In September 2016, amid a smartphone industry changing at a staggering pace, Apple finally confirmed the introduction of a dual camera setup on its iPhone 7 Plus flagship. As we near the end of 2016, a little more than a month before the 10 year anniversary of the original iPhone presentation event, which took place on January 7th 2007, this is probably a good time to reflect.
What are the key lessons learned from Apple’s recent introduction of dual cameras? And where are we headed? Yole Développement can tell you, having published its ‘Status of the CMOS Image Sensor (CIS) industry’ report in May 2016, and with its sister company System Plus Consulting publishing a reverse engineering and cost analysis of Apple’s camera devices in November 2016.
So here we are, 2016 is confirmed as the initial launch pad for the dual camera approach. Previous releases from HTC and LG were unable to penetrate significantly, but eventually helped mature the technology and prepare the minds of consumers. Huawei did broaden the trend this spring with its P9 model, and Apple followed suit in September with the iPhone 7 Plus. Many Chinese vendors have been following close behind, including Gionee, Xiaomi and TCL. In the end a handful of brands, which together cover almost 50% of the market, do have at least one smartphone using the dual camera approach in their lineup. The iPhone 7 Plus itself currently accounts for over 15% of Apple smartphone sales. This is on track for the fastest dual camera adoption scenario Yole published this summer, with 8% overall penetration in 2017 and 15% in 2018. We will have to watch Samsung closely, as it is the last large player to not follow this trend.
The first take-away from Apple’s dual camera strategy is the successful introduction of the technology. The response of consumers has been positive, even though we are still wondering if significant performance improvement is achieved by the approach. Technology evaluators like DXOmark don’t rate dual cameras above other technologies – and in fact, the Google Pixel, which has a mono camera, is currently topping the charts. However, dual camera technology is improving the current usage of photography by bringing new performance elements, such as the blurry aesthetic of bokeh, high resolution black and white, or optical x2 zoom operation in daylight. Performance is broadening, rather than focusing on a few indicators like pixel count and low light capability. This has actually been true for a little while, with the previous introduction of Optical Image Stabilization (OIS). Another key aspect of the successful introduction is the status symbol it brings to adopters. Dual cameras are a visible attribute that can be linked to the slim form factor of high-end smartphones. This overlooked aspect is probably helping the hype factor beyond the factual technical improvement.
The second take-away is the increased revenue this approach is bringing to the smartphone industry. The dual camera setup necessarily doubles the number of imagers, their packaging, and eventually autofocus (AF) and/or OIS devices. This will have a huge impact on the whole supply chain and especially the main players Sony, Largan and Foxconn. It will also foster technical innovations as the search for efficiencies gets more funding. Very few market research companies will be able to picture the full impact. At Yole we were expecting costs to go up by at least the cost of a front camera, roughly $5-$6. This appears to be partly true. The added cameras are actually relatively high resolution, 12MP for Apple and Huawei, and do integrate AF. The total cost for smartphone cameras has escalated toward the $22-$24 range, around 10% of the total smartphone manufacturing cost. In the end, the added camera brings in more silicon content than initially expected, although some cost improvement is achieved at the system level. This is good news for a company like Sony, mitigating the fact it is getting less Yen per dollar sales, due to recent currency headwinds. In the end, the impact is well aligned with Yole’s previous estimate. The additional camera volume will fuel 10.4% global revenue growth rate we forecasted for the CIS Industry for the 2015-2021 time frame.
Now the question is, will it last? It depends, is probably the best answer we can give today. For months now Yole has been claiming that the big change is not so much in the dual camera setup. We are more inclined to say 3D imagers would be the big step forward, radically changing the smartphone experience. The reason 3D is so important is linked to augmented reality (AR) and there are many signs pointing into this direction. Following the investment from Google in the Tango project, the launch of the Lenovo Phab 2 Pro has been a big step in this direction. We should also mention the recent investment of Snapchat in 3D imaging startup Seene. One thing is certain, the dollar content for image sensors in smartphones will not reduce. The fact that dual cameras are now well established is potentially pushing the introduction of 3D sensors a little further down the road. The smartphone industry is in slower growth mode, and the appetite for innovation is proportional to the increase in competition. The success of Pokemon Go, and the huge investments that we are witnessing in the AR headset space from Google, Apple, Facebook and Alibaba are evidence that we will get even more image sensors, probably sooner than analysts expect.
Author: Pierre Cambou, Imaging Expert, Yole Développement.
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