How does a firm or an industry defend itself against a technological change? This paper aims to determine the ways in which the photograph shop industry could have survived persistently despite the technological change in the digitization of photography. This digitization could have had a serious impact on photo shops whose business was developing and printing photography in the silver halide photography era.
In this case-study analysis, we explore the optimum timing of the reaction to a technological change by focusing on the following two factors: consumers' behavior and existing competence.
Photo shops launched a new business of digital photo printing by introducing digital mini-labs (i.e., printing devices) and succeeded in acquiring the printing demand of digital photography. The digital mini-labs diffused early, and this prevented users of digital still cameras from switching from photo shops to inkjet color printers. The new business of digital photo printing adapted to consumers' photography habit when shifting from silver halide to digital photography. Hence, consumers could maintain their choice of consumption, to which they were already accustomed. The countermeasures of introducing digital mini-labs and launching a new business for the users of digital still camera were effective because they were conducted when the consumers were still bringing their photographs to photo shops. These findings imply the possibility of incumbent firms reacting actively to technological changes using their asset of consumer habit or by affecting to the one.
Furthermore, the fact that digital mini-lab's printing mechanism is changing from wet (i.e., printing to silver halide paper) to dry (i.e., inkjet color printer) implies that the photo shop industry could have survived not because it sought technology that would become dominant technology in the future but because it made use of transient technology existing only at that time to maintain consumer habit.