The impending DSLR downturn and liquidity

eNo said:

That's very interesting. I wonder, though, if these figures don't tell the whole story. Instead of getting twisted in abstract descriptions, let me illustrate by example. Suppose I and 999 of my best Nikonian buddies are invested into Nikon up the gills.

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Actually, you're closer to the real story that's unfolding than you know, only you still haven't quite got the "stray electron" part (as long as we're going to use physics terms).

With DSLR growth now 0%, if 1000 people bought Nikon in 2008 and another 1000 people bought Nikon in 2009, and they tend to update on two year cycles, you need all 1000 2008 folk to buy in 2010 or your market share goes down (or overall market goes down; both can happen). So it doesn't take very many stray electrons to change things. If 10 people decide Nikon isn't living up to their expectations anymore and they figure out a way to swing it (or just grin and bear the loss), then your new group of updating folk is no longer 1000, it's 990. Then 980. Then 970. In other words, each time you come back to the market with something your loyal following can update to, there's less of a following!

Nikon actually has a pretty good curve to look at: their SLR sales in the 80's and 90's. They lost share as they were perceived to have slipped behind Canon and not really get back ahead with subsequent releases. Basically, the F4 didn't stem the erosion, and the F5 definitely didn't stem the erosion.

eNo said:

maybe that adds up to $45M when you put it all together.

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It doesn't matter when you put it all together. If you didn't get US$45m this year that a competitor got, it means that your competitor has more money to put back into R&D for the next generation. If you're not careful, you start down a slippery slope. Moreover, your shareholders don't like seeing someone take your US$45m. For Nikon, missing a few million here and there is a problem, as they no longer have a healthy Precision division to boost profits overall.

Just for the heck of it, I went back and looked at Nikon's year 1999 results. Precision was 60% of the company. Today Imaging is 70% of the company. I'll also point out that 2007 was one of Nikon's best years: in 2000 they were 34% the size they were in 2007. But here's a kicker: in 2010 Nikon is expected to be 71% the size they were in 2007. Thus, they've just had two years of decline in overall sales. (This is all based on net sales--obviously, there are other measures I could use, but this is a decent enough indicator.)

eNo said:

Then at the end of this 2 year period, Nikon releases a D4 and a D400 and a bunch of new cool lenses and we go squeeling like kindergarten kiddos on Christmas morning to the nearest store and fork over ungodly amounts of money to get our new toys.

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That's certainly possible. It's what we all want ;~).

eNo said:

Now the ledger swings $45M the other way

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Yes. Quite possibly. However, note that the year after Nikon introduced the D3 and D300, which everyone thinks are winning cameras, the net sales of the Imaging division went up less than 2% and operating profit dropped in half. That just shows you how little those top models can influence the bottom line.

eNo said:

... did anybody switch brands? Maybe, but it wasn't us.

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Well, maybe the D3 folk didn't switch, but what about the D5000 and D90 folk? Or the D80 and D200 folk? Basically, the less you have invested in the system, the more likely you are to switch. Moreover, most of the sales are at the end where people haven't got huge investments in equipment.

eNo said:

You know, the more I think about m4/3, the less I think it threatens low-end DSLRs in a huge way.

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I'd tend to agree with that. But we haven't yet seen the low-end of m4/3. Both Olympus and Panasonic have indicated they'll have lower level models eventually.

--
Thom Hogan
author, Complete Guides to Nikon bodies (21 and counting)
http://www.bythom.com

eNo said:

But I'll point out that those used the same film (35mm) that DSLRs did, and though their lens quality was nowhere near what one could get in a DSLR, I think the capture medium makes a big difference.

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Yes, I think it's certainly true that the image quality gap between P&S film cameras and 35mm SLR was significantly smaller than the gap between digicams and DSLRs.

But digicams are a ton of fun and people buy boatloads of them. In 2008, about 110 million units got sold, the peak, so far, of the digicam business. The peak of the film P&S market was about 37 million units in the mid 1990s.

