Warning Bells Sound

(commentary)

Two US research companies have now published US retail sales numbers to their clients for January 2014. It does not look good for serious camera makers. Sales fell off significantly year-over-year, and steeply off from December. In fact, the steepest decline from Christmas sales I can remember. Some of this is certainly due to weather issues in much of the US during the month, as all sales were off, but still, the trend is worrying. This is starting to look like a make or break year, and given that it’s a Photokina year, I have to now wonder if we’ll see a major camera company pull out of the biggest photography trade show.

I look at Canon’s prediction of a 1% decline in DSLR/mirrorless sales and Nikon’s slightly lower estimate through March—they don’t estimate the rest of the year until in May, when they report their full year financials—as optimistic. CIPA is currently predicting a 2.3% decline in interchangeable lens camera shipments for the year. If the first month’s US retail sales numbers carry over into February and further, that estimate is going to end up highly optimistic, too.

I generally don’t do my estimate for the full year until May. The reason for this has to do with the fact that it isn’t until the camera companies other than Canon report their full year results that we actually get enough good information to see how things are really playing out. But I’m already lowering my working set of numbers. I’ll bet that the decline in interchangeable lens camera shipments is going to be in double digit percentages at this point. 

The problems are simple: 

  • Smartphones changed the game at the low end and increased expectations of convenience across the board
  • Camera makers still have bloated product lineups (see this article) and significant unsold inventory of previous generation cameras
  • Too many of the mirrorless and high-end compact cameras are attempting to be sold at too high a price for the benefits they provide (and negatives they have) 
  • Camera makers aren’t making the cameras most people want
    • Fanboys aside, cameras like the X-T1, E-M1, and A7/A7r are low volume products and even those are negatively impacting sales of the rest of those makers lineups
    • Cameras are still mostly executing the same old “disconnected box that takes photos on removable media” game
    • More megapixels, high ISO values, and the like really only appeal to a small subset of enthusiasts; everything else is above the needed quality bar for 90%+ of the market
  • It’s a software world when it comes to images, and the camera makers are billions of customers behind when it comes to putting out the kind of software people actually would use with their images


We’re right back where we were towards the end of the film era. Most of the companies are under immense stress to generate any positive numbers, plus we have a duopoly that is controlling interchangeable lens cameras and a triopoly that controls most camera sales, and only one of those three are doing much innovation at all. 

By the end of 2014 the still camera industry will be ripe for full disruption. That disruption, when it comes, won’t be about the parts of the camera (sensor, LCD/EVF, shutter, memory card, etc.), it will come in software. 

If I were running a Japanese camera company, I’d move the indicator to DEFCON 2 right now and be looking for a Silicon Valley company that understands imaging software to purchase and help with what will eventually have to be a full rethink at the camera end. 

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