Nikon's 5 year plan...

Started Oct 23, 2013 | Discussions thread
Leif Goodwin
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Re: Nikon's 5 year plan...
In reply to motobloat, Oct 24, 2013

motobloat wrote:

Leif Goodwin wrote:

It's a silly article designed to get attention, maybe to publicise the author or the media.

There is no reason why Nikon could not carry on with lower sales due to, for example, smart phones taking over the compact market. What it would mean is less innovation and less product development due to lower research and development spending. And products might remain on the shelves for longer.

I agree with you there, but is that really a sustainable business model in a competitive environment? I doubt it.

Markets change and evolve. Canon et al will change in a similar way.

30 years ago we did not have such a wide range of cameras and lenses, and they survived.

I disagree - 30 years ago was 1983 and there were PLENTY of camera companies.

I expressed myself unclearly. I meant that Nikon were not producing so many models of camera back then.

Most have gone under or been acquired. Nikon survived, but the majority of them (mostly film companies that failed to make the transition to digital) are no longer around, including some big names like Konica/Minolta, Contax, and Kodak.

Nikon is one of the big names in sports optics (the modern term for binoculars and spotting scopes) and microscopes.

Take a look at Nikon's financials. 74% of their sales come from cameras. Precision Equipment is a declining business (scanners and steppers), and makes up 18% of sales. Same with instruments (i.e. microscopes), only 5% of sales and declining. Then the "other" category, with 3% of sales. Cameras are Nikon's bread and butter.

As I said, the market will change, and perhaps reduce in value in real terms.

But what the article ignores is the growth in new markets such as China. Many countries are developing rapidly. Africa is developing a middle class. South America is doing well. So sales of full size cameras may well remain very healthy. Don't forget that today many wealthy amateurs own pro grade equipment. Even large numbers of ordinary people - mainly Americans it seems - own a D800 and pro grade lenses to photograph their dog, and family.

While you make a good point about the growing spending power of the middle class, it's not like Nikon will have that market to themselves. All the other brands are well aware of this being a major growth driver long term, and are competing in those markets like any other.

Yes, and Nikon are doing well at maintaining market share.

For example, China is already Nikon's 4th largest market by percent of total sales: USA 27%, Europe 26%, Japan 14%, China 12%, Other 21%.

The bigger risk to Nikon is that in those markets, DLSRs and P&S cameras become a "leapfrogged" technology. In the same way the many of those countries never built phone lines, but just went straight to cell towers, the risk is that the consumers skip buying clunky, mirror-flipping DSLRs, and buy small, sleek, high-end mirrorless systems that have the same image quality and pricing but are smaller, lighter, and more connected online. Likewise, the trend is already pretty clear that they aren't buying P&S cameras, they are just using their phones.

Yes, compact cameras may disappear. And yes smaller mirrorless cameras may dominate. But at the moment u4/3 has only a small market share. So people prefer a DSLR to a u4/3.

Nikon should thrive. As others have said, the recent experiences of flooding in Thailand and the earthquake in Japan may well have shaken Nikon profoundly (no pun intended).

The flooding in Thailand was two years ago. The earthquake was two-and-a-half years ago. Those are fine reasons when it's happening, but if they haven't rectified those problems by now, they're doing a pretty poor job of managing their operations.

No, I think you underestimate the impact of major events on a company. I think they did an amazing job of recovering, and may still be paying the price. These events would have cost a lot of money, and severely damaged existing and future production.

Overall I would say that the fat lady has yet to sing, and it is not yet time to order a headstone for Nikon. Apologies for mixing metaphors. The Sony mirrorless cameras are nice, but with a less compelling system. Nikon do need to respond IMO, as you will surely agree.

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