(commentary)
I’m a voracious reader. I’m a prolific author.
Often those two intersect, as they did when I picked up my Sunday paper and found an article in it by Seth Talbott, one of many highly visible entrepreneurs out there. In that article, Seth hits on a number of things you’ll find common in my writing lately, and I’m going to use his points to once again point out what’s happening in the camera business. (A variation on that newspaper article appeared in Fast Company.)
Here’s Seth’s three points (paraphrased in bold) with my commentary:
- Does your product solve a problem that enough people will pay for? The camera companies all are caught up in the second half of that question. Their problem is that “more than enough people” has turned into “not enough people.” For the most part, all the answers I’ve seen so far are pursuing people, not problem solving.
One way you pursue people is sales. If it didn’t sell at X, try discounting it until it does sell. All businesses do this to some degree—though note that home-run hitter Apple rarely does this—and as long as you started with enough product margin and the discounting occurs late in a product’s healthy sales cycle, you can tolerate some level of this. But note that profitability is illusive for the camera companies, indicating that we’re past the tolerance point. Even in the profitable companies, we see stress and some hand waving as “costs” move out of the group generating them to general administration in order to disguise the problem.
What we don’t see is anyone really tackling the first part of Seth’s question. No new big problems are being solved, and the little problems that are solved aren’t provoking customers to buy at the rate they used to. Adding 6mp to the pixel count once was a big motivator and even a problem solver. Now? Not so much. Heck, even 12-18mp increases don’t trigger the same response as the camera makers used to get.
Put another way, more pixels no longer solves a problem that most users really have. Some that think it does solve a problem are even mistaken, which induces a different problem down the road in terms of further resistance to that kind of change.
From an investor viewpoint, the camera companies are no longer serving their customers with useful solutions to problems, thus are un-investable. Clearly the boards of the camera companies disagree, because they’re still pouring the same high levels of R&D money into the same solutions. I’m siding with the investors on this one. - Can you dominate with meaningful differentiation? In this case you have to ask “differentiation from what”? Easy at the higher end: from Canon and Nikon DSLRs. These two companies locked up and own the DSLR market, and for the most part, the whole interchangeable lens camera market. A market that’s declining in size. The other camera companies are fooling themselves if they can’t create a clear differentiation. Price, ease of use, size/weight, quality. Those are the Big Four. And for the most part every entry I’ve seen from anyone trying to claw away market share from Canon/Nikon is failing at three of those four. To me, that’s delusional.
Canon and Nikon aren’t immune here, either. What’s the key differentiator between Canon and Nikon DSLRs? You already have either Canon or Nikon lenses. That’s really it. Over the past 15 years one or the other company has had modest leads in some quality issue (high ISO performance, dynamic range, pixel count, focus performance, something). And then it flips back the other way as the other company responds. Temporarily. So what’s left? Nothing. No wonder the market shares don’t change more than a percentage point or two at any given time and have stayed within a very small range for the entire digital era.
Now I know a lot of you will jump in and try to say that “mirrorless is a differentiation.” You’re forgetting Seth’s modifier: meaningful. Mirrorless is to DSLR the following: smaller, lighter, newer, less costly to the manufacturer (;~), a bigger battery drainer, lagged view of the world you’re photographing, worse at focus performance. I’m sure I could add more, and I’m sure some of you will try to argue that focus performance is equal (it isn’t), but I’d challenge anyone to define “meaningful” for the user of mirrorless versus DSLRs as anything other than smaller and lighter right now.
And of course at the consumer end the “differentiation from what” question is also easy: from smartphones. The camera company’s answer has been “more lens, more pixels, more ISO.” But that’s clearly not working, as the market for this type of camera is collapsing faster than just about any tech market I’ve seen constrict in the past. Why? Go back to #1: a user problem is being ignored. Yes, the user wants better quality and more flexibility, but not at the expense of convenience. So here’s the short course: who will solve their problem first? Will the camera makers figure out the convenience problem before the smartphone makers tackle the quality and flexibility problem? My bet’s on the smartphone makers given the evidence so far. - Will this business grow, or is it just a business? Of course this is the crux of the camera company’s problems lately: there’s negative growth. Highly negative growth. So the answer to the first part is “no.” And the answer to the second part is “maybe.” That’s about as bad as it gets for businesses. The only way it could be worse is if the answer to the second part was also “no,” in which case every camera company should just close that part of its business, no questions asked.
This is a different way of asking the ROI (return on investment) question. If you have X dollars to spend on employees, facilities, and parts, what’s the thing that’s going to give you the biggest multiple return on your X?
It sure isn’t cameras these days. I’ll make you a wager that if I had unrestricted access to the full financials of the Japanese camera companies, not a single one has an ROI at the moment that any investor would say is worth pursuing. Most have negative ROIs with no clear promise of ever showing a positive ROI. Those are “hobbies,” not “businesses.”
To grow, you have to have the right answers to #1 and #2. So yes, there’s a really bad circular problem happening here. We aren’t seeing #1 and #2 being done, so #3 can’t be answered positively. This is exactly where the film camera business was towards the end of the 1990’s, by the way, so the camera companies should know what the answer is. That they don’t is disturbing. That seems to imply that the digital camera “solution” to their doldrums was more luck than understanding.
Okay, with that said, I have to add one more important thing: we users are a big part of the problem. Say what?
Recently I posed a question on a brand-specific forum regarding lenses. What lenses were still needed to solve what problems? Virtually all the responses were lens specifications, not problems that needed solving.
Let me give you an example of what I mean by a problem that needs solving by a lens: at present I have no real way to get correct perspective in interior shots. The lens that would solve that for me is something much wider than the current 24mm PC-E lens. Yes, I know that Canon has one; and my solution to my problem would be that I’d just rent a Canon lens and body to deal with that problem whenever I’m hired to do that kind of shoot. But I’m a Nikon shooter, and Nikon doesn’t have a solution to my problem.
Now if I ask Nikon for a 17mm f/4 PC-E, I’m asking for a specification. If I ask them for a wider PC-E because of X problem I have, I’m asking for a solution. Do I really care if the final result is 17mm, 18mm, or maybe even 20mm? Do I really care if the aperture is f/2.8, f/3.5, or f/4? For my problem, no. Any of the above provides more of a solution to the problem than I currently have.
But we users are generally terrible about understanding our problems, let alone figuring out what solves them. We’re a little lemming like. “Hey, Canon has a 17mm f/4 TS-E, so should Nikon.” Thus we end up asking Nikon for the exact same thing (see differentiation, above ;~). If Nikon produced an 18mm f/3.5 that was optically better in some way, would you still say that “no, it has to be 17mm f/4”? Didn’t think so.
I’ve written about this problem before (e.g this article): what’s the problem you’re trying to solve? So—at the risk of flooding my already full In Box—I’m going to ask your to perform a little assignment for me and email me your final answer. What’s the biggest problem you face with your photography and what would solve it? One problem. As well defined as you can present it. Something that impacts you over and over again when you take photographs that needs fixing. Plus your best guess at what would fix it.
