DSLR market shares and profit margins, April-June 2008

Started Sep 19, 2008 | Discussions
tweedle Veteran Member • Posts: 4,480
DSLR market shares and profit margins, April-June 2008

Mizuho Securities Equity Research, Tokyo, issued an 8-pages sector outlook report on Precision Instruments today.

The report includes an extensive breakdown of the camera industry, including the researchers estimates on market shares and operating profit for the three months April-June 2008 (1st quarter) regarding the four leading manufacturers of DSLRs.

These figures seem to indicate that:

  • Canon has regained a clear leadership in DSLRs with a market share well above 40 per cent and a very strong profit.

  • Sony is now a clear #3 in DSLRs with a market share in the region of 12 per cent, more than doubling #4, Olympus.

  • Sony's big step forward is costly, since Sony is taking an operating loss of no less than 16.7 per cent in the DSLR business. Olympus is losing money from DSLRs too, however much less but making no inroads either.

Please note that these estimates are from an independent researcher, your view might be different.

Key figures regarding DSLRs only (April-June 2008):
DSLR units/operating profit margin

Canon 1,050,000/23.2
Nikon 820,000/19.1
Sony 330,000/-16,7
Olympus 150,000/-6.7

No figures for Pentax or others are given.

(For the full report, you will have to subscribe)

WaltKnapp Forum Pro • Posts: 13,857
Re: DSLR market shares and profit margins, April-June 2008

tweedle wrote:

  • Sony's big step forward is costly, since Sony is taking an

operating loss of no less than 16.7 per cent in the DSLR business.

That actually is less loss than I expected. Having to R&D a whole line in a short time is costly and at the time period in question most of the cameras were hardly on sale.

It is why the upper levels of Sony are pressuring the DSLR business to get 20% market share this year. They can only support the losses so long if there is no progress. So far Sony is not making it to 20% if the European sales are any indication. They sure don't need all the negativity they get from all sides. They are doing a fantastic job in a short timeframe.

Walt

Glenn Veteran Member • Posts: 7,911
Re: DSLR market shares and profit margins, April-June 2008

Each of the other manufacturers didn't have to develop from scratch a whole camera business. the initiall losses should'nt be a shock to anyone. Also sort of shows how small the DSLR market really is, Canon only sold a million units in that quarter. so there chasing pretty small potatoes here I can also see why Sony wants this market. with such small numbers as that (8-9 million units a year) and the other companies being so heavily dependent on that market and also being only 2 competitors it's attractive to win it because then development can slow and profit can increase.
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thebard37 Veteran Member • Posts: 5,225
Sony is in the process of . . .

. . . buying market share.

And it looks like it is working because every six months or so they seem to gain 3-4% of the market.

Once their startup costs are amortized they will be in the red, and things will be back to the way they were before digital except Minolta is now Sony as the "third" player in the "big three."

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shaocaholica Contributing Member • Posts: 873
Re: DSLR market shares and profit margins, April-June 2008

Glenn wrote:

Each of the other manufacturers didn't have to develop from scratch a
whole camera business. the initiall losses should'nt be a shock to
anyone.

Thats assuming Sony threw everything out from the Konica-Minolta deal. Its not purely from "scratch". I even talked to a bigshot marketing/sales guy from Japan who used to work for KM but got transferred to Sony as part of the deal which is an example of how Sony didn't just start from scratch.

RedFox88 Forum Pro • Posts: 30,549
not from scratch

Glenn wrote:

Each of the other manufacturers didn't have to develop from scratch a
whole camera business. the initiall losses should'nt be a shock to
anyone. Also sort of shows how small the DSLR market really is,
Canon only sold a million units in that quarter. so there chasing
pretty small potatoes here I can also see why Sony wants this
market. with such small numbers as that (8-9 million units a year)

From scratch? No. They bought a camera company, that is hardly from scratch. They had been making sensors for nikon for years. So if anything it was just a revision of the direction of minolta's dSLRs. It'd be much different if sony didn't buy minolta camera and decided to just start making their own dSLR designs.

Canon's forecast at the begining of the year was to sell 4.4 million units, which was a good jump from 2007 so it looks like they are on track so far. What isn't told here is lens sales. Canon is starting expansion/construction of a new lens manufacturing facility this month that should be making lenses by July 2009. It was posted in this forum this week.

ledittmar Veteran Member • Posts: 3,495
Re: Sony is in the process of . . .

A lot of people who may like the new Sony DSLR are hesitant to buy it, because they have lenses that fit other cameras.

If Sony wants to move their camera, maybe they should offer money for those lenses!
Are you listening SONY?

ropen Senior Member • Posts: 1,479
Re: DSLR market shares and profit margins, April-June 2008

tweedle wrote:

Mizuho Securities Equity Research, Tokyo, issued an 8-pages sector
outlook report on Precision Instruments today.

