In 2006, Ren Ng, a graduate student at Stanford, published a doctoral thesis outlining a revolutionary technology in photography that almost seemed like an illusion.
Mr. Ng discussed a way of capturing photographs whose area of focus could be shifted after you snapped the image. You could take a picture of two people, one in the foreground and one in the background, and later switch the focus between the two subjects as if you were directing an art house horror movie.
Mr. Ng’s idea, digital light-field photography, became an instant sensation in Silicon Valley, attracting tens of millions of dollars from some of the industry’s leading investment firms. In 2012, Mr. Ng’s firm, Lytro, introduced its first light-field camera to positive reviews. When the $399 camera went on sale online, many customers bought it sight unseen.
Then the company’s fortunes began to fizzle. Lytro’s first camera suffered several drawbacks that made it unsuited to everyday use. Its display was tiny, its software was dodgy, and many users found it difficult to compose shots that made full use of its focus-shifting capabilities. Lytro was also blindsided by the significant improvement in smart-phone cameras and the rise of social photography apps like Instagram, which have together decimated the market for small point-and-shoot cameras. Indeed, some of today’s high-end phones — like Samsung’s Galaxy S5 — can mimic Lytro’s refocusing trick.
This week, Lytro will begin shipping a new camera, the Illum, a big, $1,499 model aimed at serious photographers. I’ve been using the Illum for a few days, and I found that like Lytro’s first camera, the new one is a marvel of imaging technology that is also hampered by some quirks.
The Illum is a nice device for people interested in carefully composing creative shots that would benefit from the camera’s ability to shift focus or perspective. While it is possible to take some incredible shots with the Illum, the camera takes some getting used to, and it is not for everyone — probably not even for most professional photographers.
Yet despite its narrow audience, the Illum is still an interesting device because the technology inside it could well have far-reaching implications for photography. If the device sells well and paves the way for Lytro’s long-term prosperity, the company’s light-field technology could change the way we make movies, improve medical imaging devices, and radically reduce the price of most professional cameras and lenses.
But all that is a big if. Along with Nest (which was acquired by Google this year), Jawbone, Oculus (now owned by Facebook), Sonos, and Pebble, Lytro is part of a resurgence in startups whose primary aim is to manufacture physical products. But its recent history illustrates the challenges faced by upstart hardware companies.
“It’s way harder than a software company in terms of the number of things that can go wrong,” said Ben Horowitz, one of the founders of the venture capital firm Andreessen Horowitz and an investor in Lytro, Oculus, and Jawbone. “Lytro has a very, very big opportunity to change the world, but there ends up being all kinds of challenges along the way. That’s because hardware is just hard.”
You can divide the tech industry into two main denominations: companies that make code and companies that make devices. For much of the last three decades, software — making code — has been the more attractive part of the industry because software has magical business properties. A company can write code once and make copies for almost no additional cost, which translates into huge profits and novel business models (like advertising or subscriptions). Because software can be updated from afar, it is also more forgiving than hardware; if you make a mistake in your app, you can just send out an update.
Software can also create businesses driven by so-called network effects. The more people that use your software, the more useful it becomes for other users, which leads to incredible growth — look at Microsoft’s Windows, Google’s search engine, Facebook, and the Android operating system, each of which has more than a billion users.
But in the late 1990s, around the time Steve Jobs returned to Apple, the calculus began to shift. The rise of the Asian manufacturing industry allowed American hardware startups to reduce manufacturing costs through outsourcing. Mr. Jobs also showed that when a company designed all of the components in a device, it could create radically innovative products for which customers would pay a huge premium.
You could argue that Apple is an exception in the hardware business. Most other device companies don’t make much of a profit, and even those that do, like Samsung, constantly struggle to maintain their margins. But the bleak record hasn’t deterred a host of startups from trying to mimic Apple’s success.
“Apple has shown how to build successive new categories of hardware hits and have a great margin structure,” said Jason Rosenthal, who took over from Mr. Ng as Lytro’s chief executive last year. (Mr. Ng remains the company’s executive chairman.) “That’s what we aspire to do.”
In many ways, Lytro is a testament to the new possibilities for making hardware. Though the company is tiny, with 85 employees, it has managed to cajole some of the world’s largest tech suppliers into providing components for its camera.
The Illum has a powerful mobile processor made by Qualcomm, and it includes a lens custom-built to Lytro’s specifications. The fast processor enables one of the camera’s best features, a system that shows you, in real time, which region of your photo can be refocused. On Lytro’s old camera, you just had to wing it.
Yet the Illum also demonstrates the perilous economics of the hardware business. Planning for the Illum began years ago. If the camera is a dud with users, or afflicted by a bad bug like what has happened with certain Nest and Jawbone products, Lytro’s future could be cloudy. “It makes for a white-knuckled experience,” Mr. Rosenthal said.
Still, Lytro said the Illum isn’t the final embodiment of its technology, but rather one more step along the path toward demonstrating the possibilities of its new kind of photography.
In a traditional digital camera, a sensor collects just two data points about the light that hits it: its color and its brightness. A light-field camera can capture much more data, including information about the direction in which rays of light are traveling through a scene.
This directional data allows a light-field camera to improve performance and cut costs compared with other cameras.