Will Demand or Supply Determine the End?

This just in and relevant to the discussion: Nikon noted for the first time that mirrorless unit sales of both bodies and lenses exceeded DSLR unit sales as they reported their 3rd quarter financials (Oct-Dec 2021). And revenue and profit were both up, even though unit volume overall was down.

Two ways exist to get to the end of the DSLR era: (1) customer demand falls below sustainable levels; and (2) product supply falls below expectations. 

#1 is easy to understand: people just stop buying DSLRs. To a large degree, that's what has happened at the consumer end of DSLRs. People aren't seeing the value in paying US$500-1000 for a big camera, often with arbitrary performance and feature cuts, when their mobile phones are getting better at doing the same basic function and, if they want an interchangeable lens camera, the mirrorless versions are more compact, light, and just as functional at the same prices. 

To put that into context, it's difficult to recommend a Nikon D5600 with the 18-55mm lens for US$800 (current price) when the Nikon Z50 with the 16-50mm lens has been at US$900 at times (currently US$1000). 

But that brings us to #2: the camera makers are in control of supply and pricing, so they can game the results as they see fit. When the supply chain was functioning better, the Z50 was often on sale, while the D5600 began to stop being included in sales. Clearly Nikon wanted to get more people choosing the Z50 over the D5600 at that point. However, as the supply chain started making it more difficult to manufacture new cameras at the volumes the camera makers wanted, you may have noted that pricing tended to ratchet back up to list price. So now the Z50 sits significantly higher in price than the D5600, of which apparently Nikon has plenty of in the pipeline. 

The naive consumer walking into a camera store shopping for a basic interchangeable lens camera now sees that the D5600 is the less expensive choice, has a few more pixels, an articulating LCD, and a few other odds and ends that make it look better than the more expensive Z50. Though the Z50 does 4K video, and is smaller and lighter, so maybe that extra US$200 is worth it?

For years the camera makers have been micromanaging their unit volumes of various products. Partly by price, partly by keeping them available long after the expected end of life (also by price), and by careful feature manipulation. There's no surprise, for instance, that the Z50 didn't have a fully articulating LCD when it came out. That's because the camera it most resembled in terms of performance was the D5600. If you put out an exact clone (e.g. a Z50 with 24mp, articulating LCD, real 3D-tracking, Special Effects modes, and so on), what you're saying is that the new thing (mirrorless) replaces the old thing (DSLR). By gaming products into gaps, Nikon essentially forced customers to make tough choices. 

Let's go higher up the lineup: the Z7 came in below the D850 in terms of performance and features. It's really a 5.5 fps camera (usefully) versus a 7 fps one (9 fps with the right battery and grip). I suspect the odd and kludgey Subject tracking choice instead of a separate 3D-tracking focus mode was another intentional compromise to provide some model separation. 

We can infer from what Nikon did originally with the Z system versus the DSLRs that Nikon thought they wanted to continue with both. The question now is this: is that still true? (My own personal assessment is that I think it is with some cameras, such as the D850, but not with the full DSLR line, particularly at the lower end.)

Which brings us back to #2: if a manufacturer wants to end the DSLR era, they can simply stop making them. You don't announce that you're going to do that, but one can start to see all kinds of hints of this in the market. For instance, when Sony stopped iterating Alpha DSLRs/SLTs, you could see inventory slowly disappear and then not get replenished quickly. Someone interested in the Sony solution started to find that the Alpha mirrorless cameras actually were providing performance and features that extended beyond the DSLRs/SLTs. Coupled with lower availability over time, this was essentially Sony forcing supply to have customers favor mirrorless. Sony's marketing of mirrorless ratcheted up considerably, too, as it was a trait with benefits that Canon and Nikon at first didn't match. Indeed, the full frame A7 and A7R were launched in 2013. Canon's R appeared in 2018, as did Nikon's first Z's. Sony had a long time to force the issue.

Canon and Nikon both now face the opposite problem: do they have any time to make the mirrorless lines their primary focus? The answer to that is no. The R3, R5, and R6 sealed it for Canon, the Z6 II, Z7 II, and particularly the Z9 did the same for Nikon. 

I think Canon has already taken approach #2 and is choking anything further happening in DSLRs. I'll bet that we see them choose to put parts in mirrorless cameras and their DSLRs start to fall more and more into Out of Stock or Back-ordered status in 2022. 

Nikon had already hit that juncture, partly because of their further choice to downsize and consolidate all manufacturing in Thailand. Not only did they start having parts restraints, but I think they also had some trouble juggling all the things they now wanted the plant to produce (it's still unclear if the D6 manufacturing moved out of Sendai to Thailand, for instance). 

So, in essence, as dealers sell their remaining DSLR boxes, I'm finding that they're not getting restocked as fast. At least one dealer has told me that DSLRs are now "special order" for him. He'll sell one to a customer if they want one, but he won't stock them. 