The report includes an extensive breakdown of the camera industry,
including the researchers estimates on market shares and operating
profit for the three months April-June 2008 (1st quarter) regarding
the four leading manufacturers of DSLRs.

These figures seem to indicate that:

  • Canon has regained a clear leadership in DSLRs with a market share

well above 40 per cent and a very strong profit.

if Sony has 12% with 330K units then Canon will have: (1050/330)x12% = 38.18%

  • Sony is now a clear #3 in DSLRs with a market share in the region

of 12 per cent, more than doubling #4, Olympus.

Again if Sony has 12% with 330K units then the total of the units (btw units shiped, sold, produced????) is about 2,75 M (in a slow quarter let alone the one with the Xmas). So the total of the 2008 will surpass 11M (no kidding?) and more important in this "statistics" there are 14.5% missing (2,75 M -c-n-s-o = 400K units). Well I guess it's Pentax 14% and Sigma 0,25% and Panasonic 0,25% LOL!!!!!!!!!!

  • Sony's big step forward is costly, since Sony is taking an

operating loss of no less than 16.7 per cent in the DSLR business.
Olympus is losing money from DSLRs too, however much less but making
no inroads either.

Please note that these estimates are from an independent researcher,
your view might be different.

I can make this kind of studies all day long or better yet I'll let some of the more famous "consultants" here (pb hint) do it so they would get whatever brand is needed to the apogee.

Key figures regarding DSLRs only (April-June 2008):
DSLR units/operating profit margin

Canon 1,050,000/23.2
Nikon 820,000/19.1
Sony 330,000/-16,7
Olympus 150,000/-6.7

No figures for Pentax or others are given.

(For the full report, you will have to subscribe)

I think I'll pass considering the above ... either this report is s..t or the op made a mess from it ...

My 2 eurocents,
Radu

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rhlpetrus Forum Pro • Posts: 27,125
Re: DSLR market shares and profit margins, April-June 2008

Glenn wrote:

Each of the other manufacturers didn't have to develop from scratch a
whole camera business. the initiall losses should'nt be a shock to
anyone. Also sort of shows how small the DSLR market really is,
Canon only sold a million units in that quarter. so there chasing
pretty small potatoes here I can also see why Sony wants this
market. with such small numbers as that (8-9 million units a year)
and the other companies being so heavily dependent on that market and
also being only 2 competitors it's attractive to win it because then
development can slow and profit can increase.
--

The market may look small in units, but not in sales money.

But even regarding units, looking at these number, it seems the market has grown a lot from the previou syear, when Canon sold about 3.2 million units and Ninkon about 3 million. These figures, projected to a full year would look like 4.2 million for Canon (30% more) and 3.3 million for Nikon (+10%), increases, with Sony also looking like much larger than previous years, at 1.3 million. Oly looks the same, at about 600 K, a number similar to what I've seen in recent years (which, IMO, points towards Oly's dslr division being in big trouble).

Canon is profitting from a very agressive marketing/price strataegy in the first Q, with the launch of the 450D and big discounts for the 40D and 5D. Nikon suffered a bit because they didn't updated the entry-level line, but I think the D90 now and likely a D60+ later this year or early next year, will help a bit. Nikon people said earlier this year that they would invest more in the pro sector and are doing just that, the D700 and, it seems, a new high MP camera coming next Nov (Nov 8th is the date circulating in Nikon forums).

Sony has also profitted from teh agressive launch of many entry-level bodies, in particular the A350 (whatever people think of its IQ properties), which looks very attractive for the newcomer.

I think we'll see Sony gaining bit by bit a larger share of the market, in a few years the market will be clearly 3-way, with Canon with about 40%, Nikon 30% and Sony about 25%, the rest getting 5% share.

It looks like the market is moving into the 10 million units level next year.

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HerbChong Senior Member • Posts: 1,369
Re: DSLR market shares and profit margins, April-June 2008

production and sales are essentially identical because anything else is financial suicide for anyone, even Canon.

Herb....

philbarton Senior Member • Posts: 1,618
Sony must be discounting like crazy

tweedle wrote:
These figures seem to indicate that:

  • Canon has regained a clear leadership in DSLRs with a market share

well above 40 per cent and a very strong profit.

  • Sony is now a clear #3 in DSLRs with a market share in the region

of 12 per cent, more than doubling #4, Olympus.

  • Sony's big step forward is costly, since Sony is taking an

operating loss of no less than 16.7 per cent in the DSLR business.
Olympus is losing money from DSLRs too, however much less but making
no inroads either.

Please note that these estimates are from an independent researcher,
your view might be different.

Key figures regarding DSLRs only (April-June 2008):
DSLR units/operating profit margin

Canon 1,050,000/23.2
Nikon 820,000/19.1
Sony 330,000/-16,7
Olympus 150,000/-6.7

No figures for Pentax or others are given.

