How Hasselblad explored digital imaging and made profits on it.

1. Hasselblad Electronic Imaging

2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.

3. The Swedish company
Hasselblad became a camera
legend when it was used in
space during the 1960s.

11. The following photo of
Edwin ”Buzz” Aldrin (no. 2
on the moon) and Victor
Hasselblad – the founder
of the company, was taken
in Gothenburg, Sweden.

13. The Hasselblad system has
been loved all over the world
for its flexibility, superior
performance and simplicity.

23. Headquartered in the industrial
city Gothenburg, in the south
west of Sweden, Hasselblad
became a cult brand in the
1960s and 1970s.

27. Believe it or
not – but
though
Hasselblad
was an iconic
camera, there
were several
concerns
already in the
1980s.

28. The medium format segment
of the industry faced declining
revenues already in the 1980s.

29. A shrinking market may in the long
run lead to increased price
competition, and thus lower profits.

30. Maybe Hasselblad should try
to diversify its business in
order to grow?

31. In addition to this, the ’Mavica
shock’ from Sony’s launch of a
semi-digital camera in 1981 had
put digital imaging on the
agenda of all big players.

32. Even though the shift was far
away, especially for high-end
firms like Hasselblad, it would
be unwise to completely ignore
the new technology…

34. Hasselblad was a mechanical company, and it
would be quite risky to have only a
competence related to coggwheels the day
when electronics transform the industry.

35. “Even though I did not believe in the
Mavica concept, I was convinced that
the photo chemical film would in the
future be subject to serious
competition from electronical
photography and would eventually be
substituted by this technology”
//CEO Jerry Öster, 1991

36. ”I met Sony’s CEO and the person
behind the Mavica project. It soon
became clear that the technology
had so many shortcomings that it
would not lead to any commercial
success.”
Jerry Öster, CEO

38. But at the same time – could a relatively small
company like Hasselblad enter at this very
early point and compete with such poor image
quality with diluting its brand? Sounds risky.

39. Öster discussed the issue with the R&D
Manager Lennart Stålfors (who was an
electrical engineer). They both
concluded that the Mavica was not the
way forward for Hasseblad, but were still
certain that digital imaging would
become a serious threat in the future.

40. But what to do then?

41. Was it possible to learn more
about digital imaging by
developing applications and use
this knowledge to develop
cameras at a later point?

42. Stålfors and Hasselblad had been
collaborating with the Space
Division of SAAB for a few years.

43. The project concerned image analysis
related to space and aircraft
applications. The outcome of this was
called OSIRIS, a scanner that could
digitize images in order to send them.

44. However, the image quality was too
poor and the price too high. OSIRIS
did not become a success.

45. Based upon insights from this
project, Stålfors recognized that the
transmission of images via the
phone line was underdeveloped.

46. Those photos which
were sent had a
significantly lower
image quality when
they arrived.

47. Thus, photographers had to use their
dark rooms instead. In many
applications, this time consumption
was quite a big problem.

48. Could Hasselblad
develop a digital tele-
photo sender?

49. Such a product would
be lighter and offer a
superior image quality
and thus, it was
compatible with
Hasselblad’s brand.

50. Jerry Öster thought
this was a good idea
and the development
work was initiated.

51. The goal was to have a
working prototype ready
until the Olympic Games
in Los Angeles 1984. The
Swedish newspaper
Expressen joined
Hasselblad in this work.

52. After days and
nights of hard
work, two tele-
photo scanners
could eventually
join Expressen’s
photographers
when they crossed
the Atlantic ocean
in order to cover
the Olympic
Games in LA.

53. It looked like this:

56. The ”Digiscan” became a
great success!

57. When the other photographers
were still queuing for the dark
rooms, Expressen’s
photographers pulled up the
Digiscan and sent their photos
home and they could be
published much faster.

58. Since photo journalists from all
around the world had gathered
in LA, this was fantastic
marketing for Hasselblad.

62. Back home in Gothenburg it
was clear that Hasselblad had a
great opportunity to create good
revenues and more knowledge
about digital imaging.

