CIPA data 2016: Another horror year for digital camera production

[willie_901]

How much of this is bad management as well though?

Just about all of it.

To be fair the tragic natural disasters also played a role... which makes highly flexible, pro-active, forward-looking management even more essential.

I enjoyed using every Nikon DSLR I owned. In ancient tines I had to use AI/AIS lenses because DX primes were limited. I didn't enjoy carrying large heavy DSLR bodies everywhere, but I did (until the X100 and X-Pro 1 appeared). Besides a D200 I owned a D300 and then two D700s. Those are tough cameras that never let me down. I even made some money with them. Nikon's current predicament makes me sad.

In my view Nikon's management basic strategy was to protect their DSLR business. Hindsight shows this was an tragic error.

Their CX sensor experiment failed. This is not to say the CX cameras are bad or inferior. In fact, they are neither. The still-photogrphy market just couldn't support another format line. The success of m4/3 shows the CX idea (compact system with very high IQ). How come Nikon didn't enter the m4/3 business? How come they didn't develop a compact, mirrorless DX product line?

Until recently the Nikon ignored the DX... particularly in terms of prime lenses. How come?

While we don't know if Fujifilm every realized a profit from the X-Series, they did sell a lot of bodies and lenses. Fujifilm's market share does not consist entirely of new photographers or people upgrading from mobile phones. Why didn't Nikon do what Fujifilm did? Fujifilm didn't even bother to develop a complete flash system (which would have been trivial for Nikon). And until very recently the X-Series was not the best choice for action or dedicated landscape photographers (unless the latter opens their wallets for the GFX line).

Protecting a product line is not necessarily a bad idea. For instance Fujifilm, acted to protect the X-Series by skipping the 24 X 36 mm sensor to bring the GFX to market

However, Apple knew the smart phone would eventually decimate their highly profitable iPod product line. We know what they did. Other examples of IT companies cannibalizing highly profitable product lines abound.

The still camera market is becoming a highly fragmented. It is a sum of niches, sub-niches and even sub-sub niches. Nikon is operating as though FX DSLRs are not a niche product. Well, they are.

 

[HHPhoto]

How much of this is bad management as well though?

A part of it is bad management, and a part of it is the rapidly declining market for digital cameras (as all other manufacturers are reporting sales and / or profitability problems as well).

Cheers, Jan

 

[Skiff]

One word:

Smartphones.

Well no, only partly.

We clearly have to differentiate. The market is not homogenous at all:

1. The collapse in digital compact cameras has two main reasons:
a) More than 1 billion (!) compact cameras have been sold worldwide since 2000. So everyone who wanted such a camera has at least one.
The market is completely saturated.
b) For most of these "snap-shooters" now the current smartphones are more than good enough. Therefore they don't buy a new compact camera, but just use their smartphone instead.

2. The amatuer / enthusiast market with DSLRs and DSLMs is different. The strong decline of the last years has the following reasons:
a) Market saturation. All enthusiast / hobby photographers who wanted one have now at least one DSLR / DSLM.
b) In the first years, when the cameras were still quite "crappy", photographers upgraded regularly to the next model.
That is not the case anymore.
For many years now the enthusiast cameras are on a technical level on which most photographers say "that is more than good enough for me" and "I will never really fully exploit the capabilities of my current camera".
Therefore they have escaped from the "upgrading rat race" and are using their DSLRs and DSLMs for much much longer periods than in the past.
They don't see a reason to pay several thousands bucks for the tiny improvements of the new model.
They realize how expensive it is when they upgrade with every model cycle.
Most people with normal income and family simply cannot afford to buy a new DSLR / DSLM every 3-4 years.

And probably 99% of the digital photographers only use computer monitors to look at their pictures. Mostly that are 2k / 4k monitors with a 2 MP / 8 MP resolution.
More and more of these photographers realise that it is a complete waste of money to pay thousands of dollars for 20, 24, 36 or more megapixel cameras, and than destroy that resolution by the extremely low resolution of the computer monitor.

It is not the case that by the smartphone now less people are using DSLR / DSLM.
The number of enthusiasts is still increasing with the global economic growth.
Lots of the new sold cameras are going to new enthusiasts.
But as the using periods of cameras are getting much much longer, and also lots of enthusiasts are buying used instead of new cameras to keep it affordable for them, the global sales numbers are decreasing.

 

[Ko.Fe.]

Totally agree on "smartphones theory". Using crappy, small and awful sensors in digital P&S stopped working about five years ago. Why bother with purchase of new digital P&S if old ones are still working and IQ from ten years old digital P&S is the same as made in 2016? They added more MP and ISO on paper, but in real it is nothing but fake. Mobile phones are doing exactly the same IQ, but with better handling and much greater convenience and much more options (and many of them are free).
This is what I see in the stores with camera shelves getting more and more empty. And this is what I see outside of the stores. Some old folks like me might pull out digital P&S, just because they have it and it still works. I see none of the young ones with regular digital P&S, it is DSLR, advanced mirror-less or film.
Getting same crappy, small and outdated sensors in fancy looking cameras like Olympus did with Pen and Pentax (I don't even remember the name of this failure) is marketing mistake. As stupid as using Leica phone skin on iPhone.
It is time for camera manufactures to face and recognize it. It they will continue to use small, crappy and useless sensors it is dead end, because it is taken by mobile phone manufactures and not coming back. Look what Fuji did. They abolished all of their small and crappy sensors, ended X30 and XQ line and jumped on digital MF.