Which means that #2 is starting to be more and more the case. As that happens, you get an expected outcome: people can't buy a DSLR so they don't buy a DSLR ;~). Because people aren't buying DSLRs, manufacturers decide they can stop making them.

Many of you, on the other hand, have an entirely different viewpoint, as the emails triggered by my initial Change begets Change article continue to pour in. So here's some more of them with my responses:

"Re: straddlers. Before the Z9, it was very easy to see complimentary combos of D850/Z6 II or D500/Z7 II.  Now that the Z9 is out, the combination with the DSLR is more difficult."

True. I've been dealing with this with a number of pro sports photographers, who end up with some angst, too. The only DSLR/mirrorless straddle that makes sense to me with a Z9 is the Z9 and the D6, and even that's a bit questionable, and starts to bring up the issue of lenses. I've had to keep my 70-200mm f/2.8E, for instance, because the Z-mount lens can't be used on the DSLR. But I like the Z-mount lens on my Z9 because it gets rid of the extra mount needed by the FTZ adapter (and the adapter itself, of course). I really don't want to keep both lenses, as that seems like an expensive redundancy.

And the 400mm f/2.8? Boy do I want that lighter lens with the built-in TC, but it wouldn't work on my D6, so, again a problem. 

Of course, Nikon wants this to steer users towards rebuying everything in the Z form, but that's quite costly to do, so a lot of folk end up in a straddle position and not feeling comfortable about it.

"[D500 discontinuation is] Bad news. Oh well. I waited a LONG time to upgrade from D200 to D500, so I guess I will hang on to the D500. I was hoping to update my D810 one more time though. The D850 is not a sufficient jump IMO, I was hoping for an update. What are the chances? But that means I will not be investing in Nikon mirrorless. I have too much glass to switch, too expensive. But I don't really want to carry the weight around anymore. Around the city I mostly use m4/3 nowadays."

First off, the D850 is actually a pretty significant update from the D810, which itself was a more significant update of the D800 than most seem to realize. Nikon pushed the bar quite quickly in the D8xx line. Which, of course, would make it disappointing if we don't get another push, as it would produce a stellar DSLR.

The weight comment is the trickier one. The mirrorless options do tend to produce lighter equivalent gear, but as you note, there are other options, such as m4/3. This puts Z DX in an awkward position, too, though I personally find the Z50 and the right lens(es) make for a great walk around camera. But a Z50 isn't going to replace your D500 and D810, as it's not in the same league. 

"For me, the biggest impact of the discontinuance of the D500if that's what it is—is that it makes me rethink all Nikon purchases as I wait for the other shoe to drop. I'm not ready to go mirrorless and had been looking at a couple of lenses and another body and the long winter nights are when I read blogs like yours, dpreview, LensRentals blog etc. and that's when I start getting DSLR GAS while thinking about spring shooting. But if Nikon is discontinuing such a highly regarded body maybe the DSLR days are over at Nikon and the last thing I want is to put $$$ into lenses that have to use an FTZ when my 810 dies."

This is one reason why I said Nikon needed to be more forthcoming about future bodies—both mirrorless and DSLR—with some sort of (even vague) Road Map. What's happening is that Nikon's few moves coupled with radio silence are putting quite a few people into a "no buy" zone. So what we end up with is a pre-gone conclusion: we won't tell you what we're up to, so you stop buying, but since you stopped buying, we won't make that

Nikon has a long history of shooting themselves in the foot like this. They've over-extended and been late to the game with certain new tech (autofocus, IS, mirrorless, etc.) many times before. What happens is that they jettison all the low-end stuff, retrench, and come out with lower volume at the other end. The only real exception to this was DSLR, where they were first mover, and moved fairly fast at the consumer level as well as quite fast at the pro level. (Same thing can be said for the Precision division, where abandonment and retrenchment seems to be a constant struggle, but has resulted in Nikon losing leadership in steppers.) 

It's always fascinated me that Nikon can manage to make the numbers work with this constant back-pedaling approach. Full credit to the bean counters. However, at some point, this could very well come to a different conclusion. Imaging and Precision are the majority of what Nikon does, despite attempts at diversification, so if the bean counters ever can't make this back-pedaling work, it's game over. 

"It was not long ago Nikon’s message (at least it seemed to be) was "we are going to support our users with both DSLR & Z". Since then it appears F-mount lenses are being dropped left and right and no new DLSR announced or even credibly rumored, while existing “current” models basically are not available. I understand there are issues with supply chain and market uncertainty, but Nikon needs to at least provide minimal guidance to its user base about F-mount and DSLR—even a firm clear "really do not know at this time" is better than what is happening."

