Digital camera market is collapsing

[Skiff]

Hi,

being the OP I am quite astonished about so much reactions and replies.

Of course I cannot reply to everyone.
Therefore I will focus on the most important facts:

1. Status of the digital camera industry:
Some here said that there is no crisis. That is quite blind and naive, and ignoring the real numbers.
There is indeed a very severe crisis. The digital bubble has burst:
The market crashed on only half (!) of its former size in only 3 years. That is an even bigger crash than film had some years ago.
And not only the sales crashed, but also the margins for manufacturers and distributors. It is extremely difficult to earn (sufficient) money with digital cameras.

Lots of the Asian OEM manufacturers for digital compact cameras (DSC) had to quit the market and fired employees.
The manufacturers expect the market to further decrease down to only 20-30 million units p.a..
That will result in further companies leaving the market.

2. Reasons for the sales crash:
- smartphones are significantly hurting the DSC market, but the smartphone bubble will burst in 2-3 years
- the whole digital camera market (DSC, mirror-less and DSLR) is completely oversaturated, because the market was totally flooded for more than a decade with digital cameras
- because of this giant over-supply the used market is hurting sales of new cameras in a significant way
- new cameras offer only very tiny advantages compared to their forerunners; but higher quality cameras still cost a little fortune: Customers realize how extremely expensive it is to upgrade, and how little additional value they get
- Customers realize that buying a new camera in a 2-3 year time span sums up to a very big fortune, with very little benefit for them
- Customers realize that they have spend so much on digital gear in the last 10-12 years that it is more than two whole photographer lifes of film
- if you want a better sensor, you have to buy a complete new camera; with film you just change the film and keep your camera
- most serious photograpers are completely tired of the digital upgrading rat race.

3. Status of the film industry:
Some here said the film industry is in an even more problematic situation.
The facts do say otherwise:
- instant film is making a big comeback with significant increasing sales; Fuji had to increase their capacities to satisfy the demand
- Professional film sales have started to stabilise, some types are already increasing
- RA-4 silver-halide paper is making a strong comeback with increasing sales; Fuji has increased its R&D funding in this field
- InovisCoat in Germany has built a new, modern, right-sized film/paper factory and are producing colour and BW materials for different customers
- Ilford is building a new, modernised factory in the next two years; investing a double-digit million sum in Brit. Pounds
- Film Ferrania is restructuring and modernising its factory and will start film production next year
- new cameras for film were introduced this Photokina, and there were lots information there that more camera manufacturers will follow: very good news for our bartender Stephen 🙂.

Film will be the "new Vinyl".
Vinyl sales hit the bottom in 1993. Since then the sales have increased by a factor of 20 (!!).
Film is cool again.

Cheers, Jan

Very exact analysis, Jan.
I completely agree.

I see it here with all my friends, and in the local photo club, and my local, big brick-and-mortar photo shop reports the same:
The people just don't want to spend such a huge money for only tiny, negligible improvements.
1500€ to 6000€ for a camera with a real sensor (FF, 24x36mm). But do you really see improvements in the picture in comparison to the forerunner?
With 99,5% of the shots: No.
Photographers are not willing anymore to waste enormous cash in this upgrading race forced by the marketing of the manufacturers.
They do use their cameras now much longer.
And lots began to realize:
Not the camera is the bottle-neck for good pictures: They themselves are the bottleneck.

And as 99% of the digital photographers only view their pictures on the lowest quality viewing medium, the computer monitor, and don't make real prints, they realize the complete stupidity of this upgrading rat race of the last years:
LCD computer monitors cannot show real halftones.
The resolution is ridiculously low with 1-2 megapixels.
Spending so much money for a 24 or even 35 MP digital cam, but then only using the tiny fraction of 1-2 of it........
Wasted capital.
If they at least would make (bigger) prints and really "activate their megapixels" (on silver gelatin colour and BW paper, lots of labs are doing that with their laser or LED machines).