 

[jsrockit]

I bet smartphones sales will start slowing as well. I know more and more people that are using their phones for longer than the 1-2 year upgrade cycle that used to seem like the norm. However, I do not think the decline in digital has affected any change in the film world. They are mutually exclusive and both will continue (while changing and mutating).

 

[Skiff]

I bet smartphones sales will start slowing as well. I know more and more people that are using their phones for longer than the 1-2 year upgrade cycle that used to seem like the norm.

That is right.
This slowing down of smartphone sales is already happening: In the last quarters the sales of higher end smartphones already decreased a bit (analysts were surprised, because they 've predicted increasing sales).
Only the cheap smartphones (especially in the emerging markets) have still increasing sales.

But back to the photo market:
Of course the significantly declining sales numbers of digital cameras are a big problem for the manufacturers.
But we should not forget the distribution chain:
It is of course also a big problem for the distributors / retailers and the local photo shops / brick and mortar stores.
Most of them had concentrated in the past on digital only. And lots of these either had to lay off employees, change their business model (some expanded to other electronic equipment), and some even had to close completely.

I am living in a big city. Several of the "digital only" photo shops closed in the last years.
Very few photo retailers survived. Interesting to see that all surviving local photo shops are not the "digital only" type of business, but the "full service - digital, film, lab and photo finishing" type of business.
All surviving local photo shops offer
- films
- film development
- RA-4 silver-halide prints
- photo books
- instant films and cameras
- film cameras (new and used)
- digital cameras (new and used)
- lenses
- accessoires (tripods, photo bags....)
- a photo studio (portraits, weddings.....)
- photo workshops for beginners and enthusiasts.

That will probably be the future sustainable strategy for retailers / local photo shops:
Diversification.
Offer all what photography (digital and film) can offer.

 

[intheviewfinder]

The phone market has a good long run left before maturity sets in and the the ICL market is shrinking because of it. Competition for that smaller market will be intense. There will be blood.

CMOS Image Sensor manufacturing is increasing and most of it is aimed at multi-sensor phones. Sony is the elephant with about 35% of the market, followed by Samsung (~19%) and Omnivision (~12%). The rest of the players are each all under 10% market share (Panasonic has about a 3% share). Any ICL camera maker not manufacturing their own sensor is vulnerable.

Because Sony manufactures many of the camera sensors in use today (~35%) they will probably continue making ICLs especially the full frame mirrorless aimed at an up-market.

Because Canon manufactures their own sensors and they are part of a larger company they will hang around awhile. It is attempting to enter the sensor market but it may be too late. With the contraction of the ICL market they will have to reevaluate. Will they pull the plug on the APS-c? Only time will tell.

It is apparent now with Nikon's extraordinary announcement that they will move towards a higher end market. I believe that Nikon who has been ignoring the APS-c cameras by pushing full-frame cameras and will move away from "consumer models." A smaller company focused on the professional and high-end consumer market. Will they take on Leica? Maybe - at least Leica's DSLR is in danger.

No one is quite sure who manufactures Fuji's sensor. Sony and Toshiba (it seems Fuji sold their manufacturing plant to Toshiba) are routinely mentioned. There are also rumors that most of the sensors are manufactured in Shenzhen. We only know that Fuji does not make their own sensor but designs and develops them. My guess would be that Fuji has a long term deal with Toshiba. Fuji develops the prototypes and initial market sensors and has Toshiba make them. Then Fuji moves the proven design to a larger manufacturing plant (probably in Shenzhen). We do know that Fuji just hedged their bets with the new medium format camera aimed at the professional. We already know that they aimed the X-100 series at Leica.

To me the m4/3's market, Panasonic and Olympus, is vulnerable to the losing more market because it does not really have any significant advantages compared to APS-C mirrorless cameras. Both Panasonic and Olympus like Canon are part of larger conglomerates so they have some buffer but the shakeout is coming. Panasonic may hold on awhile because of it's partnership with Leica but I see the m4/3's market as the next place for some sort of fallout.

The sensors for Leica cameras are made by STMicroelectronics (2-4% market share) probably on a long-term deal. They also get by on various Leica branding deals. Right now their differentiation is with the unique rangefinder focusing and great lenses aimed at the premium market segment. Market pressure from other players moving up-market will bring in competition stress that they have been above for a number of years. How long will they last? Who knows but they've manged to reinvigorate themselves before.

We definitely live in interesting times.

 

[HHPhoto]

The phone market has a good long run left before maturity sets in ....

