One now has to wonder what the Japanese camera companies are actually hiding. In particular, both Canon and Nikon in their financial results are seeming to understate the likely market size (Nikon just said it's 10m units; the actual 12-month trailing value is 11m units, so cooked into Nikon's numbers is an implicit strong collapse of the ILC market in just two quarters). Either that or they're overstocking inventory by large numbers (e.g. CIPA shipments are far above actual sales).
I've already done a brief overview of Canon's Q3 results. Let's break into Nikon's.
Overall, the Imaging Group was down 14% in revenue and 2.2% in profits for the year-to-year comparison for the first half of the fiscal year. Revenue actually came in a bit higher than forecast, while profit was lower than forecast. Nikon's explanation was that the profit change was due to two things: (1) the high cost of introducing the new mirrorless cameras, and (2) "more customers than expected refrained from purchasing existing products." I take the second one to mean that DSLR sales stagnated while customers waited to see how good the Z6 and Z7 actually might be.
How big was that effect? It's difficult to say, as Nikon didn't previously present a volume forecast for 1H (now ended), only for the complete year. But unit volume of DSLR/mirrorless cameras decreased by 240,000 units from last year's same period, an 18% drop, and considerably larger than the overall market drop. Nikon is predicting that the second half of their fiscal year—ends March 31, 2019—will produce slightly more volume (1.18m units versus 1.07m).
Meanwhile, in Japan retail sales analyzer BCN is reporting that Nikon is #3 in the full-size sensor mirrorless camera market share now that the Canon R is shipping. In September, Canon captured 22% of the market with a single unit, Nikon 5%. Sony has the remaining 72.9%. What most other sites reporting those numbers don't tell you is that over 16% are older Sony cameras selling at (often deep) discount. Sony has used that strategy in the US to its advantage, as well, trying to build a strong base before the Big Two get fully up to speed.
The real trend that's going mostly unreported is probably there in the Canon and Nikon numbers: lower-end DSLR sales continue to be the real issue, particularly the crop sensor DSLR sales. Personally, I'm 100% confused as to how Canon and Nikon think they're dealing with that.
In Canon's case, the EOS M models really don't align with the EOR R models, certainly not the way the EF-S cameras lined up with the EF ones. I've written that I believe their feeder system to be clearly broken, and that's where Canon is reporting their weakness in sales. Pricing and marketing can only do so much to pull up volume, and we're now seeing those things nibbling away at Canon's overall GPM numbers, too.
I don't know how to say this politely: Canon needs to take all the EOS M and EF-S DSLRs and firesale them into oblivion, and come up with a better entry position. I was amused to hear a Canon spokesperson say at PhotoPlus Expo that the new R mount really won't work for APS-C. Really? I'd think that it would work just fine and open up new potential lens ideas and designs.
In Nikon's case, the D3xxx and D5xxx are now past their sell-by date. And because of Nikon's total lack of commitment to DX lenses—buzz, buzz, bztt (the bztt being the bug hitting the zapper, which will now be my new shorthand)—that's probably about to be true of the D7500 and D500, too.
Nikon got the full frame mirrorless transition basically correct (very DSLR-like handling with mirrorless' bonuses). Bravo. Someone was awake in Tokyo. Let's hope that same person or group is now responsible for ZDX. But don't go bzzt with ZDX lenses, Nikon!
Finally, there's always the "they're all going to go out of business" cry that goes up every time we hear that the dedicated camera decline news continues.
Nope.
- Canon — certainly might contract, but still very profitable, and has plenty of other business to lean on as they work things out in imaging.
- Fujifilm — digital cameras are still far too small a part of the overall company for them to worry about, and they believe that they're continuing to make progress towards their goals.
- Nikon — continuing to contract, but they've done massive restructuring that has actually produced a higher gross profit, indeed a record one for the past 10 years when measured to sales.
- Olympus — probably the most vulnerable to something dramatically changing, as they didn't meet the stated goals yet again, and by a huge margin this time. Still, the imaging group at Olympus is sheltered by a far bigger and highly profitable medical group, and nothing's seemed to change in their attitude towards building cameras.
- Panasonic — the GH5/GH5s has been a big success for them, the rest less so. The full frame initiative is representative of what I wrote in the past ("I see them changing their direction"), and that's a big investment, so they're not going away.
- Pentax/Ricoh — digital cameras are barely a footnote in their financials, as they are part of a far bigger "Other" group that's only 9% of Ricoh's sales. As a Japanese company, they're not going to try closing the camera groups any time soon because that would be a bigger hit on the bottom line than just letting them run their current course. Ricoh's management has bigger problems to deal with than cameras.
- Sony — probably the one camera company that "turned the corner" early. While their volume continues to go down, their average selling price and profits are headed the other way, and the group has pretty much succeeded at restructuring and reinventing themselves.
What's that all mean?
Every camera company is following Sony's pattern: increase average selling price, leave older models on the market to have something to sell at lower consumer cost, and push mirrorless as a reason to buy. Canon and Nikon need to fix their entry model lineups to align with this, but seem like they're on that course.
A lot of folk don't remember the early days of DSLRs. The D100, for instance, was a US$2100 camera, and most of the competitors were around that same US$2000 mark initially. Everyone's resetting to that mark and just taking the volume hit.
For the 2,897,254th time I'll repeat: the mistake that the camera makers continue to make is that their products live (mostly) in a standalone world. They are pitiful when it comes to trying to do what the smartphones do in their sleep. The volume market for cameras is right there for the taking: be better than a smartphone as a camera, be equal (or 100% compatible) to a smartphone for sharing images.
As much as I nag at SnapBridge, Nikon actually took some of my advice there and it is actually now usable, though slow and fiddly. You can actually shoot raw on a Z7 and squirt 2mp JPEGs of selected images via SnapBridge over to a mobile device as you need to. Of course, the transmission speed doesn't even come close to what the smartphones do (thus my word "slow").
You can almost see how the camera companies might get some volume back, but you're not sure if they can see the same thing. So the decline continues...
