Will Nikon be out of business in 5 years?

Started Oct 28, 2013 | Discussions
Jeff
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Re: Will Nikon be out of business in 5 years?
In reply to pavi1, Oct 29, 2013

pavi1 wrote:

Jeff wrote:

pavi1 wrote:

Jeff_Donald wrote:

Just something to think about when a company is so "invested" in just one business and not diversified.

You have been terribly misinformed. Perhaps you should read their financial statements for yourself rather than a blog written with a competitor agenda.

I don't understand your point. What have you gleaned from the financial reports that leads you to a different conclusion?

They do not just make cameras. They are more diversified than the blog would lead you to believe.

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I think the concern of the IDC analyst that about 75% of Nikon's revenues come from their imaging division. (The article claimed 78%, but I saw 74.4% in the 2013 annual report).

Or did you have a different point?

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Jeff
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Re: More like returning to pre-digital sales levels!
In reply to Mike_PEAT, Oct 29, 2013

Mike_PEAT wrote:

Everyone keeps talking about dropping dSLR sales, but what people forget is before digital there was a LOT more competition, and people kept their cameras for decades instead of months...we are just starting to return to that trend where people kept their cameras longer, and Nikon (like every other brand) will have to get used to the bloated sales returning to normal levels!

The article was making a different point ... that the camera hardware on offer by Nikon and Canon is being displaced by different technologies offered by Apple, Samsung, and Sony.

What's normal?  We're certainly not going backwards to the days of film developing at the corner drugstore.  For better or worse, photography has changed in pretty profound ways. For one thing, there are more photos are being taken than ever before. We no longer stuffs a few prints in a snail mail letter to let grandma know how the family is doing.

The anomaly is that in spite an exploding culture of visual communication, compact camera sales have fallen off the cliff, and dslr sales are falling, too.  I have no crystal ball, but I do suspect that photography industry 5-10 years from now will look a lot different than it does today.

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Marcin 3M
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If this happen...
In reply to Jeff_Donald, Oct 29, 2013

... it is quite probably, that the only widely available Canon product are going to be the microwave ovens...

Yes, it is quite probably, that whole imaging market will collapse. This may be due to the general devaluation of photography. We are surrounded by meaningless images. Also tools for image creation are everywhere. Amateurs are switching to cameras mounted in the phones (This summer I've heard it from two persons - both abandoned theirs p/s in favour to cellphones).

On the other hand: Sony, Nikon, Canon - they're just the tools for picture taking. For me it's meaningless, as long as my camera works, and I can buy ink and paper for my printer. My D700/800 pair delivers me IQ that can be hardly beaten by any tools that normal user can afford, and are definitely better than any camera I've ever own (excluding my 4x5 Cambo).

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Jeff
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Re: Will Nikon be out of business in 5 years?
In reply to Jeff_Donald, Oct 29, 2013

Jeff_Donald wrote:

Just something to think about when a company is so "invested" in just one business and not diversified.

Christopher Chute from market intelligence firm IDC predicts Nikon may be out of business in 5 years if the trend continues.

“You’re talking about a 10-15% decline in DSLR shipments all over the world. Which is kind of shocking because that market’s been growing double digits for almost ten years. Nikon recently said they have a five year plan to address this. And my view is, that five year plan should have come out five years ago. They’re not going to be around in five years.”

Let's hope for the industries sake that this is not the case.

Hi Jeff --

A few more quick comments on an interesting article.

Personally, I would frame the issues somewhat differently.  It seems to me what's happening in the camera industry isn't a battle of market segments or manufacturers, but rather a commodification of camera technology.  100's of millions of cameras are now being sold each year as modules that are installed in phones.  The modules cost just a few dollars, yet in good light  deliver a quality image that meeting the most needs of most people.  In that sense, mass market cameras are now a commodity where folks just don't care about brand. It comes down to price and specs, just like buying potatoes.

Another important distinction is that iOS and Android attract third party developers with a published API and a viable business model.

Those things don't exist in the Canikon ecosystem.  The only third party developers that come to party are the lens makers, and even then it's not always clear they are welcomed. And forget about commodification, their whole strategy is based on the exclusiveness. Nikon and Canon are pursuing a smaller and more exclusive market with more and more expensive goods.  In the meanwhile, their are literally billions of potential customers being captured by their competitors.

Now specifically with regard to Nikon, they have the financial, brand, and technical resources to hang in their for a while, perhaps a long while. But I suspect, for the reasons mentioned above, that they do have a walk through the 'valley of death' coming their way over the next 5-10 years.  It'll be interesting to see what Nikon looks like in 5-10 years.  Some companies pull if off (see Apple), others don't (see Kodak).

