Cheap Cameras, More Shipments

You may have noticed some interesting pricing as you ate your turkey and other special meals at the end of 2017. Refurbished Canon Rebel 6’s under US$300, new D3400’s selling at US$349. New Sony A7 bodies going for US$799.

Because the Japanese control virtually all of the dedicated camera market—Hasselblad, Leica, and Phase One are almost a rounding error in camera volume—and because the Japanese tend to mimic one another, we had an interesting 2017.

The first thing the Japanese decided was that they’d make more cameras than they forecast selling. Early each year the Japanese camera industry standards group CIPA makes a prognosis about the coming year based upon everyone’s anonymous forecast. Well, guess what, those numbers were clearly wrong. 

I don’t think this was anyone trying to game the system (e.g. forecast low, ship high). I think it was companies shipping what they could as sensor supplies recovered from the earthquake and the cameras that used those then sold quickly. Up the forecasts, boys! And sales still held up well for awhile. Up ‘em again, fellas!

Of course, this didn’t go perfectly smoothly for anyone. Nikon’s a good case in point. While the D500 and D750 sold decently, the D3400 and D5600 not so much. The D850 came in like gangbusters (at least it would have had Nikon been able to ship to demand), the D7500 much more mildly. Same thing with Sony. The A9 didn’t sell in the initial quantities I think Sony expected, but the A7R Mark III orders were above their expectations. 

Plus, don’t forget the “hangover” cameras. Thing is, you commit to a certain number of sensors early in the development process. If you sell fewer than you expect, you still are going to produce those cameras. You just have to figure out how to move them.

Which brings us back to those curious prices we saw during the Christmas buying season. 

What I saw seems to be a hybrid approach. Yes, most of the camera companies would love to sell you their high-end latest and greatest, and they pretty much all had fairly new ones to dangle in front of their user base: 5D Mark IV, D500, D850, E-M1 Mark II, GH5/G9, A9, A7R Mark III. Those cameras all seemed to do quite well, well enough that the companies that make them should be pleased with their sales.

But everyone had the odd duckling that wasn’t doing so well, plus all those hangover cameras that still needed to be sold.

Analyzing things more carefully (caution, we don't have any numbers for December 2017 shipments yet), the news is still pretty grim other than perhaps mirrorless cameras, though. Here are the Jan-Nov shipments for 2012 to 2017:

bythom ytdcipailc

Without the mirrorless surge in 2017, the news would have been very bad, indeed. In five years ILC sales have dropped to 58% of their former self and DSLR sales have dropped by more than half. These drops are ongoing and not likely reversing any time soon. If you look at the trailing year numbers (e.g. December to November), things look even worse for DSLRs:

bythom cipatrailingyr

Mirrorless went from a quarter of DSLR sales to more than half in four years. 

Simply put, this is why Nikon must have a mirrorless answer in 2018. There's no choice for them now but to get in the scrum in the smaller pond with all the others. 

But there's a bigger question hidden in the numbers here: was 2017 really the bottom for ILC overall? Basically we hit a flattening somewhere in the 11-12m units/year range. But remember, these numbers reflect the Japanese companies' thinking more than the consumer's actual purchasing. There's still plenty of hangover inventory sitting around, and how fast it turns will really be the determinant as to whether we're at bottom.

So I’m curious. Obviously, we have companies now taking lower margins to move some of their older boxes. That can still be quite profitable, though not at the high margin levels that companies like Canon and Nikon really want. So what’s going to happen by the end of February, when the camera companies again produce their consolidated forecasts for the coming year and have new models coming to market? Are we going to see optimism or pessimism?

I’m betting optimism from the camera makers. I'm betting pessimism from the camera buyers. In other words, I'm expecting many more sales of any older camera that's not moving at better-than-forecast volume. 

Overall, I think we can expect DSLR volume to continue to decline, and maybe even accelerate faster downward. Indeed, what new DSLRs can we expect in 2018 that would drive new volume? If I'm right, we have modest iterations from Canon and nothing or next to nothing from Nikon in the coming year in terms of DSLRs. That would slam virtually all of the ILC competition into the currently smaller mirrorless market, where things are going to get dramatically more complicated for everyone in 2018. 

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