Contrast that with SLRs: the peak of the 35mm SLR business was either 7 or 8 million units (depends on whose count you trust) in 1982. The peak of the DSLR business, so far, is roughly 10 million units.

So both businesses have grown -- a testament to how cool digital is, in my view. It makes photography fun for more people (like Polaroid, only better). But point-and-shoots grew much more than SLRs in the digital era. I'm not making any particular point here -- many variables undoubtedly obtain. But the comparatively poor image quality of digicams, compared to DSLRs, has evidently not hurt their sales much.

A side note: some substantial proportion of the digicam business replaced a third category of film cameras: disposable 35mm cameras. In 1994, when I was a Nikon sales rep and attending a Nikon national sales meeting, our V.P. of sales asked us to guess the unit volume of disposable cameras in the U.S. The answer was 70 million units. (He was trying to outline a strategy for converting some of those sales to a non-disposable, very small, Nikon P&S we were about to introduce.)

eNo said:

I'd say photography is pretty hot now, though in a different way, with tons of people taking tons of images and pushing them across the Internet. I'm often amazed at how many more people are taking photos (snapshots or whatever we call them) than 20 years ago.

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Agreed. People really like digital photography. And well they should. Video, too..

eNo said:

This is an interesting observation: wouldn't a market segment that 10X larger than another stand to lose more, from a purely probabilitistic point of view, than the smaller one from a switch to a middle segment? Yet that's not what the most recent CIPA data seems to suggest.

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I'm not following how we can conclude that from the CIPA data. No way to know if mirrorless IL camera sales replaced some portion of DSLR sales, or some portion of digicam sales, or neither (i.e. they could have simply expanded the 2009 camera market). Can't tell from the CIPA data. Answering that question accurately requires some direct questioning of a good random sample of consumers.

Thom Hogan said:

Thom Hogan said:

You know, the more I think about m4/3, the less I think it threatens low-end DSLRs in a huge way.

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I'd tend to agree with that. But we haven't yet seen the low-end of m4/3. Both Olympus and Panasonic have indicated they'll have lower level models eventually.

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And sooner than later, as Olympus seem to be offering a teaser on their site for possibly the lighter, smaller E-P3:

http://www.olympusamerica.com/cpg_section/oima_next.asp?cid=oima_geto_next_tw

Eamon Hickey said:

Yes, I think it's certainly true that the image quality gap between P&S film cameras and 35mm SLR was significantly smaller than the gap between digicams and DSLRs.

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Well, yes in one sense, no in another. With film, ultimate quality was really determined by lens and film. Assuming you were buying amateur film (not refrigerated pro film), film was probably the gating issue. The reason why P&S and SLRs were reasonably the same was because film was the same, and it only went to basically ISO 800.

But consider what happens if you take today's digital cameras and put a limit at ISO 800: state of the art compacts do nearly as well as low-end DSLRs. Where the real difference in "quality" comes between digicams and DSLRs today is in low light, high ISO situations only, IMHO. And things are only going to get closer as we see more BSI and other technologies get pressed in the compact realm.

peripheralfocus said:

But digicams are a ton of fun and people buy boatloads of them. In 2008, about 110 million units got sold, the peak, so far, of the digicam business. The peak of the film P&S market was about 37 million units in the mid 1990s.

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And the peak of the cell phone cam has yet to hit, and it will be an order of magnitude or more higher than the highest of those numbers.

peripheralfocus said:

Agreed. People really like digital photography. And well they should. Video, too..

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Everybody, including the Japanese, is still missing the "whys" here, IMHO. And that's going to be important to sustain the business. Apple gets it. Canon doesn't.

peripheralfocus said:

I'm not following how we can conclude that from the CIPA data. No way to know if mirrorless IL camera sales replaced some portion of DSLR sales, or some portion of digicam sales, or neither (i.e. they could have simply expanded the 2009 camera market). Can't tell from the CIPA data. Answering that question accurately requires some direct questioning of a good random sample of consumers.

