Do not base your business model on change in human behavior

Posted by jd
August 30, 2005

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As search technology for images has improved and prices for digital devices (including cameras that are now incorporated in mobile phones, PDA, etc.) for taking pictures, I am seeing opportunities for growth in the imaging industry coming from several dimensions. But all this time, reports from market research companies (as shown in the chart below) were pointing to a leveling off of sales of digital cameras and a boom in camera phones. While it did seem like a logical evolution, it was running contrary to other trends that have not led to a convergence in devices. For instance, while we are starting to watch a lot more video on our computers, we are still buying larger and better television sets.

Chart showing the flat sales of digital cameras and booming growth in camera phones.

This is exactly what is happening in the the camera phone/digital camera business. In fact, IDC now calls it a myth that “[T]hat camera phones will replace digital cameras.” According to their Mobile Imaging Survey, “[T]he camera phone is more of a gateway product in the U.S., and creates, rather than destroys digital camera users.”

What does it mean for you?

    Don’t believe everything that analysts and experts (including yours truly) say, and particularly, when they forecast. These guys are no better at forecasting than a psychic or a monkey is.
    Human behavior is impossible to predict. So do not base your business model on a certain expected change. Incorporate unexpected scenarios in your business planning so that if things do not turn out the way they were predicted, you can still survive. The dot-com taught us that lesson really well.
    Do your own research. Use multiple sources of data and add your own research to it. And once you are done, don’t just sit back and hope that things will turn out the way they were predicted. Stay on top of trends and keep refining your forecasts based on continuous research.

Recommended article: Business forecasting is not a perfect science

Growth opportunities

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