 

[Eric T]

So where is the camera business going?
Compact cameras have been nearly killed off by smart phones.
That loss of business to some major camera manufacturers may reduce their ability to invest in innovation. Could this be what is happening to Canon?
For some other camera manufacturers, photography is only a small part of their business such as Fuji and Sony. Both continue to innovate but Sony's overall business outlook is not good.
The interesting thing about Fuji is that their instant camera (Instax) camera business is doing VERY well, especially in Asia. That business alone seems to keep the X camera business afloat.
My hope is that there will also be a small percentage of smart phone users who want to go beyond the limitations of their smart phones. They will upgrade to ILC systems.
A small percentage of the new ILC system users will be intrigued by the very low price of film cameras and want to give film a try.
So smart phones are now the base of the pyramid of the camera business. The ILC systems and film will continue as well but the durability and high quality of the digital cameras made today will mean that the volume of digital cameras sold will never be as high as in the past.
Will the lenses that attach to smart phones catch on, such as the Sony QX1? I doubt it.

 

[willie_901]

Eric,

On what data do you base your assumption Fujfilm's Instax film camera line subsidizes the X-Series digital product line?

Thanks,

William

 

[Eric T]

William,
I have seen this from a number of places. I will try to find something specific for you.
In the meantime, see pages 22 and 23 of the latest Fuji annual report:
http://www.fujifilmholdings.com/en/investors/annual_reports/2014/pack/pdf/Annual-Report-2014.pdf
They attribute instax cameras and film as being a large reason why their photo imaging business returned to profitability over the last year.
The instax cameras are HUGE in Asia. So big that it is hard to get instax film in other markets.
So the X-series is great but it is not a big driver of their income. The instax cameras may indeed be providing the income needed to keep pushing forward the innovation we have seen in the X-series.
Eric

 

[NJH]

Sorry I didn't read them attribute anything to conventional photographic film other than as part of their history. They mentioned instax several times, x cameras and growth from camera modules for smartphones but film barely got a mention in the entire report. Its great to see Fujifilm doing well but it seems very much like a company for which photographic film in its conventional sense is part of its history not its future.

Thanks for the link it was an interesting read on an exciting technology driven company but as a report it did nothing to make me think that Fujifilm is even thinking about conventional photographic film production in the future, for all we know they could kill it all off apart from instax and paper in the next couple of years to concentrate on pharmaceuticals or one of their other business lines.

 

[Alberti]

It's not really silly, though. Go to the zoo, there are 98% cell phones, and maybe 1 in 300 dslrs. Plus some joe with a L35AF, that was me.

That "market" differs though from the rangefinder (incl X100 series) and the dslr one.

It's time for full frame medium format to take off..

and I expect there are les than 1/100.000 shooters with medium format camera's. I saw a Hassley for the first time in years a few weeks back ...

but that might change with a full digital '6x6' MF camera (..645) at a reasonable price . Note that a Rollei takes different pictures than any 35mm one for the user. The perspective [sic] of the shooter is just different. So I expect a recognition from the market just like with the uptake of the X100 ' s - at least my wife likes hers and she thinks it's a quite different camera from my M or any dSLR.
But are we talking 300/month worldwide??? 1/100.000 sales???

 

[Eric T]

William and NJH,
See this link on how Instax is important to the X-series at Fuji:
http://www.fujirumors.com/instax-ru...nstax-cameras-sell-better-than-fujifilm-x-t1/
Eric

 

[Pioneer]

William and NJH,
See this link on how Instax is important to the X-series at Fuji:
http://www.fujirumors.com/instax-ru...nstax-cameras-sell-better-than-fujifilm-x-t1/
Eric

Great stuff Eric T.

Certainly appears that Instax is THE new trend. Just bought 5 cameras with extra film for my younger grandchildren. Now all I have to do is keep their Moms and Dads from buying the same things. :bang:

 

[VertovSvilova]

Sorry I didn't read them attribute anything to conventional photographic film other than as part of their history. They mentioned instax several times, x cameras and growth from camera modules for smartphones but film barely got a mention in the entire report. Its great to see Fujifilm doing well but it seems very much like a company for which photographic film in its conventional sense is part of its history not its future.

Thanks for the link it was an interesting read on an exciting technology driven company but as a report it did nothing to make me think that Fujifilm is even thinking about conventional photographic film production in the future, for all we know they could kill it all off apart from instax and paper in the next couple of years to concentrate on pharmaceuticals or one of their other business lines.