Reality proves you wrong....at least for Germany. Saturation has already happened here last year.
Sales in 2016 were lower than not only 2015, but also 2014.
Here is the sales data:
http://www.faz.net/aktuell/wirtscha...-werden-in-deutschland-verkauft-14900608.html

Cheer, Jan

 

[nikonhswebmaster]

Saturation? They are just getting warmed up.

• SnapChat users now share 20,000 photos every second. 70% are female. All are phone images.
• 95 million photos and videos are posted to Instagram every day, most are phone images.
• More than 250 billion photos have been uploaded to Facebook, most are phone images.

 

[Huss]

[*]More than 250 billion photos have been uploaded to Facebook, most are phone images.
[/LIST]

So Facebook's image library, to do with what they will, is at least 250 billion.

 

[HHPhoto]

Saturation? They are just getting warmed up.

Yes, saturation of smartphone sales in major markets. Look at the data I've given above.
More information and confirming data about that topic:
https://www.cnet.com/news/smartphone-markets-glory-days-are-over-says-analyst/

https://www.wired.com/2016/04/official-smartphone-market-gone-flat/

https://morningconsult.com/alert/smartphone-shipments-drop-amid-saturated-market/

http://www.telegraph.co.uk/technolo...rtphone-sales-in-china-fall-says-gartner.html

http://www.stuff.co.nz/technology/gadgets/88223279/smartphones-reach-saturation-point

Cheers, Jan

 

[nikonhswebmaster]

Jan, IMO, there is always someone out there telling investors not to invest in Apple or Samsung. But smartphone penetration is only 17% in India, 11% in Pakistan, 27% in the Ukraine for instance.

And on top of that, while the tech is taking a breather, while AI catches up, all phones will be replaced in 5 years, and they will be almost unrecognizable tech-wise.

I read everything when making decisions, but with the exception of Wired Business, I would not invest based on your sources. That Apple statistic (16%), for quarters after the release of the 6 in particularly misleading.

Huss you will have to work someone else on that "to do with what they will" comment.

 

[bayernfan]

all my moneys is going to kodak and ilford. the digital camera business model is bogus and i'm glad it's failing.

 

[nikonhswebmaster]

all my moneys is going to kodak and ilford. the digital camera business model is bogus and i'm glad it's failing.

You don't explain why you are glad, but the film camera "business model" is even more decimated, we are now down to 3 Leicas, and 2 Nikons. The Leicas seem pretty secure.

 

[bayernfan]

i'm glad because it's an incremental update, money grabbing model. not to mention the investment loss when a slightly updated version comes along.

fortunately, the film cameras still being produced are pretty great (F6, M-A).

 

[HHPhoto]

But smartphone penetration is only 17% in India, 11% in Pakistan, 27% in the Ukraine for instance.

Yes, there certainly will be further growth in the developing markets. But can that fully compensate the saturation effects and declining demand in the major markets in the industrialised countries? Probably not.
Definitely not in value and in profit margins, because most smartphones sold to new users in the developing countries are either very cheap, low margin smartphones from the Chinese manufacturers, or used ones importetd from the saturated industrialised markets.

Cheers, Jan

 

[jsrockit]

i'm glad because it's an incremental update, money grabbing model.

Huh? You don't have to buy each one. Do you buy a new computer each time they release a small spec increase?

not to mention the investment loss when a slightly updated version comes along.

Investment? You don't have to feed it film and you do get to use it still. If you buy smart, then it's a very great deal.

fortunately, the film cameras still being produced are pretty great (F6, M-A).

True.

 

[nikonhswebmaster]

But can that fully compensate the saturation effects and declining demand in the major markets in the industrialised countries? Probably not.

Since Apple makes 95+% of the profits on smartphones, seems to me, you are really not asking the right questions. Will Apple make inroads into India, by manufacturing there? Will Apple be able to deal with the Chinese government in the face of increasing US and UK protectionism? Invest in AAPL, SNAP, or FB?

This thread feels to me like the comments on many investment advice threads, too personal. An analyst makes a prediction about the next quarter, and commenters tell us how much they hate the company personally.

There are always going to be digital and analog alternatives at some price point for users. Who will supply the technology is anyone's guess. Nikon is decidedly not Apple, but it's also not Sears.

It's like asking if the bankruptcy of Arch Coal will end energy generation.

 

[jsrockit]

On the surface, it appears Fuji is doing well in both digital and film:

http://fujiaddict.com/2017/02/28/fujifilm-interview-by-imaging-resource-at-cp-2017/

 

[AZPhotog]

The seemingly constant introductions of the "new camera of the month" is not good for the industry overall, IMHO. Too much meaningless stuff (often only slightly upgraded items, Nikon!) being dumped in the marketplace.

And anyway, who needs dozens more megapixels being introduced over time when 8-12 mp suffices for "most" consumer needs?

I am turned off by digital and enjoy film. Yes, I do use digital but in very limited form.

These are just my opinions. Feel free to argue and disagree.