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That's correct. Though a few years of statistics will also tell us after the fact ;~). My hypothesis, however, is that mirrorless does not increase the camera market in any meaningful way. Thus, it must cannibalize one or both of the previous categories.

--
Thom Hogan
author, Complete Guides to Nikon bodies (21 and counting)
http://www.bythom.com

Thom Hogan said:

Well, yes in one sense, no in another. With film, ultimate quality was really determined by lens and film. Assuming you were buying amateur film (not refrigerated pro film), film was probably the gating issue. The reason why P&S and SLRs were reasonably the same was because film was the same, and it only went to basically ISO 800.

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But that has happenned again to some extent with DX. Hasn't the D300 sensor been used in the D90 and D5000 too? Many seem to think that if you are a pro you would only use FX.

I used beaten up old FM2's right through to going digital, even though all the newspaper guys used to sneer at them. But as long as i was using good film the output was the same!

I use a D300 for magazine and library work (fulltime freelance). The only reason I would go full frame is for my personal project work which is mostly shot at night. Even then i would never buy a D3 or D3s because I don't need all the frames per second etc. A D700 with a 35mm f1.4 would be ideal for my personal work!

Actually I blown the dust off the old D200 (has been relegated to back up) for good light work and have re-reminded myself how good the files are!

You also said that the m43 cameras were providing better image quality than the D3000, so that would mean better quality than the D200 too then? Don't they both use the same sensor?

Thom Hogan said:

Eamon Hickey said:

Agreed. People really like digital photography. And well they should. Video, too..

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Everybody, including the Japanese, is still missing the "whys" here, IMHO. And that's going to be important to sustain the business. Apple gets it. Canon doesn't.

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I think you have made variants of this point at least twice now (e.g., iPhones aren't the best cell phones, but their sales are taking off), but never have come out to clarify what you mean. Are you saying that technology appeal has to do more with "coolness" or emotional appeal than with performance or quality? I think you're right, within limits, of course. The coolest device won't last long if it craps out on you half the time, or if it produces very poor results. But it is truer that a high performaning, bullet-proof device will fail to capture wide market shares if it doesn't have some schnazzy appeal. Maybe that's why Nikon is doing all those commercials with Ashton Kutcher. What's cooler than being able to pack your underwear alongside a small DSLR?

~~~~~~~~~~~~~~

It's easy to argue about equipment and technique, but hard to argue with a good photograph -- and more difficult to capture one .



Gallery and blog: http://esfotoclix.com
Special selections: http://esfotoclix.com/store
Flickr stream: http://www.flickr.com/photos/22061657@N03

Apple are a marketers dream, especially given the way they've opened up their devices to developers while keeping their thumb on them. But in a broader context they're only peddling tomorrow's garbage through a combination of innovation and savvy marketing. The American business class are prone to hero worship.
--
Jim

eNo said:

Thom Hogan said:

Eamon Hickey said:

Agreed. People really like digital photography. And well they should. Video, too..

Click to expand...

Everybody, including the Japanese, is still missing the "whys" here, IMHO. And that's going to be important to sustain the business. Apple gets it. Canon doesn't.

Click to expand...

I think you have made variants of this point at least twice now (e.g., iPhones aren't the best cell phones, but their sales are taking off), but never have come out to clarify what you mean.

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I'm purposely being vague here for reasons I'll eventually reveal. Let's just say that a project I've been working on addresses this whole issue in spades. But I will say that I'm not talking necessarily about the hardware products themselves, but rather the environment they live in. Apple understands the environment, Canon doesn't. That has implications on hardware design choices.

--
Thom Hogan
author, Complete Guides to Nikon bodies (21 and counting)
http://www.bythom.com

Thom Hogan said:

eNo said:

Thom Hogan said:

Eamon Hickey said:

Agreed. People really like digital photography. And well they should. Video, too..

Click to expand...

Everybody, including the Japanese, is still missing the "whys" here, IMHO. And that's going to be important to sustain the business. Apple gets it. Canon doesn't.

Click to expand...

I think you have made variants of this point at least twice now (e.g., iPhones aren't the best cell phones, but their sales are taking off), but never have come out to clarify what you mean.

Click to expand...

I'm purposely being vague here for reasons I'll eventually reveal. Let's just say that a project I've been working on addresses this whole issue in spades. But I will say that I'm not talking necessarily about the hardware products themselves, but rather the environment they live in. Apple understands the environment, Canon doesn't. That has implications on hardware design choices.

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Hmm. A confidential project you are working on, Canon doesn't get it, but no mention of Nikon... Let the rumor's begin!

