Christmas Selling Season – steady as she goes!
Not cyclical. Displacement by phone cameras makes the drop in P&S sales permanent, if not fatal. Phone cameras also put a dent in demand for compacts or casual buyers of DSLRs. Pro's upgrades of high-end equipment may also level off, or even sag, as the technical improvements mature and diminish.
Why so gloomy?
I'm not gloomy, but the camera makers' financial results sure are. Most of the world is not gloomy. Most of the world is happy or downright cheery with smart phones. The gloom hovers over any company that tries to sell traditional cameras.
The J1 was selling at $249 at clearance. That tells me how low the production cost is. Put the PDAF and processing speed into a Coolpix B and it will sell in numbers at $350-$450.
The J1 with kit lenses originally listed in 2011 for $600. Liquidation at $249 probably entailed a huge loss. Had Nikon been able to sell the J1 at the MSRP, the gross profits would have been under $100 and split between the retailer, wholesaler, and maker, leaving Nikon with roughly $30. Cut the price to $249, and the net loss to Nikon would be roughly $220 / unit. Were Nikon to share that loss with the retailers, you can guess how many would go out of business or stop selling J1s or cameras at all.
Nikon's operating margin (operating profits / revenues) between 3/2010 and 3/2013 averaged 4.8%. People grossly over-estimate companies' profits. A liquidation price is not the cost of production, but often much less.
There lies the future of compact cameras. Not as cheap versions of DSLR. But as powerful little bridge cameras between smartphones and DSLR.
Smart phone cameras have closed much of the gap, plus they offer utilities, connectivity, and convenience that no camera can. Selfies and Instagrams don't require heaps of IQ, and the cost and bulk of large sensor cameras and HQ lenses leave most people cold. Might as well try to sell them a typewriter, vinyl disc turntable, or an adding machine.
With the mass market gone forever, the camera industry must shrink.
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|Feb 24, 2014|
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