===========

Makes it kind of hard to find a place for Pentax to survive. Sony must be cutting deals with the channels to push this stuff out, and generate sales - that's why margins are negative 16.7 percent. This is called "dumping" - i.e. selling below cost; and is illegal in the U.S.

Olympus is spending money on the micro format, so I understand their problem.

Now, the shareholders of Sony would need to go along with THEIR problem.

I'll guess going forward at 43 percent for Canon, and probably around 38-40 percent for Nikon. Sony has gotten share from discounts, as both Canon and Nikon are releasing new models faster. This is a sprint for Sony, and I doubt that it lasts. The A900 is the make-or-break.

If you logically and assign 83% to (C) and (N) combined; and a current 12 % to Sony, that would condemn everyone else to near-invisibility; and I think that these numbers for Sony are questionable and/or short term. No one can keep running with that kind of negative margin - and at least since 2006 Sony has been in the game.

PhotoTraveler Forum Pro • Posts: 11,700
Re: DSLR market shares and profit margins, April-June 2008

Long term yes, short term, no.

Camera makers stock pile gear when it's new so there is a supply built up. Sony is doing this right now around the world with the A900. Units are coming into some countries, but they are getting a stock pile built up before letting folks buy/take delivery of them. So they don't have the situation of 1 person gets a camera, then the next guy/gal has to wait a week.

Camera makers also make lenses in batches. So they will fill up a ware house with how ever many they think they need. Then sell down that inventory over a period of years and not make more till they see a shortage coming.

Now if you average that build up and sell out over time, yeah, they make as much as they sell. But looking at a short timeline the production could be much higher than sales.

PhotoTraveler Forum Pro • Posts: 11,700
Re: Sony must be discounting like crazy

Not really, if you look, Sony doesn't do much of any price chopping. A700 has been out a year and they have only dropped the price 100 bucks. They hold the prices up pretty well.

Their hit isn't selling stuff under cost. It's that they are having very large R&D cost right now. They are bringing a lot of models out fast, and developing very expensive lenses very fast (16-35ZA, 24-70ZA for example), yet they don't have the volume of sales to make up that cost very quick.

Sony's R&D/NRE will be very high for a few years till they get the system built up and can slow down on the R&D side, and the sales side has grown.

To break even, Sony would have to get market share up near Canon and Nikon levels. They have been bringing gear at the same rate or higher than Canon, but without their marketshare. So they are loosing money. But give them a few years and they will be fine.

ropen Senior Member • Posts: 1,479
Re: Sony must be discounting like crazy

philbarton wrote:

===========

Makes it kind of hard to find a place for Pentax to survive. Sony
must be cutting deals with the channels to push this stuff out, and
generate sales - that's why margins are negative 16.7 percent. This
is called "dumping" - i.e. selling below cost; and is illegal in the
U.S.

I would be less worried for Pentax and more for those 4th grade math knowledge that eludes you. After you master that I'll be more than willing to read your "analysis".

Radu

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philbarton Senior Member • Posts: 1,618
Re: Sony must be discounting like crazy

PhotoTraveler wrote:

Not really, if you look, Sony doesn't do much of any price chopping.
A700 has been out a year and they have only dropped the price 100
bucks. They hold the prices up pretty well.

Their hit isn't selling stuff under cost. It's that they are having
very large R&D cost right now. They are bringing a lot of models out
fast, and developing very expensive lenses very fast (16-35ZA,
24-70ZA for example), yet they don't have the volume of sales to make
up that cost very quick.

Sony's R&D/NRE will be very high for a few years till they get the
system built up and can slow down on the R&D side, and the sales side
has grown.

To break even, Sony would have to get market share up near Canon and
Nikon levels. They have been bringing gear at the same rate or higher
than Canon, but without their marketshare. So they are loosing money.
But give them a few years and they will be fine.

=========

I doubt that you're seeing the storefront prices overseas. Sony has been at this for years, so it's not a sudden earnings hit. You're right - they don't have the volume for those lenses - and the cure is to discount bodies, and to get people to own them.

Ever see the discount blood sugar meters at the drug store? Now, ask how much the strips are.

Amazon's DSLR sales indicate Sony far down the list - so where's the sales volume coming from? That kind of market share bump is just not believable, and in fact Canon's share is increasing. Sony A200K is at #21, and A300K is at #27. Amazon lists several kits, with extra lenses in there - a logical marketing move for volume.

A700 body-only is at # 57, at $1099. No doubt that's why it's at # 57.

philbarton Senior Member • Posts: 1,618
Re: Sony must be discounting like crazy

ropen wrote:

philbarton wrote:

===========

Makes it kind of hard to find a place for Pentax to survive. Sony
must be cutting deals with the channels to push this stuff out, and
generate sales - that's why margins are negative 16.7 percent. This
is called "dumping" - i.e. selling below cost; and is illegal in the
U.S.

