A Quick Analysis

I wanted to take a large set of numbers I have access to and run them against each other to see what it might say about Nikon's position in cameras at the moment.

In particular, I was interested in whether Nikon is selling above the average selling price for units, at average, or below average. The quick spreadsheet answer is this: probably just above average for compacts, but much more above average for DSLRs and lenses. Moreover, it's now likely that compacts account for less than 20% of Nikon's camera revenues.

If we run just the CIPA shipment numbers against Nikon's stated volumes, for instance, we get a value that's only approximately 75% of what Nikon reported for income during the same period. Even accounting for accessory volume, it seems that Nikon is selling many products at above average pricing. My more complex spreadsheet that integrates more data from more sources shows the same thing: Nikon really has to be selling at above the average selling price in each category to make the revenue numbers they're reporting.

The reason why I wanted to do this quick calculation is because my perception is that right now it is Nikon's heavy hitters that are driving Nikon's sales and carrying the weight of the company. Here's how I'd characterize things:

  • The KeyMission series bombed. Did considerably poorer than Nikon expected.
  • Coolpix is bombing faster than Nikon expected. Only the P900 and B700 have any traction at all.
  • The Nikon J5 has minimal sales, and is the only Nikon 1 product moving. 
  • The D3400 and D5600 models are doing worse than Nikon expected, and worse than previous iterations.
  • The D5 volume is minimal at this point, but probably at expectations.
  • Only the D500, D750, D810, and D7200 models are really selling at Nikon's expectations, but then only with discounting. 
  • New lens sales other than all the kit lenses are holding their own (e.g. 24-70mm f/2.8E and 70-200mm f/2.8E).

So the questions this produces are:

  • Will the D7500 hold serve?
  • Is the next expected update, the D810 one, going to hold serve?
  • Can Nikon continue to find expensive lenses to introduce or update in ways that will produce continued sales?
  • Will Nikon add anything to the lineup in the coming year that will pull in better than average results?

Looking at Nikon's forecast for the coming year, the decline in revenue and volume versus the flat profit expectation tells me that Nikon is counting more than ever on the top end of their lineup. They need their high margin products to do well. So Nikon's answers to my questions are probably:

  • Yes, Nikon expects the D7500 will hold serve.
  • Yes, Nikon expects the D810 replacement to hold serve.
  • Yes, Nikon thinks that they can produce a few new lenses with high prices/margins that will sell decently.
  • No, there's no indication of anything coming in 2017 that would change the trajectory at all. For there to be something new and significant in the lineup that would pull in better than average results, then one of the three yeses, above, would have to be a clear no. 

Nikon is becoming a more high-DX and FX DSLR company. D7500, D500, D750, D810. Those are four key, core cameras for them for the foreseeable future. 

The good news is that those are all really good cameras—okay, I'm guessing on the D7500. But where are the lenses to better support the D7500 and D500 better (buzz, buzz)? And what new FX lenses will keep the lens line providing Nikon the high margins they're expecting? 

The bad news is that nowhere do I see anything in Nikon's just concluded financial reporting and press briefings that indicates that we can expect something new and different that extends that small competent core product line in some way in 2017. 

For me and many reading this site, the good news offsets the bad for the moment. The real questions we face are further down the line: what happens in 2018 and 2019, and in particular, 2020 when the Olympics come to Tokyo? But for the time being, it's business as usual in the serious DSLR line. 

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