I read the whole report and came away with the same summary. Their Imaging Solutions sector is now at 15% of their income, down from 54% in 2001. That sector did see income growth in 2014 with “strong performance in Instax instant cameras and camera modules for smartphones and TV camera lenses." This positive revenue growth will mean Instax distribution "will be increased for worldwide sales outside of Asia." And the only mention of their photographic film heritage as being important is in respect to making smart phone touch screen film based on their previous photographic film emulsion coating knowledge and R+D.

So yes, Instax sales have been good. But in a sector that is only 15% of the company and has the least amount of revenue. As far as digital cameras and lenses are concerned, they say: "The electronic imaging business, on the other hand, faced a challenging business environment, with continued large declines in demand for compact digital cameras. In response to this, we reorganized our electronic imaging business by integrating it with our optical device business, which works with lenses. Through this reorganization, we will leverage our image processing technologies and lens technologies and strengthen our operations in fields with growth potential, such as security lenses and automotive camera lenses. We are also working to secure stable profits in digital cameras by focusing our strengths on high-end models with high image quality."

The report specifically states that their immediate emphasis will be in the health care industry, leveraging their strong position in the market of medical image archiving and communications with a combination of diagnostic equipment. Specifically: "The Fujifilm Group has identified healthcare, highly functional materials, and document solutions as three priority business fields through which it will pursue growth."

I think the reality is that their Imaging Solutions sector could shut down tomorrow with not much impact on them as a corporation. But sure, it's nice to see that a lot of people seem to appreciate the Instax and that Fuji will likely keep it going as long as it sells and is profitable. But it's not a priority for Fuji, that's for certain.

 

[HHPhoto]

Thanks for the link it was an interesting read on an exciting technology driven company but as a report it did nothing to make me think that Fujifilm is even thinking about conventional photographic film production in the future, for all we know they could kill it all off apart from instax and paper in the next couple of years to concentrate on pharmaceuticals or one of their other business lines.

I have to disagree,
because
- Fujifilms CEO has clearly said they will continue producing film
- their film production is profitable
- we will see a film revival (in certain market areas it is already evolving), and why should they leave an again increasing business
- Instax is booming, and they need the normal film production for their Instax film production: The negative film base for Instax films is coated on the same machine as normal film
- silver-halide paper production is increasing:
http://www.ephotozine.com/article/fujifilm-hails-golden-era-for-silver-halide-paper-26280 ;
Fuji is increasing their R&D,
the technolgy of colour paper and colour film is very similar, technology transfer makes sense.

Cheers, Jan

 

[HHPhoto]

but that might change with a full digital '6x6' MF camera (..645) at a reasonable price . Note that a Rollei takes different pictures than any 35mm one for the user.

But a really price-worthy, or really cheap digital camera with a real 6x6 sensor with the same length of 5,6 centimeter will never happen.
Because
- there are some physical limits in the production of large sensor: the larger the sensor area, the more waste is produced, and in an exponential way
- that is the reason why 24x36mm sensors ("FF") are still very expensive
- there are no 'economy of scale' benefits anymore: demand for such higher quality cameras is significantly decreasing (that is what this thread is about), the manufacturers are producing less and less each new year: that means higher production costs
- for real medium format: film will stay as the medium with the best price-performance ratio, and affordable for everyone.

Cheers, Jan

 

[Alberti]

Jan,
But what would happen if the industry would not go for 45 or 100 mega pixels of a MF sensor, but just 17-22 Mp? The production costs would be a lot cheaper.
Going for B/W would decomplicate the sensor and the processor even more imho.
Such a sensor would not have to cost as much as a FF 35mm one.

Well OK, I am not a promotor of 6x6; rather am selling a Rollei 2.8F, a yashicamat and some other oddities.
I just have the observation that Rollei/Hassy represent a different method of taking pictures, and that the different perspective one has is part of the quality. Just like the RF is very very different from SLR.
And from that, why not serve that niche? They don't die out all at once.
a

 

[HHPhoto]

Jan,
But what would happen if the industry would not go for 45 or 100 mega pixels of a MF sensor, but just 17-22 Mp? The production costs would be a lot cheaper.

No, not as you would expect.
Because the manufacturing cost problem with sensors is not so much related to pixel count, but to area, to the whole size and surface of the sensor.
Look at sensors for smartphones or some DSC: relative high pixel count, but tiny in size, surface = reletively cheap.

