Lazy Iteration

(commentary)

I've written about Nikon's "lazy DX iteration" before. Indeed again last night when I posted my article about the D7100 announcement I implied it once again. 

Some people think that's just an insult to Nikon, that I think Nikon doesn't know what it's doing. Well, yes and no. I believe Nikon knows exactly what it's doing. The real question is whether they should be doing more or not.

The DX DSLR line is the heart of Nikon's sales and profits. While they sell more Coolpix than DX DSLRs, they also do that across many more models and it takes a lot more promotion to push all those Coolpi boxes into users' hands. As the compact camera market continues collapsing, the problem of keeping the Coolpix lineup selling just gets tougher. But let's just use CIPA's numbers: 14m Coolpix at an ASP of US$99 is US$1.4 billion in sales. Probably not a huge profit margin there giving the dropping ASP. Let's assume for a moment that Nikon sold 1m Nikon 1's. That's US$343 million in sales. DSLRs? That then becomes US$2.5 billion in sales for Nikon at CIPA ASPs. And of that, most are still DX, despite last year's FX push.

To some degree, having a line that you iterate gently forward (lazy iteration) and which is a strong seller that doesn't take a lot of excess promotion to move is a good thing. Coupled with Nikon's strong DX DSLR user base, the scenario goes like this: you pick up some folk new to sophisticated cameras (newlyweds, first child, etc.), you get people replacing older DSLRs because the iteration eventually makes them feel left behind (or they dropped their old one off the side of their boat ;~); if you stay at the forefront of what's happening with DSLRs in general you pretty much keep your market position. A few you manage to upgrade to FX (last year, FX amounted to not quite 10% of Nikon's DSLR sales by my calculations).

But my challenges to Nikon are these: 

  1. How does this strategy ever get you to take over the number one position from rival Canon as long as Canon does the same? Isn't that written in stone as a goal somewhere in the Tokyo offices, or did someone remove that rock?
  2. Where are the big breakthroughs that will propel Nikon ahead of the pack and make it clear that they're the only camera company looking out for the future of photography? After all, Nikon is the only Japanese camera company that's absolutely dependent upon cameras (75% of sales; the only one to have a majority of their sales in photography). 
  3. Lazy iteration doesn't take a lot of engineering or even the top designers to do, so what is it that Nikon is doing with its best designers and engineering?


I'm perfectly happy with the D7100. It's almost exactly as I predicted it would be many, many months ago. It's a near perfect execution of the lazy iteration cycles Nikon has been using: more pixels, parts from upper models drifting downwards, a taste of something new (spot WB, more elaborate remote triggering). If Nikon carries this over and iterates the D300s, too, then the DX camera lineup does pretty much what it's been doing for the past decade. My usual recommendation still stands: upgrade every other cycle. So D90 users, your new chariot has arrived. D7000 users, hold pat for the time being. Either wait for the D7200 or the D400 if you really want to get bang for your buck in an upgrade cycle. 

As I pointed out in DX Month last year, though, Nikon seems reluctant to put any investment in lenses for DX, which completely dilutes the iteration progression as far as I'm concerned. The 18-105mm was a great kit lens on the D90, a decent kit lens on the D7000, and I suspect will be slightly under the bar of where we want it for the D7100 (that's based upon an initial examination with the D5200). While we have the continued iteration happening in DX cameras, we basically have very little happening with DX lenses. We've had 26 DX cameras introduced in 14 years, and 17 DX lenses. How that doesn't get every DX user's immediate attention I don't know. Why Nikon thinks that's the right balance I don't know, either. Sure, you can put FX lenses on DX cameras, but then you're not getting the full benefit of buying DX. 

Thus, the laziest part of Nikon's DX iteration process is easy to see: lenses. Given the three-year development cycle for new lenses, it appears that something changed in Nikon's thinking regarding DX lenses back in 2007 (warning bells sound: the year FX was launched, and the year in which the mirrorless rumors started). Since then, it looks to me that we've had only one DX lens enter development a year. Yet the DX body group is still iterating cameras in straight marching orders.

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