DSLRBodies

(news & commentary)

Nikon has announced that shipments of the D500 will be delayed by about a month from the date originally announced (March 15). This has caused the conspiracy theorists to dust off their keyboards and start typing away.

Let’s start with what the delay isn’t caused by:

• A problem was discovered and Nikon is correcting it before shipment. No. In my long history of following Nikon I’ve never known them to do so without admitting to the actual problem. Indeed, there have been at least two examples where they announced a delay in shipments due to a specific problem they discovered. While Nikon is not always very clear in their messaging, they’re not likely to lie outright, as this conspiracy would require.
• That the product wasn’t ready. I’d say no, though there’s a small element of truth that feeds this conspiracy theory. That element? The D500 marketing and messaging all feels a bit rushed to me. Either Nikon didn’t originally intend to announce the D5 and D500 together, or the D500 fell off the critical path at some point and prototypes got out late in the pre-announce cycle. But still, I’m confident that Nikon wouldn’t announce a March shipment date if they weren’t already in production and the software weren’t already virtually locked down.
• The delay is only in Japan. No. It has only been directly communicated by Japan as I write this, but it generally takes the subsidiaries a bit of time to first correctly translate such statements, and then get corporate approval to release the translation. It appears to me that the corporate statement was a hastily made one, and that the subsidiaries are still reacting. I’ll bet that we get subsidiary statements either just prior to or at the D5/D500 launch events that will happen at a wide range of dealers this coming week. I should point out that there will likely be D500’s at all those many events, which would also tend to invalidate the previous conspiracy theory I mentioned (next bullet up).
• QC didn’t pass the product after inspection of finished products. Well, Nikon asked for that conspiracy ;~). The D600, D750, D800 issues at first ship coupled with the same for a couple of recent lenses are the fodder for this conspiracy. The theory goes like this: Nikon made the first batch and then sampled them so as not to repeat the previous fiascos. And they found a flaw that has to be fixed, so, voila, delay of shipment. No, no, and many times no. First, I’m not aware of Nikon significantly changing their final QC procedures in Thailand. Second, there’s no indication that production stopped and previous production came back to be fixed. I’d hazard a guess that the first shipments of D500’s is either already on container ships or close to that. I particularly like this conspiracy theory because of the wishful thinking that’s implied in it: that Nikon changed and is now making sure that no more first ship problems happen. Guys (and gal or two), Nikon first ship problems date back into the film era (remember the F100 early rewind or the F5 mistaken battery level that produced only a couple of rolls of film on eight, yes eight, AA batteries?). I can name well over a dozen such problems, maybe a couple of dozen if I went back and looked at everything and didn’t just rely on my memory. I’ll only believe that Nikon has changed in respect to first ship issues when I see evidence that they have. No evidence, then sorry, this conspiracy theory can’t be right ;~).
• Nikon decided to ship them a cheaper way. Another amusing theory. But almost certainly wrong. Generally first shipments have always been a large batch shipped by ocean container ships. The days of airlifting new cameras has been over ever since cost control became the name of the game in Japan and high volumes made doing so very expensive.
• They didn’t get as many sensors (or shutters, or some other critical part) as they thought they would. Here we have the first almost believable conspiracy.  I say “almost” because Nikon has a pretty darned tight production chain. I’ve never seen them announce a ship date for a product and take it back because of supply chain issues. I’m pretty sure ship dates don’t even get set at Nikon until they’re sure that the supply chain is producing their full anticipated need.
• Nikon decided to push back the shipment so as to build an even higher fever pitch for the product. Holy conspiracies, Batman. According to this theory, Nikon should keep postponing the D500 every month to build world-dominating demand. Only then they’d have to postpone it some more because they don’t have a factory that could produce world-dominating demand instantly ;~). The funny thing is that there’s a teeny bit of truth underlying this conspiracy. I once remember a conversation I had with a high-level NikonUSA executive who said: “our problem is that we just don’t have enough staff to really do a great job of marketing multiple new products simultaneously.” He went on to suggest that two simultaneous DSLRs was really taxing on Melville, and that they preferred one at a time. I’m not sure in this case that a month delay still doesn’t count as simultaneous, though, especially since all NikonUSA staff and reps are running around this week at various dealer launch events for two cameras.

Okay, so if all these conspiracy theories are wrong, what’s the real reason for the shipment delay? 

Maybe exactly what Nikon suggests: the demand is higher than they can fulfill with their originally scheduled first shipment.

I can’t speak for the rest of the world, but here’s how it works in the US: two things incumber Nikon when launching a product that turns to be more popular than they anticipated:

1. US law basically forces Nikon to treat any tier of dealers the same. NikonUSA can’t send two cameras to Dealer 1 in Big City A and no cameras to Dealer 999 in Littler City Z. NikonUSA did establish some tiers to dealerships, and as long as they treat tiers the same, they’re fine under US law. But still, as I write this, there are about 320 dealers in the US on the authorized list, and that counts companies like Best Buy and Target as “one dealer.”  This list is further broken down into two basic tiers: Nikon Imaging Dealer (NID), and Nikon Professional Dealer (NPD). In past situations, Nikon has always wanted to deliver at least two bodies to every dealer in both tiers, and perhaps more to the Professional tier. Leaving out the NID Big Boxes and counting the NPD Big Boxes, I come up with something a bit over 1000 stores that need cameras on day one. At two per store, that’s 2000 bodies, minimum. There will high tier stores under a different NPD contract that want far more than two bodies on day one. 
2. Priority Purchase (PP) allows NPS pros to pre-order a D500 (and/or D5) and have their bodies delivered via their store on first ship day. This works outside of #1.

The combination of those two things is what Nikon has to plan for. It should be obvious that if Nikon planned to ship 2000 bodies initially into the US, any large volume of NPS PP orders would mean they’d have to steal bodies from the initial number planned for dealers. Remember, Nikon tries to seed enough volume so that a dealer will have “one to show” in the US. After all, people who are still holding out aren’t going to order until they’ve actually played with a camera in their own hands.

But add this in: dealers put in their own pre-orders. I know that my smaller dealer has more than two D500’s on order. He believes he can sell more than two because he already has orders from customers for more than two. 

So here’s what I think happened (in the order it happened). Nikon corporate announced the D500. You and everyone else who saw that announcement started pre-ordering like crazy. Dealers started pre-ordering from the subsidiaries. Nikon corporate told the subsidiaries how many units they’d be getting in the first shipment. The subsidiaries looked at their dealer pre-order lists, the number corporate said they’d be getting, and sent a message back to corporate: not enough. I’d guess that NikonUSA was the big culprit here: we have far more dealers to service than anywhere else. Now Nikon corporate and the subsidiaries engage in a frantic dialogue and negotiation. A minimum number to meet legal requirements is determined. Then Nikon corporate issues the “shipment is delayed” announcement. 

Short answer: Nikon severely underestimated initial demand. 

Here’s the scary aspect to this: I think Nikon may still be underestimating demand. We have the potential for another D800-type scenario here, where some pre-orders took four or more months to fill. 

Why do I say that? Well, I’ll point to a reader poll at dpreview: out of nearly 300 votes, about 55% said “I’m going to wait for the dust to settle before buying…” 

So if you made it this far, here’s a little survey for you (note this is a timed poll and will disappear after 24 hours):

Why do I disable your ability to view results while the poll is open? Knowing how others are voting distorts your vote. I want your unbiased response to the question. Don’t worry, I’ll tell you what the results were soon enough.