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trac63
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Canon and Nikon will be the last to go.
In reply to Jeff_Donald, Oct 29, 2013

Even in the worst-case scenario for Nikon and Canon — the consumer DSLR market dries up and everything goes mirrorless — the transition will not be a huge deal.

Let me put it this way. What magical technology exists in mirrorless cameras that Nikon and Canon don't already have at their disposal? None. Nada. Zilch.

Canon and Nikon both made the jump to digital without missing a beat, and there's no reason to assume that the jump to mirrorless will be any different.

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pavi1
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Re: Will Nikon be out of business in 5 years?
In reply to Jeff, Oct 29, 2013

Jeff wrote:

pavi1 wrote:

Jeff wrote:

pavi1 wrote:

Jeff_Donald wrote:

Just something to think about when a company is so "invested" in just one business and not diversified.

You have been terribly misinformed. Perhaps you should read their financial statements for yourself rather than a blog written with a competitor agenda.

I don't understand your point. What have you gleaned from the financial reports that leads you to a different conclusion?

They do not just make cameras. They are more diversified than the blog would lead you to believe.

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WSSA #44

I think the concern of the IDC analyst that about 75% of Nikon's revenues come from their imaging division. (The article claimed 78%, but I saw 74.4% in the 2013 annual report).

Or did you have a different point?

Compared to other financial statements I have looked at they seem to be riding the storm out. They have three other divisions other than imaging that are profitable They have only one loss year in the last 10 and that was 2010. Cost of sales as a per cent of sales was 7% higher than the average of the other 9 years. Not sure why but if cost of sales in 2010 had been the same per cent as other years they would have had a profit in all 10 years.

If they have not considered market saturation and a longer lifespan for their product, they could have problems. This will be a problem for a lot of camera companies. Just like computers, you no longer need a new one every year.

Of course any company can go bankrupt. GM was the largest corporation on the planet and without a bailout they would have gone bankrupt.

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Toccata47
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Canon is worse off then Nikon, apparently
In reply to hotdog321, Oct 29, 2013

Both, it seems, will need to rapidly shift gears to remain present in amateur market.

hotdog321 wrote:

Man, I hope not! I'm already getting gouged like mad by Canon. Imagine what they would do without Nikon's competition!

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Eamon Hickey
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other businesses
In reply to Jeff, Oct 29, 2013

Jeff wrote:

Now specifically with regard to Nikon, they have the financial, brand, and technical resources to hang in their for a while, perhaps a long while. But I suspect, for the reasons mentioned above, that they do have a walk through the 'valley of death' coming their way over the next 5-10 years. It'll be interesting to see what Nikon looks like in 5-10 years. Some companies pull if off (see Apple), others don't (see Kodak).

From some public comments over the past year, I think it's evident that Nikon management is well aware that they've got a walk through the valley of death coming up. They've actually been more forthright about that than any other camera company, although, of course, they need to be, since investors can clearly see that Nikon is more exposed to disruptions in the camera business than anybody else is.

This is fairly obvious, but I'm sure that one major thrust of their plans to deal with a changing camera business will be to look for additional non-camera optical businesses to get serious about. Steppers (Precision (Optical) Equipment) looked glorious in the 1980s (and was both very profitable and also a seemingly perfect fit for Nikon), but it's proven a very fickle mistress over the last 15 years.

In other words, yes, they need to be smart about how to build cameras for the future, but equally, they need at least one more big optical business. I'm sure they know that. Whether they can find it is another question entirely. The most obvious route, to my eye, is medical optics, which they already have a small presence in.

In any case, they have done it before. Making cameras was itself one such transition -- for their first 30 years, they were primarily an optical munitions manufacturer. In 1946 they found themselves shrunk from twenty factories to one and with nothing to sell (their only real customer, the Japanese Imperial Navy, was almost entirely at the bottom of the ocean at that point). That was a much deeper, darker hole than anything they'll face now.

Anyway, they decided to start making cameras for consumers, and it worked. They did it again in the late 1970s when they got into the stepper business (invented by the American company, GCA) and within a decade became a precision equipment company with a relatively small sideline in cameras. (Obviously, that has since reversed.)

So, like most companies with a long history, they've transformed themselves successfully before. As you said, we'll see if they can do it again. I don't have a prediction, but I will say that their senior management has been much more able than it was in the 1990s -- Nikon is much better run than it was in the 1980s and 90s, and it's better run than several other high-end optical companies, so I think they've got a decent shot.