~~~~~~~~~~~~~~

It's easy to argue about equipment and technique, but hard to argue with a good photograph -- and more difficult to capture one .



Gallery and blog: http://esfotoclix.com
Special selections: http://esfotoclix.com/store
Flickr stream: http://www.flickr.com/photos/22061657@N03

JimPearce said:

Apple are a marketers dream, especially given the way they've opened up their devices to developers while keeping their thumb on them. But in a broader context they're only peddling tomorrow's garbage through a combination of innovation and savvy marketing. The American business class are prone to hero worship.

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As one major commentator has noted in the last couple of days: the iPad response is almost exactly the same Yeah/Nay response that the iPhone was originally greeted with. You can see direct parallels between the negative iPhone comments from many after it's introduction and the iPad comments from many. These are usually prefaced by "it doesn't...". At the risk of overgeneralizing, most of those negative comments tend to be characterized by lack of imagination and/or trying to fit a new shaped peg into the round and square holes they can currently see.

There are some clear issues with the initial iPad design, yes. They're not hard to find. Just as they weren't hard to find with the iPhone, or the iPod, or yes, even way back to the Macintosh. But what I respect about Apple is that they design forward, not backwards. Almost certainly they know all the issues and have known of them for some time. The question is how they're already addressing them in subsequent development. That we won't know for awhile.

But if you talk to iPhone developers you tend to get a different sense of the iPad from them than you hear in the public fora. This is especially true of the game developers, but it seems to apply to most I've heard from so far: the iPad opens up territory they want to explore. So just as many were surprised at the app store and what happened with it for the iPhone, I think we're going to get another burst of interesting stuff centered around the iPad.

--
Thom Hogan
author, Complete Guides to Nikon bodies (21 and counting)
http://www.bythom.com

when I can download nBird from the Nikon Store Thom. Then I can give away my crappy, nearly batteryless iPod Touch.
--
Jim

eNo said:

Thom Hogan wrote:

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Let's just say that a project I've been working on addresses this whole issue in spades. But I will say that I'm not talking necessarily about the hardware products themselves, but rather the environment they live in.

eNo said:

Hmm. A confidential project you are working on, Canon doesn't get it, but no mention of Nikon... Let the rumor's begin!

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And....by strange coincidence, today on Nikon Rumors....

From an interview with Hiroshi Takashima (General Manger of Imaging Division at Nikon) at Photofair:

Q: What can we expect from Nikon in 2010?

A: We plan to surprise the market. We will concentrate only on better quality and better line-up of cameras. So you can expect surprises.

Me thinks the surprise will be the rumored Nikon EVIL system. What could be considered a “surprise” in the DSLR world?

Apple has done one of the smartest things any company has ever done in this sector. They built an industry around every facet of a device and its use and then they released the device. The iTunes store and iTunes, complete with mass scale publishing deals, made the iPod come together. Add the onrush of developers for the iPhone and hundreds of thousands of apps. Then court all the major media houses with promises of a super media store (today iBooks, tomorrow everything) as successful as iTunes. THEN release the iPad. I believe this device will be very successful, the boombox heard round the world.

Yes, in its first release, it is not adequate for full HD video. Yes it lacks things. But it is good enough to move the herd, and the more full featured models will follow close behind. I predict a full HD display within a year.

Thom, I wonder if you will publish your books in Apple's store. It seems to me the powerful Apple iTunes/App Store/iBookstore will be a great platform for self publishers like you.

