Which Camera Makers Are Safe?

The short answer to the headline's question is none: there's risk involved for everyone as the market collapse continues. 

But a lot of folk are assessing the risks incorrectly. 

Let me put a simple draft theory out there: the core of the enthusiast market that is still buying cameras and will continue to do so now (or will) shoot in full frame.

Nikon's been on that strategy for a decade now: convert all the DX users they attracted in the early DSLR growth period into FX users. This isn't a perfect strategy, as it sacrifices volume for margin. That's because FX products tend to sell for more than equivalent DX products. 

Canon has been on an opposite strategy for the most part: sell as many cameras as possible, and because that means price is important, EF-S and EF-M (both APS-C, or DX equivalent) crop sensor cameras have been the focus of their retail marketing and sales efforts.

Sony started their "let's go all mirrorless" thrust with the APS-C crop sensor cameras (originally NEX, later A5xxx/A6xxx), but most of their marketing and PR action has tended to be with full frame once the A7/A7R pair appeared. Now supplemented by the full frame A7S and A9. Technically, Sony has as many "current" full frame cameras as APS-C cameras now, and if rumors are correct, things will tilt more full frame soon. 

Emphasizing full frame has a couple of advantages: higher price points, plus generally better gross profit margins, both for cameras and lenses. Indeed, lenses are a hidden indicator of that price/margin thing. If you look at the CIPA numbers so far this year, crop sensor lenses are being shipped at almost twice the volume, but only at about half the value (price). There's a lot of crop sensor kit lenses being shipped still, basically. 

CIPA doesn't break out full frame and crop sensor for camera data, but hidden in the camera data is the fact that full frame is propelling the value line for mirrorless higher than DSLRs. Put another way, full frame sales are dropping in DSLRs, increasing in mirrorless. Some of that is self directed: Canon has had five new APS-C DSLR launches in the last two years, and only one full frame one. Go back another year and it's 8 and 2. On the DSLR side—which is still where most of their volume is—Canon's peddling a lot of crop sensor DSLRs, while Nikon is still managing to sell a lot of D3500's.

Despite a paucity of audited numbers, I've been trying to track the crop sensor and full frame balance for some time. For Nikon, the shift in sales volume towards full frame has been clear. For Sony, too. For Canon, not so much. 

Why is such a transition important? 

Well, while many other sites now are citing CIPA shipment statistics to show how the market is collapsing, they are ignoring other data in plain sight. Let's look at the camera market a different way: value.

  • 2019: total camera total 587b yen, lens total 366b yen 
  • 2015: total camera total 885b yen, lens total 449b yen 

Let's do a little bit of math. Add the values together, then figure the percentage drop: 29%. Now let's look at camera units for a moment: 35.4m units in 2015 down to 15.2m units in 2019. Hmm, a 57% drop. 

So, in a market volume contraction of just over half, the value contraction is somewhere between a quarter and a third. And a lot of that difference is explained by enticing crop sensor users into a new full frame system. I'm betting that the next four years will be a lot like the previous four: another volume contraction of half, but a much lower value contraction. 

Which puts our headline question into a slightly different perspective: which camera makers are best poised to take an existing user up-market?

The answer to that is simple: Canon, Nikon, and Sony, and in that order due to installed base considerations. 

Canon has, by far, the biggest crop sensor user base that might be enticed upwards. Nikon has arguably the most loyal crop sensor user base that might be enticed upwards. Sony has a smaller, but decent-sized crop sensor user base, plus has emphasized trying to get Canon/Nikon users to switch at the full frame level to mirrorless.

I believe all three of that group are probably fine, long term, as long as they execute their future product plans decently. For Canon, that means a lot of mount consolidation and a lot of product discontinuation. For Nikon, it means lots of mount transition; in other words, Z momentum must increase. For Sony, it means keeping the perception of technology leader intact so that they can pick up some switchers. 

But the other camera companies? It's a little less clear how they fit into an upscale, mostly full frame future (and that was Olympus' problem). 

Fujifilm seems to hope the small medium format can suffice for full frame. Certainly MF for them is upscale enough (more dollars, more margin). The question is whether that's a big enough segment to make a real difference.