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Red5TX
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Re: other businesses
In reply to Eamon Hickey, Oct 29, 2013

So, like most companies with a long history, they've transformed themselves successfully before. As you said, we'll see if they can do it again. I don't have a prediction, but I will say that their senior management has been much more able than it was in the 1990s -- Nikon is much better run than it was in the 1980s and 90s, and it's better run than several other high-end optical companies, so I think they've got a decent shot.

I'm not a Nikon shooter and don't have a dog in this fight, although I would like to see Nikon survive.  Your analysis here seems correct to me.  Nikon seems self-aware enough to weather this storm.  They may emerge smaller and leaner, but there's nothing wrong with that.

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GodSpeaks
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Re: Will Nikon be out of business in 5 years?
In reply to bobn2, Oct 29, 2013

GodSpeaks wrote:

Nikon is the next Kodak...

My .02

No, not a chance, unless they were to make a monumental blunder.

Way back around 2002/2003 when Canon came out with the first FF DSLR, Nikon responded by saying they were not going to do FF.

They never did say that. They said they weren't going to do it until they were convinced that it offered the best price/performance, that was a consistent line they had for years, they never said 'never'.

Edit: In any case, Canon did not 'come out with the first FF DSLR'. That was Contax with the ND.

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Bob

Nikon may never have actually said 'never', but they certainly implied that in the begining. They changed their tune later to something along the lines of 'when we are ready'.

Yes, Contax was first, but that camera hardly set the world on fire. It was the Canon that made real waves, followed the next day (if I recall correctly), by the Kodak 14n.

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jkoch2
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Dog Fight
In reply to Red5TX, Oct 29, 2013

Red5TX wrote:

I'm not a Nikon shooter and don't have a dog in this fight,

Unless you use a phone camera only, or don't need to defend an investment in lenses, or worry whether you're DSLR bodies will eventually cease to function, perhaps you do have a dog to defend.  Profits on dedicated cameras are down just about everywhere, for all manufacturers.  Canon and Nikon are the least impaired, which makes doomsday scenarios a bit less likely, but a serious possibility nonetheless.

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Eamon Hickey
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Bob's right
In reply to GodSpeaks, Oct 29, 2013

GodSpeaks wrote:

GodSpeaks wrote:

Nikon is the next Kodak...

My .02

No, not a chance, unless they were to make a monumental blunder.

Way back around 2002/2003 when Canon came out with the first FF DSLR, Nikon responded by saying they were not going to do FF.

They never did say that. They said they weren't going to do it until they were convinced that it offered the best price/performance, that was a consistent line they had for years, they never said 'never'.

Edit: In any case, Canon did not 'come out with the first FF DSLR'. That was Contax with the ND.

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Bob

Nikon may never have actually said 'never', but they certainly implied that in the begining.

No, Bob's right. The widespread impression that Nikon said they would never make a FF DSLR is purely the result of lots of people on the Internet not knowing anything about how companies use language. They misinterpreted Nikon's statements.

I followed this very closely at the time as a reporter in the camera industry. I'm quite sure of what Nikon said, and I also know -- and knew at the time -- what they meant. They have never contradicted themselves on this question.

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Red5TX
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Re: Dog Fight
In reply to jkoch2, Oct 29, 2013

jkoch2 wrote:

Red5TX wrote:

I'm not a Nikon shooter and don't have a dog in this fight,

Unless you use a phone camera only, or don't need to defend an investment in lenses, or worry whether you're DSLR bodies will eventually cease to function, perhaps you do have a dog to defend. Profits on dedicated cameras are down just about everywhere, for all manufacturers. Canon and Nikon are the least impaired, which makes doomsday scenarios a bit less likely, but a serious possibility nonetheless.

I actually think we're looking at two different questions:

1. Will cameras as we know them survive into the future?  You're right, I have an interest in the answer to this question.

2. If yes, which camera companies will survive?  I do not have any interest in Nikon surviving into the future.*  My comments reflect my opinion of Nikon's chances vis a vis the industry as a whole.

* I guess I do own a P7700, but it's a stand-alone model so I don't really care if Nikon keeps making them.

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jkoch2
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Re: Canon and Nikon will be the last to go.
In reply to trac63, Oct 29, 2013

trac63 wrote:

Even in the worst-case scenario for Nikon and Canon — the consumer DSLR market dries up and everything goes mirrorless — the transition will not be a huge deal.

Your phone is ringing.  Text message: It's the phones, trac63.  It's the phones.  Repeat: it's the phones.  They are the market tsunami.  Mirrorless cameras are a bare ripple on the pond.