As has been suggested, EVIL has been rumored and talked about as a complete inevitability for so long, how could it be a surprise? The only hope is that something about it will be surprising... in a good way.

~~~~~~~~~~~~~~

It's easy to argue about equipment and technique, but hard to argue with a good photograph -- and more difficult to capture one .



Gallery and blog: http://esfotoclix.com
Special selections: http://esfotoclix.com/store
Flickr stream: http://www.flickr.com/photos/22061657@N03

jeff-c said:

Thom, I wonder if you will publish your books in Apple's store. It seems to me the powerful Apple iTunes/App Store/iBookstore will be a great platform for self publishers like you.

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ePub files can't handle the level of complexity that's in my books. I'd have to dumb them down.

--
Thom Hogan
author, Complete Guides to Nikon bodies (21 and counting)
http://www.bythom.com

Thom Hogan said:

jeff-c said:

Thom, I wonder if you will publish your books in Apple's store. It seems to me the powerful Apple iTunes/App Store/iBookstore will be a great platform for self publishers like you.

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ePub files can't handle the level of complexity that's in my books. I'd have to dumb them down.

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Sort of like the "dumbed down" CD and DVD-A music into MP3 files. And yet look at what took off like a rocket. You might want to look into the convenience vs. fidelity trade-off.

~~~~~~~~~~~~~~

It's easy to argue about equipment and technique, but hard to argue with a good photograph -- and more difficult to capture one .



Gallery and blog: http://esfotoclix.com
Special selections: http://esfotoclix.com/store
Flickr stream: http://www.flickr.com/photos/22061657@N03

Thom Hogan said:

ePub files can't handle the level of complexity that's in my books. I'd have to dumb them down.

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The term of art is 'repurpose', Thom. eNo has a point.

"In every change, something totally new and wonderful comes to be, something old is preserved, and something precious and irreplacable is lost forever." (Marshall McLuhan, misquoted from memory)

...the D3s and D300s are not quite enough to
make most of us (at least me) upgrade.

Canon gets it with the 7D and 5DM2: a clear step
forward from their predecessors, not just a little shuffle.

Little steps and high prices hurt Nikon, in my opinion.

If the D3S had been lower than $5000 I would probably have
gotten one. I'm not going to pay more for a similar camera to
what I have. ( I know some think the D3/D3s difference is huge - I don't ).

There is more to life than money, and more to photography than price.
I used, and still have, an extensive Hasselblad system. I find myself
annoyed at the higher than expected prices Nikon charges, and
I find myself buying fewer of their products recently.

maljo

eNo said:

eNo said:

ePub files can't handle the level of complexity that's in my books. I'd have to dumb them down.

Click to expand...

Sort of like the "dumbed down" CD and DVD-A music into MP3 files. And yet look at what took off like a rocket. You might want to look into the convenience vs. fidelity trade-off.

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That's because the fidelity difference was between excellent and very good, both being more than good enough for the majority of listeners, many of them not being able to discern a difference. A few audio "pixel peepers" could hear differences, but the difference you're talking about is akin to Thom producing two versions of his guides, one at a very slightly reduced resolution that wouldn't matter to most people because the value of his guides is in the information that's conveyed, not how slick and pretty the graphics and tables appear. I think that what Thom is talking about is that he couldn't easily produce a more "convenient" version (such as automating mp3 rips from CD), but would have to rewrite his guides, probably without being able to use conveniences such as tables (maybe links as well - I don't know if ePub supports them or not). As far as I'm aware, with portable readers, Thom's PDF files work if the smallest fonts are used. Increasing the font size makes them totally unusable, but at least they're useful with the small fonts. Redesigning the guides to work well as ePub files would probably require enough additional time that Thom would have to delay or abandon other projects, and "dumb down" the guides enough so that they'd look a lot worse when viewed on a computer, since I doubt that it would be a good idea to create two significantly different versions, with ePub users getting the short end of the stick.