Well, the good old days are about gone. 2013's numbers, when they come out are going to be down, and they're a harbinger of worse things to come in the digital camera market.
At least one analyst is questioning Nikon's staying power in five years. While I think that's probably a bit of a stretch, it's not a comforting thought.
Mirrorless cameras were thought by the industry to be the next saving grace, but outside of the Japaneses home market in particular, and Asia in general their sales have been anemic. That's important, because though Asia is a growing camera market, the US and Europe still account for 60-65% of all digital camera sales.
Of course industry analysts are pointing to a lack of innovation, but I think it's more fundamental than that. There are two forces here that matter.
The first is cell phone cameras are becoming the Instamatics and Polaroids of the day. In the 70's and 80's those cameras took share from the 35mm SLR lines and were the biggest share of the business. Since most cell phones sold these days have pretty good cameras and useable flashes, there's less and less need for consumer cameras. Also, since most picture sharing is now online, the connectivity offered by a phone is a larger part of the usefulness. Sort of like those old mail-your-film-in envelopes of the past, but more ubiquitous. For 2010-2012, point and shoot sales declined by 40% for CIPA members (Canon, Nikon, Sony, Fuji, Oly, Ricoh.) 2013 sounds like it's unlikely to change that downward trend. Worldwide, 70% of all digital camera sales and 75% in the US and Europe are P&S cameras. Given the volumes, that market isn't going to go away tomorrow, but it's not likely to grow again and margins are going to shrink.
The second thing is more interesting- over the last decade, many amateurs and pros have gone through two to four bodies, so we've had a perfect storm of folks going digital added to folks upgrading digital bodies in the higher-margin parts of the business (Pro and Prosumer DSLRs.) Even the low-end bodies are producing enough quality and lasting long enough that the update cycle is lengthening. Couple that with the contracting professional photography market and the high-margin bodies just aren't moving as much as they were before. I'm not sure innovation does much there- we've hit "good enough" at all the price points.
While we won't get the annual reports until May, the numbers that are showing for 2013 aren't good at all. DSLR sales were down about 15% overall and mirrorless were down 17% overall over 2012.
Thom Hogan's numbers for Q4 (Calendar) look like this:
Canon: Interchangeable lens cameras -7%, projected -1% for the coming year
Compact cameras -18%, projected -20% for the coming year.
Nikon: DSLRs -16%
Compacts -38%
While Nikon's managed to enhance profits enough to make up for the sales shortfall, Olympus is the only CIPA manufacturer who seems to have grown MILC sales. That doesn't mean things are looking good at Oly though.
Remember, Q4 (Calendar) sales include that all-important holiday sales season on most of the planet. That's not a good thing in this case.
Short-term, I think that means we'll see some further price drops next year, as companies try to stave off losses. Ultimately, we're more likely to see fewer products on the market and 2014-2015 may be the end of the line for someone. Unless we see serious economic growth in Asia, which could pick up some of the slack and start to grow the market once more.
At the moment, the market is stagnant. That means that to pick up market share, that share has to be taken away from another company. We haven't really seen that sort of competition in the digital market before, and Japanese companies really haven't the mindset of company-to-company competition ingrained culturally.
Personally, I'm going to avoid the quarterly reports and wait for the annuals, but I don't think there's going to be much joy.
Innovation-wise, I think Sony's winning with the QX series. But their focus is going to be on video again, and I'm not sure where that leaves the DSLR business. Nikon's still producing better images with Sony sensors than Sony is- but I think it's one to two more years before we see where Sony is going to play hard and where they're either going to glide or divest.
Paul
At least one analyst is questioning Nikon's staying power in five years. While I think that's probably a bit of a stretch, it's not a comforting thought.
Mirrorless cameras were thought by the industry to be the next saving grace, but outside of the Japaneses home market in particular, and Asia in general their sales have been anemic. That's important, because though Asia is a growing camera market, the US and Europe still account for 60-65% of all digital camera sales.
Of course industry analysts are pointing to a lack of innovation, but I think it's more fundamental than that. There are two forces here that matter.
The first is cell phone cameras are becoming the Instamatics and Polaroids of the day. In the 70's and 80's those cameras took share from the 35mm SLR lines and were the biggest share of the business. Since most cell phones sold these days have pretty good cameras and useable flashes, there's less and less need for consumer cameras. Also, since most picture sharing is now online, the connectivity offered by a phone is a larger part of the usefulness. Sort of like those old mail-your-film-in envelopes of the past, but more ubiquitous. For 2010-2012, point and shoot sales declined by 40% for CIPA members (Canon, Nikon, Sony, Fuji, Oly, Ricoh.) 2013 sounds like it's unlikely to change that downward trend. Worldwide, 70% of all digital camera sales and 75% in the US and Europe are P&S cameras. Given the volumes, that market isn't going to go away tomorrow, but it's not likely to grow again and margins are going to shrink.
The second thing is more interesting- over the last decade, many amateurs and pros have gone through two to four bodies, so we've had a perfect storm of folks going digital added to folks upgrading digital bodies in the higher-margin parts of the business (Pro and Prosumer DSLRs.) Even the low-end bodies are producing enough quality and lasting long enough that the update cycle is lengthening. Couple that with the contracting professional photography market and the high-margin bodies just aren't moving as much as they were before. I'm not sure innovation does much there- we've hit "good enough" at all the price points.
While we won't get the annual reports until May, the numbers that are showing for 2013 aren't good at all. DSLR sales were down about 15% overall and mirrorless were down 17% overall over 2012.
Thom Hogan's numbers for Q4 (Calendar) look like this:
Canon: Interchangeable lens cameras -7%, projected -1% for the coming year
Compact cameras -18%, projected -20% for the coming year.
Nikon: DSLRs -16%
Compacts -38%
While Nikon's managed to enhance profits enough to make up for the sales shortfall, Olympus is the only CIPA manufacturer who seems to have grown MILC sales. That doesn't mean things are looking good at Oly though.
Remember, Q4 (Calendar) sales include that all-important holiday sales season on most of the planet. That's not a good thing in this case.
Short-term, I think that means we'll see some further price drops next year, as companies try to stave off losses. Ultimately, we're more likely to see fewer products on the market and 2014-2015 may be the end of the line for someone. Unless we see serious economic growth in Asia, which could pick up some of the slack and start to grow the market once more.
At the moment, the market is stagnant. That means that to pick up market share, that share has to be taken away from another company. We haven't really seen that sort of competition in the digital market before, and Japanese companies really haven't the mindset of company-to-company competition ingrained culturally.
Personally, I'm going to avoid the quarterly reports and wait for the annuals, but I don't think there's going to be much joy.
Innovation-wise, I think Sony's winning with the QX series. But their focus is going to be on video again, and I'm not sure where that leaves the DSLR business. Nikon's still producing better images with Sony sensors than Sony is- but I think it's one to two more years before we see where Sony is going to play hard and where they're either going to glide or divest.
Paul