Let me put it this way. What magical technology exists in mirrorless cameras that Nikon and Canon don't already have at their disposal? None. Nada. Zilch.

No proof that anyone, anywhere is making profits on mirrorless cameras.  Sales volumes have flattened, and not a single public firm breaks out profits on mirrorless alone in any reliable way.  Six months sales reports for a new camera are always "up" and mean nothing.  Nor do we know how the companies will fare on earnings from high-end or "enthusiast" devices after they wind down the impaired P&S business.

Mirrorless sales have possibly cannibalized some DSLR business, but the combined sales of DSLR and mirrorless are at risk over the next several years.

Canon and Nikon both made the jump to digital without missing a beat, and there's no reason to assume that the jump to mirrorless will be any different.

It's not about a "jump to mirrorless" but a consumer stampede to smart phones, which makes just about any kind of traditional camera more difficult to sell than before.

Better to read the entire article linked at the start of this thread.

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Erik Magnuson
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Re: Will Nikon be out of business in 5 years?
In reply to GodSpeaks, Oct 29, 2013

GodSpeaks wrote:

Nikon may never have actually said 'never', but they certainly implied that in the begining.

IIRC, they said they were going to focus on their existing product line -- which is what every business says unless they want to rediscover the Osbourne Effect.  Nikon needed a partner who could fab competitive FF sensors and the partner(s) were not there yet.

Yes, Contax was first, but that camera hardly set the world on fire.

It killed Contax as a player in the SLR market. And set Pentax back several years (co-developed with Pentax but Pentax dropped out.)

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Eamon Hickey
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always be cameras for enthusiasts
In reply to jkoch2, Oct 29, 2013

jkoch2 wrote:

Red5TX wrote:

I'm not a Nikon shooter and don't have a dog in this fight,

Unless you use a phone camera only, or don't need to defend an investment in lenses, or worry whether you're DSLR bodies will eventually cease to function, perhaps you do have a dog to defend.

I'm not actually worried about that. There will always be devices for enthusiast and advanced photographers because there will always be a market for them.

The question is what those devices will be like and which companies will figure out what they should be like. I think Jeff is right that there's a very real possibility that those companies may not be any of the current camera makers. On the other hand, they might be some, or even most, of the current camera makers. There are precedents for both scenarios.

But I don't really care whose camera I'll be using in 15 years. If it's a Nikon, great. If it's a Google-Flex, great. If it's a Foxconn-o-matic, that's great, too. As long as it gives me capabilities that make me happy, I'm sold.

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Erik Magnuson
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Re: Canon and Nikon will be the last to go.
In reply to jkoch2, Oct 29, 2013

jkoch2 wrote:

Your phone is ringing. Text message: It's the phones, trac63. It's the phones. Repeat: it's the phones. They are the market tsunami.

Much like disposable (aka one-time-use) cameras did for film cameras.

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Red5TX
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Re: Canon and Nikon will be the last to go.
In reply to Erik Magnuson, Oct 29, 2013

Erik Magnuson wrote:

jkoch2 wrote:

Your phone is ringing. Text message: It's the phones, trac63. It's the phones. Repeat: it's the phones. They are the market tsunami.

Much like disposable (aka one-time-use) cameras did for film cameras.

I could have made a lot of money if I'd predicted, five years ago, that an 8mp 30mm equiv fixed focal length camera would come to dominate the market!

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pavi1
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Re: Canon and Nikon will be the last to go.
In reply to Red5TX, Oct 29, 2013

Red5TX wrote:

I could have made a lot of money if I'd predicted, five years ago, that an 8mp 30mm equiv fixed focal length camera would come to dominate the market!

And which camera is that?

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trac63
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Re: Canon and Nikon will be the last to go.
In reply to jkoch2, Oct 29, 2013

jkoch2 wrote:

It's not about a "jump to mirrorless" but a consumer stampede to smart phones, which makes just about any kind of traditional camera more difficult to sell than before.

Better to read the entire article linked at the start of this thread.

Yeah, it's a Financial Post article from several weeks ago. The Financial Post is a second-tier business news publication here in Canada. Fun to read, but not the most reliable source of information.

It's not at all clear that the decline in DSLR sales has anything at all to do with smart phone cameras. In fact, it's entirely attributable to the global economy and a much longer upgrade cycle as the technology matures. It's also possible that down the road, smart phones will get more people interested in photography and looking to buy more serious cameras.

In any event, my point was: if the market does continue to shrink dramatically, Canon and Nikon are the most likely to remain standing. They have the brand recognition and the customer base. It's the smaller players that are in trouble.

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