I hear a lot of chatter about how the decreased volume of camera sales is going to make some camera makers leave the market, or get absorbed by another company, or worse. Most of that speculation is all wrong for one very simple reason: it ignores the goals of the companies.
Right now we have the following significant camera maker players: Canon, Fujifilm, Leica, Nikon, Olympus, Panasonic, Pentax, and Sony. That’s about it, though you can still find Casio, Ricoh, and a few other smallish offerings if you look.
But each of those eight primary makers have completely different goals, so it’s perhaps worth examining what they are and how they influence might happen next in cameras.
- Canon — A healthy chunk of Canon’s large global business is in imaging. Overall, they hold the number one market share in still cameras, a top two share in photo printers, and have become a top three player in video cameras. Canon’s first goal is simple: remain number one in a declining camera market, and retain their user base as they upgrade. They have pricing, branding, marketing, and a host of other tools in their quiver to protect that, and they will (are). Canon’s secondary goal is how to restart growth in their imaging group. And this intersects with the first goal. For example, they appear to be getting ready to shoulder in more market share in the one area within cameras that shows some growth: mirrorless. When the hippo jumps into the small pond with full force, it’s going to create waves. Canon also very quickly morphed DSLR-type video capabilities into a separate line of EOS Cinema cameras, which are slowly building market share and reputation. Watch them do something similar in mirrorless.
The risk for Canon? The speed at which they move, and their ability to communicate clearly. They can move fast in terms of iterating designs if they really need to, but when they do they don’t always get things quite right. Canon was first with a full line of 1” sensor compacts for instance, but they’re a bit of a strange group and not terribly rationalized as a product line, in my opinion. And guys, the model numbers are confusing. The price goes upward as the model numbers go down: G9X, G7X, G5X, G3X, and the G1X breaks even that, which shows that they moved engineering faster than they could think through the marketing side of things.
The overall size of Canon means that they can afford some hiccups along the way. But they’re always going to be looking at three numbers: market share, profitability, and growth. Right now those numbers are: #1, good, poor.
- Fujifilm — Very simple goal: get digital cameras to be profitable by growing them with the right model mix. At the higher end they seem to be getting this mostly right, but they’ve not yet really fixed the entry models. Frankly, they have too many of them, and with the old fatal Japanese CES problem: arbitrary feature/performance reductions.
But cameras and lenses are such a small piece of Fujifilm, as long as the main goal seems to be within sight, Fujifilm will just keep on plugging away the way they have been. Building the lens mix actually helps them with this, as it attracts users from other crop sensor cameras that aren’t iterating lenses (I’m looking at you Canon, Nikon, and Sony, buzz buzz), so don’t expect them to slow down in bringing out X-mount lenses.
- Leica — As a niche, specialty, high-end company, Leica doesn’t really shoot for volume, they shoot for creating new, unique opportunities for their well-helped customers. Their goal is to sustain the brand reputation by doing things the Leica way and getting those customers to buy something new. In other words, continuing to emphasize niche, speciality, high-end products that appeal to their smallish customer base, and maybe peel a few more users from one of the other players.
You’ll notice a bit more “churn” at Leica with their products: various M, Mono, T, SL, and more, and that’s likely to stay the case. Couple that with all those special edition cameras they like to do, and Leica is making almost as many camera announcements as the big players. They just don’t sell in volume. But as long as they remain profitable, this churn of product is what we can continue to expect. Personally, it’s making it less likely that I’d be interested in Leica, as each of the recent new models seems to go in different directions; there’s not enough commonality of ergonomics, among other things.
- Nikon — Nikon’s corporate goal has always been a ruthless approach to cost cutting in order to keep their financial metrics looking top notch. With the market getting smaller, they seem to have doubled down on that, and some of the side effects are showing (lots of product service advisories, but a too-small customer service/repair group to deal with it).
Like Canon, Nikon wants to retain all existing users via upgrades to new gear, so don’t expect DSLRs to go anywhere soon. Unlike Canon, Nikon seems to have drifted and gotten lost in virtually everything below the DSLR. They really need to get it into their heads that they’re not a consumer electronics company, but a premier and best-of-breed photo enthusiast brand. Unfortunately, cameras are still more than half of Nikon’s business and are likely to stay that way for awhile, so Nikon has this other problem in a declining market: how to show any growth at all. That keeps them poking at the consumer devices, but not effectively in my opinion.
I think of Nikon these days as a frantic juggler: they’ve got just a few too many balls in the air for what they really can handle. Thus, they sometimes seem preoccupied with the current ball they need to deal with to the temporary expense of the others (witness the missing D400, D4x, D3500, etc.). Their goal seems to be to keep their balls in the air, period.
Nikon really needs something to break right for them. The three primary things that could help them get re-centered are: the Precision group actually manages to deliver long-term on promised numbers and show some modest growth; the nascent Medical group starts to show positive numbers instead of being a sinkhole for investment; or the camera market gets re-invigorated in some way. They’re pursuing all of those, but to date nothing’s really quite come together. So ultimately, their goal is to keep those balls in the air until somehow they get control back and find a path to growth again.
- Olympus — The big goal here? Confirm that their pride in engineering is warranted. If Olympus were a Western company, I have no doubt that the camera group would have long ago been jettisoned due to its sustained unprofitability. It’s a bit of a drag on corporate earnings when the company still needs those earnings to get the cash/equity numbers back up to where they really should be for a corporation their size (a US$1.7b hole is a huge one to dig out from under, and the medical side still has other potentially pending liabilities that could make a bigger hole).
