Apple (NASDAQ:AAPL) recently acquired LinX Computational Imaging, an Israeli company which markets miniature cameras for tablets and smartphones. LinX's cameras use several sensors which can simultaneously capture multiple images.
LinX claims that its tiny cameras can match the performance of bulky single lens reflex (SLR) cameras. Since the cameras can sense depth, they can also be used for automatic background removal in photos, 3D scanning, and improved facial recognition.
Apple reportedly bought LinX for $20 million, according to The Wall Street Journal. That's pocket change for Apple, which generated $74.6 billion in revenues last quarter. Nonetheless, the acquisition hints at big changes for the cameras in upcoming iPhones and iPads.
The next generation of mobile cameras
The 3D-sensing features in LinX's cameras are similar to those found in Intel's (NASDAQ:INTC) RealSense 3D cameras, which recently debuted in PCs and tablets from Acer, Dell, Lenovo, and Hewlett-Packard.
This isn't Apple's first investment in 3D-sensing technology. In 2013, Apple acquired PrimeSense, which developed the chip which powered the first version of Microsoft's Kinect motion-sensing controller.
In a previous article, I highlighted three potential uses of 3D-sensing cameras. They can scan 3D templates for 3D printers, be paired with VR headsets to let players move their hands in virtual environments, and possibly disrupt the traditional camera market.
Traditional camera sales remain sluggish
Leading camera makers like Canon (NYSE:CAJ) have struggled due to smartphone cameras surpassing basic digital cameras in image quality, price, and convenience. Sales of traditional cameras have also been adversely affected by the rise of action cameras.
Last July, Myojo Asset Management CEO Makoto Kikuchi told Bloomberg, "Demand for compact cameras declined sharply because of smartphones." He noted that people who wanted professional-grade SLR cameras "have already bought them." Canon expects sales of its compact cameras to fall 14% year-over-year in 2015. Sales of its higher-end cameras with interchangeable lenses are expected to remain flat.
This indicates that professional photographers and hobbyists are still propping up the higher-end SLR market. But will sales in that market decline if high-end smartphones produce comparable photos as SLRs?
Why more powerful cameras might not matter
92% of modern smartphone users use their devices to take pictures, according to the Pew Research Center. Yet a 2014 IDC survey revealed that just 19% of iPhone users and 25% of Android users actually consider the camera's resolution to be a main purchase driver.
That's probably why Nokia failed to win over many users with the 41-megapixel camera on the Lumia 1020 in 2013. However, that didn't discourage companies from selling new smartphones with massive cameras. Samsung (NASDAQOTH: SSNLF) launched the Galaxy S4 Zoom, which looked more like a digital camera than a phone. That same year Sony started selling detachable lens for its Xperia smartphones.
Those efforts also didn't gain much traction. Meanwhile, the iPhone 6 sold perfectly fine despite criticisms that its 8-megapixel camera was underpowered. This is likely due to the fact that smartphone photos are usually shared over social networks. Moreover, filters on Instagram and comparable apps can make mediocre digital photos look "professional."
Why is Apple interested in 3D cameras?
SLR-quality smartphone cameras probably won't wipe out traditional camera makers or boost smartphone sales on their own, but they could enhance iPhones and iPads in other ways.
The LinX camera's real-time background replacement could enhance FaceTime conversations with crazy backgrounds. Improved facial recognition features could be used for unlocking the iPhone. Third party apps on jailbroken iPhones can already do this, and Apple patented an official face-unlocking feature last month. Current face-unlocking solutions can be fooled with photos, but that trick probably won't work on 3D-sensing cameras.
The smartphone arms race
As the market for smartphones and tablets gets commoditized by lower-priced competitors, market leaders like Apple and Samsung have to keep piling on new features to stay at the top.
Apple did this by adding Touch ID to the iPhone 5S, an NFC chip to the iPhone 6, and a much larger screen to the iPhone 6 Plus. Samsung also added a fingerprint scanner and NFC chips to its flagship devices, and added curved screens to variant devices like the Galaxy Note Edge and Galaxy S6 Edge.
3D-sensing cameras represent an escalation of that arms race. They might slightly impact sales of traditional SLRs, but their real purpose is to help Apple widen its defensive moat against rival smartphone makers.