the partnership with Samsung. Samsung seems to be launching off on its own with its NX-mount camera, and the Pentax K-x doesn't appear to use a Samsung sensor. Can you comment on the direction of the relationship, and whether we'll see more joint development in the future?

Bunnell:
There was a relationship with Samsung whereby we were using their 14-megapixel sensor for both the K20 and K7. Samsung has decided to move on to pursuing a different approach with the NX, whereas Pentax is going to continue to develop its own SLRs. We continue to partner with them on Samsung’s SLR lineup.

IR:
Pentax has a somewhat different philosophy from a lot of other lens makers, can you comment on that?

Bunnell:
Our focus in lenses I think is being driven by our desire to produce the smallest, most ergonomic SLRs, and therefore the size of the body dictates the vision and direction you take with your lens development. So consequently, if you look back even in the film days, some of our FA Limited lenses, the 31, the 43 and the 77, were all considered some of the best designed glass for film, and they also were extremely small and lightweight. So I think that tradition has continued and shaped development of all the Limited lenses.

IR:
If a lot of the customers for the Kx type of camera are those people stepping up from digicams, they're going to be primarily zoom users, whereas this whole line of compact primes is oriented more toward the enthusiast shooter; or do you see some of the step-up users using primes, too?

Bunnell:
That's a really good question. We've found that the Kx has sold very well, at least in the States, with our twin lens kits, the 18-55, and the 50-200. There's another kit we sell which is the 18-55 and the 55-300, and we think that's satisfying the point-and-shoot families moving up who probably are not going to buy another lens immediately. But the other side of the story is we are finding a lot of people who maybe are more serious photographers who have bought the Kx, and now on the forums are asking about our Limited lenses. So I think there are two classes of customers for the K-x, and based on our kit sales, I think we feel confident that probably 50 percent are buying this for the family and are probably going to be satisfied with the 18-55 and the 50-200. But, the good news is there are a lot of people who are asking on the forums, what about these Limited lenses, what about the SDM lenses, the 16-50 and the 50-135. But I think the knowledge about our Limited lenses is not being lost on customers buying into the Kx.

IR:
Rugged and outdoor-oriented products seem to be a particular Pentax niche. Recently, the WR line of lenses have offered weather-resistant optics at affordable price points. Can Pentax fans look forward to further WR variants of existing lenses, perhaps offering more reach at the wide or telephoto end, or perhaps a WR pancake?

Bunnell:
In terms of additional weather-sealed lenses, the most recent example is the WR 100mm macro, which our designers felt would be really ideal, since so many people are doing nature closeup photography. To have a weather-sealed lens is ideal. So, it's clear that we're committed to continuing to release lenses that match up with our body capabilities.

IR: Same question then for flashes. Are you are going to be coming out with water-resistant strobes any time soon?

Bunnell: We've heard a lot of interest in that. I can't comment on whether we will be releasing weather-sealed flashes, but clearly we've heard that from the marketplace.

IR:
The K-x is a really appealing little camera, with great features and capabilities at an affordable price, but one thing really irks us: The non-illuminated AF points. Does it really add that much to the manufacturing cost to have illuminated AF points? Any chance of seeing illuminated AF markers at that price point going forward?

Bunnell:
The K-x as a follow-up to the K-m (K2000) continues to have non-illuminated AF points. For most users, it does not seem to be an issue, especially if you move up from a point-and-shoot. However, for more advanced photographers who are used to being able to select their focus points and see a visual confirmation, we understand their concerns. I don't believe it's as much of a cost factor as the continuation of a design philosophy that we started with the K-m (K2000). We clearly do listen to our customers and recognize that this is a concern, and will consider this in future products.

IR:
The global downturn over the last year has hit everyone hard, although the photo industry not quite as much as some. To gauge the mood in the industry, we're asking all the top executives we're interviewing what they see coming. What does Pentax see in current economic trends, and project for the next year: Do you see the global economy recovering? Quickly or slowly? Will there be a "double-dip"?

Bunnell:
I'm guardedly optimistic about the US economy, but I think our recovery will be slow until we see significant job gains, stability in the housing market and a much higher level of confidence by consumers. Having said this, I do not think we'll see a return to the days where many of us bought whatever we wanted regardless of whether we could afford it... thanks to the easy credit that was available to us. I think a majority of consumers for the foreseeable future are going to consider any major purchase very carefully.

IR:
Pentax has a very loyal following of old-line photo enthusiasts, thanks in part to their history of excellent optics and cameras with solid build at affordable prices. By all appearances, many if not most of these loyal fans have now made the transition to digital with the company. How will Pentax attract new users to their SLR platform, and compete with the giants like Canon, Nikon, and Sony? What comes next?

Bunnell:
First off, the notion that you can be successful in business just by a market share metric is not necessarily the way Hoya has been approaching the marketplace. A good analogy is looking at the success of Apple. They have a fairly small market share. So, our attitude is we don’t need to take on our competitors so much. We have products that are defined for a specific user. We have unique offerings such as our Limited lenses. We're doing things differently such as offering the K-x in colors. We're coming out with nice designs such as the i10 and H90, s
o we're going to focus on how we think photography should be viewed, and if we can be successful as I think is evident by the K-x, we will be able to grow our market and expand beyond our core Pentaxian base, and do it in a way that is profitable, and that's not really saying that we're going to do this at all costs, or do this to achieve some arbitrary market share number.

Clearly we have a really loyal Pentaxian following. One thing we recognize we had to do to be successful long term was to start to sell beyond our core base. And if we did this by releasing traditional SLRs, it would be very difficult for us to expand dramatically and quickly. I think it's fair to say that part of the strategy with the K-x in using colors was, we felt color was an important part of the purchase decision, for people moving up from their point and shoot, and although ordinarily we would not have a chance of being considered in their purchase decision, we felt that color was enough of a differentiator, whereby they would consider Pentax. And so far, that has worked fairly well for us.