The good news is that the big medical business side of Olympus is a profit/cash generator par excellence if just allowed to do its thing. Time heals all wounds at Olympus, basically. So the camera group believes that it just needs to use that time to generate better and better products, which at some point then distinguish themselves from the rest of the camera pack. So one of the sub-goals is that the camera group keeps trying to pioneer new things (ISIS, pixel shift resolution, etc.) and make better products.
You can kind of see their goal in their product line: they keep leapfrogging themselves with their own various m4/3 camera iterations: there are things in the latest lower models that aren’t in the top model yet. But they’ll get around to doing the same with the top model and then work their way back down the line, I’m sure.
Meanwhile, the lens group is alive and well and targeting some very ambitious individual lens goals to supplement what the camera side is doing. Overall, the goal is to show that m4/3 is not only “good enough” but a better choice than the crop sensor cameras. Personally, I don’t think that’s truly an attainable goal, as sensor size, once chosen, locks in destiny. Still, it’s a goal.
- Panasonic — Simple goal: existence. Panasonic’s CEO a couple years back set out some parameters that every business that Panasonic retains has to meet. You know, that old ROI-centric thing that a good CEO actually cares about. The still camera group got a bit of reprieve from needing to hit those numbers by being welded into the healthy video group. And given the GH4, that was a pretty good marriage for awhile.
But the still camera group still has to prove its worth and that it can meet all the internal metric numbers that are being closely watched by top management. That’s their primary goal: make those numbers. That means that projects they might want to do get shifted in priority if it looks like another project might help them meet those numbers easier.
Note that “volume” or “market share” aren’t the metrics by which the group is being judged. Don’t look for Panasonic to make a big play for market share. They’re looking for solid products that have excellent ROI for the company, that’s it. As long as they manage that, they’re fine and can continue on.
- Pentax — Every time I write about Pentax, a handful of the Pentax faithful who seem to have Spotmatic Forever disease get all wound up and agitated. They seem to see a reality that doesn’t actually exist. Yes, Pentax makes some fine products with unique features. But their iteration tends to be just a step slow, so they often end up being the last DSLR maker to achieve something (e.g. high pixel counts), and in terms of market share, they’re essentially ignorable. Meanwhile, they’re a step behind on some basics, such as autofocus performance. That doesn’t make their products bad, it just makes them tough sells in a declining market.
This slowness derives from their primary goal: just keep the camera group working and designing off their base platforms with new iterations. The problem is that they’re a hobby business within Ricoh, and still seem to have internal conflicts with Ricoh’s own camera business. It’s unclear how much investment Ricoh is really providing Pentax, and given the flow of product, I’d say it isn’t a lot. Pentax is essentially a very talented set of engineers that have been cash squeezed (Pentax), acquired (Hoya), and then re-acquired (Ricoh). Their primary goal is to continue their existence on the mounts they pioneered, but their parent organization at any given time is giving them a fairly narrow range in which to operate, and the hassles of working under three different management teams in less than 20 years has had its toll.
Basic goal: survive at any costs. Keep loyal user base happy with increments.
- Sony — Sony is probably the oddest mix of goals of any of the camera companies. There’s the promises made about taking the number two market share made back when they acquired KonicaMinolta that are still unrealized. There’s their CEO’s drive to, like Panasonic, rationalize products to those that have the right numeric metrics for the company. There’s the need to distinguish their own camera products from just the sensor part of the company (i.e. others use the same sensors and often are said to get more than Sony does from them). There’s the need to fit in and play nicely with the video group that the still cameras got integrated into.
For a while there, that resulted in huge churn of product as Sony shifted from A mount to E mount emphasis (many of those video cameras now use the E mount). The shift to mirrorless was predictable, as it helped simplify manufacturing and lowered costs in numerous areas, something that a number three company needs to compete against strong #1 and #2 players. It also gave them a mount that can be shared between still and video well.
The ironic thing is that, despite all the shifting and redesigning and quick iteration of models, Sony still sits pretty much in the same distant #3 position as they did before. Sony, therefore, is one of the trickiest companies to try to predict. They are still scrambling like mad trying to find the thorn (product) that will injure their two bigger competitors. This unfortunately runs counter to one of their other goals, as it takes huge R&D investment to find that new product, but top management wants to see better profitability from what they are doing.
I wrote that Nikon was frantically juggling balls. Sony is frantically looking for new, special balls. All while trying to build out their platforms to keep and grow their existing spot. In some way Sony is the most nimble of the camera makers. I’ve watched them make very quick and incredibly tough shifts in strategies and tactics many times now. And I don’t think we’re done with that.
This year we have Photokina in early fall. You’re going to see virtually everyone with new offerings, a few of them unexpected. But virtually all of those things we’ll see in September will be in pursuit of the goals within each of these companies, not because you the user needed something new.
The good news is that most of the players all want to keep potential upgraders from choosing to switch instead. Thus, pretty much across the board, we’re going to see the continued iteration of the models that we’ve become accustomed to. What you should be looking at is where companies move into territory that they didn’t previously occupy or did poorly in (e.g. more Canon mirrorless effort, Nikon’s DL efforts, etc.). Those are basically growth pursuits, and at least some of them are likely to have that effect for the company in question.
To bring things back around to where I started: no, no one is getting out of the camera business. There’s not likely to be consolidation. Because each of the companies is pursuing slightly different goals at the moment, it’s possible that every camera company could come close to or meet their goals and not actually change the dynamics of the market much, if at all.