Today’s Wall Street Journal has a fascinating confirmation of the state of camera sales and the ascendency of smartphones: The Point-and-Shoot Camera Faces Its Existential Moment.
The good news is that the biggest decline is in the point and shoot market, which I take to mean the cameras with image quality only marginally better than smartphone image quality. Who wants to carry that kind of camera if the smart phone is close enough in quality? Because pretty bad is pretty good for most casual users. And it’s more of a lifestyle than it is photography on its own.
A few key quotes follow which dovetail into my observations on the major challenges facing the Micro Four Thirds market segment in particular.
As global shipments plummet—down 42% in the first five months of 2013... manufacturers are scrambling to adapt to a world where customers value the convenience of smartphones for quick shots...
... Some are choosing to focus on more high-end cameras as interest in the classic compact, or "point-and-shoot," fades.
... Fujifilm plans to halve its product line—down from 20 models last year, limiting the number of less expensive devices while introducing more premium cameras.
... Olympus Corp said it would eliminate its least expensive line and reduce the number of models it offers. The company forecast global shipments of 2.7 million units—half as many as it shipped last fiscal year—in the year to March.
... Sony said the average selling price of its compact digital cameras rose by more than 20% in the first quarter of 2013.
... Camera manufacturers are also flooding the market with so-called "mirrorless" cameras.
... Price competition could spill over into the extremely profitable SLR market, which is dominated by the two-biggest camera makers, Canon and Nikon Corp
It’s not clear what “half” means for Micro Four Thirds shipments in the Olympus case. But what is clear that a company whose sales are cut in half faces an existential thread to ALL its product lines.
As I’ve speculated before, the Sony RX1 is a trial balloon. Possibly presaging a move to the higher end, the only reliable place to make money. The rumor mill suggests that full-fame NEX successor is not far off, but one wonders if an intermediate size between APS-C and full frame might do the trick just as well. And ideally a new “halo” product with a medium format size sensor. I give that very low odds, but a company seeking dominance that wants to thoroughly upset the Canon/Nikon apple cart might do well to produce (for example) a 42 X 34 speciality high end camera. One can hope.
Do Canon and Nikon realize that their current offerings are heavily barnacled? Sony is poised to eviscerate their market share if only a few key Sony people get a few key products really right. This is hard, because Sony’s weakness is in user interface design (NEX is seriously flawed), but they’re moved closer with the Sony RX1 and Sony RX100. With a few cues from Ricoh, Olympus and Fujifilm (chosen judiciously) Sony could dominate this market within two years.
Chris M writes:
I agree with almost all of your observations, but this one: one reason that Canon and Nikon have the market share that they do is because of their glass and mount.
Very few people have either the funds or the patience to sell off all of their glass and purchase a Sony DSLR or other maker. (Is there another?) That is Canon and Nikon's best selling point, their customers already own their glass and don't want to reinvest.
DIGLLOYD: This is a valid point which I’ll call “already invested in a system”. But several things temper it, including itself: if someone is well invested in a DSLR system, additions to it are likely incremental and sporadic, and discouraged by the pace of change elsewhere (“that new XYZ sure looks nice”). I’m definitely not suggesting that the trend is to sell one DSLR system and buy a Sony DSLR. Rather, it is a switch from a DSLR to alternatives, e.g., mirrorless cameras.
One issue is where new investment in cameras and lenses is aimed. There are the “supplementers”: I know several NYC pros who now shoot a significant amount of work using mirrorless cameras because even in their relatively immature form (compared to DSLRs), they offer a superior option for some work (e.g., remaining innocuous, long reach, certain types of video work, etc). The relatively stable nature of DSLR systems means that new dollars are going into systems that address different shooting demands.
On the other hand, one might say that the full-frame DSLR is the “new medium format” with the arrival of lenses like the Zeiss 55mm f/1.4 Distagon and Zeiss 135mm f/2 APO-Sonnar—lenses that make 50+ megapixels area advance less limited than with most current lenses.
Second, “DSLR switchers” is not unknown when the reasons are good. The arrival of a Nikon D800 last year caused a significant shift to Nikon from Canon among a certain segment of users, and the “switcher” cost is not all that huge. When there is a clear case to be made for a system that has significant advantages (to some segment), then selling/switching happens.
But a more powerful trend is the form factor switchers: the abandonment of DSLR systems for smaller and lighter mirrorless cameras, perhaps first among those with money to spend: well-off and retired persons who value convenience and portability, but who want quality. Or, photo enthusiasts or highly active users or anyone with less than perfect vision—there are all sorts of reasons (“I just don’t want to lug around a heavy/bulky DSLR” is one I hear regularly). Selling a DSLR system (right away or deferred) to fund a new system is thus a no-brainer for some users. It’s only a question of key metrics being met to prompt the switch, those metrics varying for personal factors, but at least the image quality factor has passed the tipping point for APS-C cameras—it’s the “good enough for me and I really like shooting the camera” rationale. For me personally, the Ricoh GR is of this nature (I am a “supplementer” in this regard).
Third, most pros see a camera system as working tools and little else: results and reliability count. Several systems might be necessary to cover all the bases, but new investment might go into new tools, rather than adding to the existing system, since needs have already been purchased (“supplementers” again). And in some cases, it might be a net financial gain to sell off expensive gear and buy an alternative (“de-capitalizers”), e.g., selling Leica S and buying a Nikon D800: anyone in business who wants to stay in business must take a cold hard look at capital costs and what is really needed to get the job done (see note above on the new medium format idea).
Service and support— a Nikon or Canon system is essential for some types of work, including a professional support network and the range of lenses and accessories, reliability, focus speed, and so on. But the market of professionals with demanding needs represents a small minority. And if less expensive gear can do the job, then the need for professional support diminishes: it is affordable (and often preferable) to invest in multiple camera bodies and lenses.