Honey, I Shrunk the Company

Here’s the basic premise in the tech business: hook the customer, then keep them; find new customers, repeat. At times all the camera companies have been good at this, at other times all the camera companies seem to have trouble managing to follow this basic prescription. 

What did Nikon really hook people with in the digital era? D1, D100, D70. The modern equivalents of those are the D5, D500, and D7200. Plenty of you reading this have one of those three cameras. 

But some of you have diverged slightly, and that’s because Nikon told you to diverge: in particular, to the D750 and D810. I know quite a few former D1/D2/D3 shooters that went down to the D750 and D810. Plus quite a few D300 shooters that went up. 

During the last Christmas season the big sellers for Nikon were the D500, D750, and D810. Not necessarily the highest volume of sales, but these models pulled the most dollars and profit for Nikon. It's not surprising that many of the presentations at CP+ this coming week will be centered around those cameras (and the D5). Clearly at the discounted prices Nikon had during the season, Nikon picked up a lot of takers. 

But the real question is whether any of the camera companies are picking up new customers below the mid-range DSLR/mirrorless level. For Nikon, that would be Coolpix. But that market has more than collapsed. It’s a giant sinkhole. A hole that swallowed entire groups within some of the other camera companies, and threatens now to do the same at Nikon (and probably Canon, too). 

But think about it for a moment. Does anyone think that any Coolpix owner Nikon hooks is going to be kept? Any KeyMission owner? Any Nikon 1 owner? Well, maybe a few of the latter, but in general this is Nikon’s fundamental problem. They got hooked on growth in the smaller and lower-end cameras (even the D3xxx), but they never really kept many of those customers, and customers for that type of camera are disappearing faster than the ice in Greenland. So there are fewer to hook, and fewer to keep even if Nikon did a reasonable job of keeping them, which they don't.

The good news, of course, is that at the D7200 level and above, Nikon hasn’t really messed up (other than the non-existent D400, lack of DX lenses, and a series of QC issues). If Nikon hooked you on the D70, you’re still shooting Nikon with a D7200 or better. If Nikon hooked you on a D100, you’re likely still shooting with a D500 or D810. So it’s clear that someone at Nikon understands the hook-and-keep scenario and knows how to iterate it. 

Which brings me to the DLs. And the Canon GX and EOS M models. 

Let’s start with Canon, since they’ve just made a series of announcements. It seems that the same external EVF and other accessories works on multiple GX and EOS M models. GX, EOS M, EOS APS, and EOS full frame all are recognizably from the same cut: menu and control similarity abound. You can grow from A to B to C to D without restarting. Heck, now you can even grow into video, too (EOS Cinema). 

No matter where Canon hooks you, they have an answer for you in the future, gave you a reasonable product to start, are iterating regularly, and have push up and pull down options that look familiar to you. 1Dx user needs a pocket camera? Canon’s got that and it’s not too dissimilar or unrecognizable from what they have. GX user wants more lens choice and flexibility? Same accessories work on the EOS M. Of the APS sensor DSLRs.

The DLs were supposed to be Nikon’s answer to the same problem (though there still would have been gaps). I can’t count how many emails I’ve received of disappointment that there won’t be a Nikon DSLR-like compact they can buy (at least for the foreseeable future). The Nikon 1 is our best choice, and those models aren’t as compatible with Nikon DSLRs as they should be, and in far too many ways. Really,  Nikon? A different Speedlight family? 

And here’s a message for Nikon marketing and the folks that made the decision to pull the DL: quite a few of those folk that are responding to me with disappointment already own a Sony RX100. That’s right. They already had the need for such a camera, but had to buy a competitor’s product because Nikon never did the “keep them” thing. They were ready to snap up a DL just as soon as it got decent reviews. Others were waiting to see if Nikon's DL was better, but now they're off to buy the Sony.

Which brings me to an aside: one of the sources that Nikon uses for demand prediction is pre-orders. But given Nikon’s recent QA and QC struggles, my surveys show that about a third of you won’t pre-order anything new from Nikon these days. You wait until the “bugs have been wrung out.” So Nikon is getting incorrect data from the pre-order stream.

I even think Apple gets the product line management wrong from time to time, particularly with the accessories side of things. Why Apple no longer makes displays and seems to be leaving the router market tells me that they have a functional disconnect on how you retain a customer correctly. No, Apple displays and routers aren’t magical. But they work like the rest of the Apple ecosystem, and are virtually plug in and it just works. The Apple ecosystem is stronger because of the glue from these Apple-branded accessories.

And then Apple goes and does it right to prove me right: the AirPods are genius in terms of the plug-in-and-they-just-work thing. So much so that I prefer them and their not-quite-great sound to better sounding third party products that just always seem to need manual Bluetooth intervention to reconnect.

So where I’m confused at the moment is exactly what Nikon thinks they’re doing. They’re a great camera and lens company (as long as you need a D7200 or better and also only need FX lenses, buzz buzz). They seem to have no grasp of how they’re going to find and hook new customers, and the products at the levels where they might do that all have a great deal of suckage of some sort that turns those potential customers off. 

Even a product like the D3400—which is a very good camera, especially at its price point—manages to throw in significant suckage with the SnapBridge application, and that’s almost exactly the feature they could point to and try to get a few people weened off their smartphones for photo taking. “Here, try this to get better and more distinctive images. Sorry the connection thing you need sucks.” 

Here’s the thing. Nikon can’t keep getting this wrong. It won’t matter how good the D7300, D510, D650, D760, D850, Df2, D5s and D5x are. It won’t matter how good the profitability of those products are. These products don’t sell in enough volume now to keep the sales spiral from continuing downward. And should we get a lame update of any of those models, things will be even far worse. 

Earlier today I saw an article on how Wang Computer failed. Not a very good article, but it jogged my memory about how things went down. There are a lot of similarities happening with Nikon at the moment (though not the family ownership bit). 

In the end, it all boils down to management. In the next two years we’re going to see just how good (or bad) Nikon management is. Right now the guess I get from all my analyst, Tokyo, and business friends is that Nikon management is currently in a “Honey I Shrunk the Company” mode. That’s deep in progress, and apparently the shrink ray is still operating. Some manager ought to go find the switch and turn it off, methinks. 

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