Meanwhile, the good news for Fujifilm crop sensor cameras is that (1) Olympus is basically exiting the small/light market; (2) Canon has to rework EF-M or let it become a dead end; (3) Sony hasn't been putting a lot of effort into A5xxx/A6xxx; and (4) Nikon has only had one crop sensor camera of note in recent years (Z50).

The bad news for Fujifilm is that low-end full frame is going to put a cap on high-end crop sensor. Canon is already under US$1000 with the very competent RP. Nikon and Sony are rumored to have new low cost full frame bodies coming out this summer. My guess is that Fujifilm is going to get margin-strapped if they try to push X-Pro#, X-T#, and X-H# cameras. Downward pricing pressure is not something you want when your volume may also go down. Also note this: Fujifilm is not making a profit in digital cameras, and hasn't been. They survive because their parent organization wants them to.

Panasonic has hid their camera group within much larger businesses, so it's now near impossible to get a handle on any numbers that reflect how well they're doing. But I'm struck by several things.

First, Panasonic has no "transition to full frame" claim worth noting. They don't have previous mount owners that they can easily transition up, as m4/3 to L mount isn't exactly enticing in the way that EF to RF and F to Z have been (or even 4/3 to m4/3 or A to E). Thus, for the Panasonic L cameras to succeed, they have to steal business from elsewhere, and right now they're the highest-priced option at each product level.

Meanwhile, within Panasonic you now have three sub groups going after the same customer: the GH5/GH5S group wants you to use m4/3, the S1/S1H group wants you to use L-mount, and the Varicam group wants you to use...really?...Canon EF. Look for Varicam to go L-mount in the future. Regardless of how the Varicam/L situation plays out, I'm not sure three groups going after the same customer is worthwhile, so more than just a mount switch at the top has to happen. I think. 

And note how I'm mostly talking about video with Panasonic. Unfortunately, the Panasonic organization isn't well set up to market still cameras. So I don't see how the G9, S1, S1R manage to attract enough customers. 

Pentax now appears to have been an employment stabilization act, not an acquisition of merit. Keep the engineers, let them continue to tinker, maybe that will have a payback, maybe not, but it's such a small piece of parent Ricoh's organization as to be mostly overlooked. Given what the Pentax side of Ricoh has done (or not done), it appears that they've been denied dipping their hands in the R&D money jar. In both terms of market share and value share, Pentax is essentially ignorable now. Maybe not to a totally loyal Pentax fan, but there are few of those left.

Sigma, meanwhile, is Sigma. Cameras aren't the primary effort of the company, but they're a hobby business of interest to its CEO, and pretty much always has been. Sigma is also not afraid to try something completely different and see where it takes them: dp didn't go anywhere, Foveon has a small fan base, fp is interesting. Mainstream is not where Sigma has gone with cameras for some time, and not likely to go in the future. 

Moving out of Japan, we have Leica and Hasselblad. Leica continues to do what it takes to engage their upper-end customers. Small volume is fine for them. They figured out how to make that profitable, and continue to do so. 

Hasselblad seems like an promising, down-on-its-luck orphan who was taken in by a foster parent (DJI, the drone company). What I'm not seeing in Hasselblad is the innovation, iteration, and follow-through typical of the drone side of the company, though. We might need to call CPS (camera protective services), as it appears this foster child isn't being fed properly. 

Bottom line: most of you need to stop worrying whether the company whose logo is on your camera of choice survives or not. Canon, Nikon, and Sony won't be killed by market contraction. They'll just move more towards full frame and higher value products. They could manage to injure themselves or fall off a cliff wandering aimlessly, I suppose, but both seem unlikely. None are wandering aimlessly—though EF-M does seem a bit off track—and all three are not likely to start slashing their wrists in angst. 

Meanwhile, for the moment, big parents Fujifilm, Panasonic, and Ricoh (Pentax) haven't made any moves I can see that indicate they are going to kick the children out of the nest. That could still happen, I suppose, but I'd think we'd see warning signs first, as we did with Olympus. 

Leica and Sigma march to different drummers, and seem to be following the beat. Hasselblad needs an intervention.

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