Agreed. Consumer-facing companies actually have to face the consumers ;~). You go on:

"Yes Nikon needs and wants to move the user base to Z, but the fastest and best way to get to that goal is to keep those existing users. Particularly for those users that will not or at least not quickly move to Z they need those users to stay connected and better yet continue to purchase products. They will reduce leakage and retain more sales from the existing user base if they would be clearer on future of F-mount in general and DLSR in particular. If F-mount lens production/inventory being liquidated and DLSR is at end of the road then say so and more importantly be clear about how you will help users to make the transition."

I'd guess that Nikon thinks they're being clear: "use the FTZ". That's not as clear a solution as Nikon thinks it is. As we're all starting to discover—thanks partly to the Z9—the FTZ is almost exactly the solution, but on a Z9. On the other models, the performance isn't quite the same, particularly in initial focus acquisition. Moreover, there's the AI and screw-drive lens issues, still. Ironically, the Z9 seems to have pulled some film SLR users from out of the closet, trading in their F's for Z's. But it's really the large base of DSLR users that Nikon needs to be careful with. The D# and D### users, in particular, have to be moved to mirrorless for the Z-mount to totally succeed, and Nikon's been equivocating with this group, sending mixed messages.

"I have the D780 and Z6 II with lenses for both mounts. I have used both in parallel for over a year for all types of photography. Despite the advantages related to sensor stabilization, electronic viewfinder and lighter setup, the Z6 II falls behind the D780 in nearly every single aspect—especially in terms of usability. That's why I overall prefer using the D780 and why I've decided to not further invest in Z-mount lenses."

The D780 is a very underestimated camera. It's not the right choice for me, but it very well can be for a lot of folk. But this brings up the question (again), of what Nikon thinks is going to happen with the Nikon DSLR users who think this way. This way of thinking definitely happens with the D500 and D850 crowd, as well, though given the Z9 not so much with the D5/D6 crowd these days. (This reader's further comments went into specifics. All of those specifics could be addressed in the Z line, but currently are not. Does Nikon even know what those things are?)

"The D500 is good enough that I can afford to wait for mirrorless—which essentially (to me) caught up with DSLR performance only this past year—to become enough better to be worth the price of switching. It's not there yet. It will be. Good now. Better later. Not sure if/where Nikon fits in that future."

The tricky part here is that you're probably expecting a Z70 (or Z90) type of camera on the mirrorless side. What happens if Nikon doesn't produce a high-end DX mirrorless body? We know they can't ignore high end in FX (and the Z9 proves that Nikon knows that). But DX DSLR users represent a huge crowd that still needs to be moved to mirrorless. Saying "buy FX" doubles the "need to buy new lenses" thought for those people, which simply opens up the buyer's decision making process to Canon and Sony options (or Fujifilm if they want to stay APS-C). 

Note to Nikon executives: you're now running at 13% market share and in a weak third place. You're not building a huge consumer base in DX mirrorless with the Z50 and Zfc models. The risk is that you're minimizing your potential market in the future to be even smaller if the prosumers and pros you target perceive that it's FX only for you. 

"I am a retired owner of a D850, D500 and Z50. Each camera has a specific space to fill for my photographic efforts. The D850 is my all-around go to camera, it’s my landscape first choice and it’s my macro first choice. My skills do not exceed the D850’s performance so it’s hard to justify a swap out for something else at this time. The D500 is my go to wildlife camera. The DX crop factor and frames per second advantages are very helpful for wildlife shooting. The Z50 is my convenience and travel camera.   Small, lightweight, good lenses and with a UI that shares the Nikon DNA.  I have previously owned Sony and Fuji APC cameras which were excellent cameras, but the menus are just different enough and just quirky enough to mean that my fingers don’t know where to go.

For the time being, it doesn’t seem like there is a big win in switching to full frame mirrorless Z cameras—all have good reviews, all are well thought out—but swapping out functional FX lenses for marginally better Z lens equivalents feels like a small win for a lot of cash. There is a part of me that says watch the used FX lens market for bargains on exotics; when the shift from FX to Z gets on in full swing there will be opportunities to fill in a few holes in my lens sets and to retire some older FX lenses for better behaved versions that are compatible with the pixel count of the D850.

Nikon has a bunch of choices to make and should consider how to move some of their core customers—owners of high end DSLR’s —over to full frame mirrorless. As they say in Southwest Texas: 'ya gott’a dance with the one that brung ya!'"

We'll leave today's installment with this last email, since it tends to summarize my thoughts fairly well (i.e., I agree with it). That last phrase really sums things up. Nikon has spent over 50 years building up a loyal, enthusiastic base. Those folk are the ones Nikon has to please to stay relevant in photography, and my In Box says that way more of you are displeased at the moment than should be, which is a problem. 

Looking for gear-specific information? Check out our other Web sites:
mirrorless: sansmirror.com | general: bythom.com| Z System: zsystemuser.com | film SLR: filmbodies.com


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