63. But how should it be done?

64. Digital Imaging and scanners
were at this point very different
businesses compared to the
analogue camera work.

65. Maybe it was better to separate this
from the company and give it an
opportunity to grow on its own…

66. In 1985, the subsidiary
HASSELBLAD ELECTRONIC
IMAGING was born.

68. Take a good luck at the brand. The
’Hasselblad’ logo is combined with a
different font for ’Electronic Imaging’.
This was done in order to communicate
that while this was a premium product,
it was still different from Hasselblad’s
traditional business.

70. Behind the Hasselblad building…

71. On the back…

72. There was a bridge over to another building…

74. Hasselblad Electronic Imaging (HEIAB) was put on
the other side of this bridge, physically separated,
yet still connected with the mother company.

76. Lennart Stålfors became the
CEO of HEIAB and brought a
few engineers from the
mother company.

77. The Board of HEIAB was comprised of Stålfors and
some people from management, the CFO Bengt
Ahlgren (second to the left) and CEO Jerry Öster
(third to the right).

78. At this point, HEIAB only had
a prototype and there were
still doubts about the future
success of this initiative.

79. Many people at the company
wondered why Hasselblad
should do something like this,
which was outside the core
competence of the company.

80. HEIAB started off as
something very small, with
small resources.

81. But they had:

82. A fantastic brand.

83. A prototype with great potential.

84. And some highly entrepreneurial and
very skilled electronic engineers.

85. The Digiscan prototype was developed
further into what became the Dixel.

86. It looked like this:

92. This is an
image that
has been
digitized
with the
Dixel.

93. There was a great demand for the Dixel
and HEIAB grew rapidly in the 1980s.

94. The Dixel became an integral part of the
photo journalist’s equipment.

98. The company started to make good
profits for Hasselblad already in 1988.

100. Merry Christmas and a
Happy New Year
(in Swedish)

101. Meet the team from 1988:

103. See the vacant (empty) positions?
HEIAB was indeed expanding
back in these days…

104. In 1989, 25
percent of
Hasselblad’s
profit came
from HEIAB, an
initiative that
was only
4 years old.

105. This is a fantastic success!

106. HEIAB started to develop other
applications for photo journalism
such as images storage systems
and image management software.

118. HEIAB kept doing very
well through 1989-91.

123. However, Nikon launched a tele-
photo sender in 1992 which was
superior to the Dixel and thus
killed tha flagship of HEIAB.

125. ”1992 was a tough year. We were
not able to continue the great
expansion that was experienced
up until 1991…”

126. This was the beginning
of the end for HEIAB.

127. But the initiative was still a great
accomplishment by Hasselblad.

128. Instead of throwing R&D at digital
imaging without any commercial
results, the company managed to
create large profits while at the
same time enhancing their
knowledge about digital imaging.

129. Which were the success factors
behind HEIAB?

130. 1. They started out on a small scale
with low expecations. This is
absolutely necessary, because new
things must by definition be small
in the beginning. Big companies
often ’think big’ and thereby miss
out on small opportunities which
become big later on.

131. 2. Hasselblad dared to leave its comfort
zone. Was the OSIRIS project a failure
because it did not generate any
revenues? No, it was actually here that
the ’Dixel opportunity’ was discovered.
Companies which only stick to their
’core competence’ will never find such
possibilities.

132. 3. The HEIAB people
were the right guys for
this. They were
creators, not
administrators of
existing things.

133. 4. While still leveraging upon the
Hasselblad brand, HEIAB was very
autonomous. No one except for the
CEO could touch it, and thus
HEIAB wasn’t starved in the daily
internal competition for resources.

134. When the HEIAB business started
to fade, most of the staff moved
back into the mother company in
order to develop digital cameras
from 1993 and on.

135. But that’s a different story.

136. So, this was the story about how a company
at one point succeeded in bridging the gap
between the daily business and the future
technological revolution.

137. Today, the bridge is gone and besides,
Hasselblad has moved to another building.

138. When you know the history behind, images like this
one can suddenly look like monuments.

139. Find out more:
www.christiansandstrom.org