A real 6x6 sensor would never be cheap. It will always cost a small fortune.
And you should not forget: The worldwide digital medium format camera market is extremely tiny:
Hasselblad said about only 5,000 units a year.
That is next to nothing compared to the whole camera market.

And: No one would buy a 6x6 sensor with only 17-22 MP.
You just cannot sell it.

Cheers, Jan

 

[jsrockit]

I guess those who are bashing the labs have never tried one of the mentioned labs.
Lots of people are just too lazy to try out other labs.

Cheers, Jan

Oh, I've tried them... most of them in NYC and the two major ones (in the US) for mail order that people talk about on this site. Perhaps I expect more because I know how good the labs were in the past. Generally speaking, a drug store did better in the 90s then a pro lab now with regard to C-41 negs. The key is that now with scanning, you either pay a crazy amount of cash for a single drum scan, or you accept horrible consumer scans. There is no in between.

 

[HHPhoto]

Oh, I've tried them... most of them in NYC and the two major ones (in the US) for mail order that people talk about on this site. Perhaps I expect more because I know how good the labs were in the past. Generally speaking, a drug store did better in the 90s then a pro lab now with regard to C-41 negs. The key is that now with scanning, you either pay a crazy amount of cash for a single drum scan, or you accept horrible consumer scans. There is no in between.

With labs it is as with car repair shops:
If you are not satiesfied with one, you just choose another, instead of selling your car and going by feet....😉.
There are enough labs even in the US which are doing excellent work. I have friends living there and using them, they are satiesfied. And they all have high expectations.

As for scans:
- either scan yourself or develop yourself
- order prints instead of scans, that is better anyway; using a high-quality medium viewed only on the lowest quality medium, the computer monitor, is stupid.
As stupid as spending a fortune on a 24 or 36 DSLR and then only looking at the shots on a 1 - 2 megapixel computer monitor.
A 3 MP cam would be sufficient for that.
- and / or use reversal film: only developing needed, and you have a finished picture in outstanding quality.

Cheers, Jan

 

[jsrockit]

Ok, HHPhoto... you win, enjoy.

 

[burancap]

There are enough labs even in the US which are doing excellent work. I have friends living there and using them, they are satiesfied. And they all have high expectations.

Would love some suggestions, then.

I gave up E6, and I am just about out of C41 because of the poor state of US labs. I have tried several and was happy with none. On the positive side, it means I have gone back almost exclusively to B&W with development and scanning at home.

 

[willie_901]

Eric,

Thanks for the links. My question was based on this link.

And I was influenced by the data in the attached graph. To be complete, I could not find any of the raw sources used to create this plot.

I do not doubt the Instax fad is real and contributed to The Imaging Group's profits. I also agree the fad bodes well for Fujifilm's business decisions regarding film.

 

[Aristophanes]

William and NJH,
See this link on how Instax is important to the X-series at Fuji:
http://www.fujirumors.com/instax-ru...nstax-cameras-sell-better-than-fujifilm-x-t1/
Eric

An $80 novelty item, stocking stuffer will always outsell in volume an $1,200 model.

 

[Aristophanes]

Hi,

being the OP I am quite astonished about so much reactions and replies.

Of course I cannot reply to everyone.
Therefore I will focus on the most important facts:

1. Status of the digital camera industry:
Some here said that there is no crisis. That is quite blind and naive, and ignoring the real numbers.
There is indeed a very severe crisis. The digital bubble has burst:
The market crashed on only half (!) of its former size in only 3 years. That is an even bigger crash than film had some years ago.
And not only the sales crashed, but also the margins for manufacturers and distributors. It is extremely difficult to earn (sufficient) money with digital cameras.

Wrong.

The digital camera market is really an imaging sensor market.

more are made now than ever. Sony and Toshiba are still adding fabs and photolitho units en masse.

The P&S has migrated to the smartphone, the dedicated, higher-end camera market is a little saturated.

There is no "crash".

Dedicated camera manufacturers (the optical engineering companies like Canikon) shot themselves in the foot with regards to building into the shoot & share paradigm that smartphone cameras thrive on. Until the DSLR's play that game as effortlessly there will be stalling sales.

Flickr recored and an increasing # of photos unloaded every month MoM and YoY. So in terms of actual use, the consumers are voting with their uploads and ashore: 99.9999999999% digital, all the time.

Again, no "crisis".