I would be less worried for Pentax and more for those 4th grade math
knowledge that eludes you. After you master that I'll be more than
willing to read your "analysis".

======

They are packing lenses into kits, and discounting the total - same as "dumping". The whole push now is to get people into the K/M mount, any way that they can. The current weakness of PK presents an opportunity. Move-ups from their megazooms (of which Pentax has zero) is another opportunity.

Math? What part of "negative margins" eludes you? Know anything about product costing? What are the elements of Standard Cost? How about "price elasticity?" How about "market share dominance"? How about the competition's accelerating new model releases, to grab news cycles?

I don't care if you read my "analysis", because it requires an education to comprehend, and a grasp of reality.

philbarton Senior Member • Posts: 1,618
Sony shares at 5-year low

http://www.guardian.co.uk/business/feedarticle/7807391

TOKYO, Sept 18 (Reuters) - Shares of Sony Corp slid nearly 9 percent to a five-year low after Goldman Sachs cut its rating on the electronics maker on concerns over the outlook for its flat TV, mobile phone and digital camera businesses. The Goldman downgrade came on top of a rating cut on Tuesday by JP Morgan, which also cited worries over the profitability of its liquid crystal display (LCD) TV business and a stronger yen.

"Risks related to LCD TVs, digital cameras and mobile phones, however, are increasing and we see a lack of positive catalysts." It said Sony would likely miss its profit forecasts as it copes with a stronger-than-expected currency and sluggish sales of digital cameras and video recorders. Continued losses on LCD TVs may also weigh on its earnings.

We think Sony can achieve its annual sales target of 17 million LCD TVs, but we are not sure if the firm can make the business profitable," JPMorgan analyst Yoshiharu Izumi told Reuters on Thursday.

(Note the "sluggish sales of digital cameras")

ropen Senior Member • Posts: 1,479
Re: Sony must be discounting like crazy

philbarton wrote:

ropen wrote:

philbarton wrote:

===========

Makes it kind of hard to find a place for Pentax to survive. Sony
must be cutting deals with the channels to push this stuff out, and
generate sales - that's why margins are negative 16.7 percent. This
is called "dumping" - i.e. selling below cost; and is illegal in the
U.S.

I would be less worried for Pentax and more for those 4th grade math
knowledge that eludes you. After you master that I'll be more than
willing to read your "analysis".

======

They are packing lenses into kits, and discounting the total - same
as "dumping". The whole push now is to get people into the K/M
mount, any way that they can. The current weakness of PK presents an
opportunity. Move-ups from their megazooms (of which Pentax has
zero) is another opportunity.

Math? What part of "negative margins" eludes you? Know anything
about product costing? What are the elements of Standard Cost? How
about "price elasticity?" How about "market share dominance"? How
about the competition's accelerating new model releases, to grab news
cycles?

What part of my first post in this thread eluded you? The numbers as presented by the op doesn't add up for the percentages. Read again and if you have more smart a$$ remarks lets talk on numbers. I'll even make it especially simple for you:

If those numbers are real and Sony has 12% market share then Canon has about 38% and 14.5% of the production is unaccounted for. Let alone an estimated production over 11M units which seems a bit unrealistic. Either the "study" is bs or the op messed the numbers big time.
It's pretty simple really ...

I don't care if you read my "analysis", because it requires an
education to comprehend, and a grasp of reality.

Wow! Too bad it didn't required an education to write in the first place ...

Radu

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philbarton Senior Member • Posts: 1,618
Re: Sony must be discounting like crazy

ropen wrote:

philbarton wrote:

ropen wrote:

If those numbers are real and Sony has 12% market share then Canon

has about 38% and 14.5% of the production is unaccounted for. Let
alone an estimated production over 11M units which seems a bit
unrealistic. Either the "study" is bs or the op messed the numbers
big time.
It's pretty simple really ...

I don't care if you read my "analysis", because it requires an
education to comprehend, and a grasp of reality.

Wow! Too bad it didn't required an education to write in the first
place ...

Radu

========

Since I'm not the OP, what's your point? Can't you even tell who's posting?

12 percent is fiction. Perhaps a mis-translation, or a mis-statement about what the point was.

"Sony plunged 8.7 per cent after Goldman Sachs cut its rating, citing increasing risks to its LCD TV, digital camera and mobile phone businesses."

ropen Senior Member • Posts: 1,479
Re: Sony must be discounting like crazy

philbarton wrote:

ropen wrote:

philbarton wrote:

ropen wrote:

If those numbers are real and Sony has 12% market share then Canon

has about 38% and 14.5% of the production is unaccounted for. Let
alone an estimated production over 11M units which seems a bit
unrealistic. Either the "study" is bs or the op messed the numbers
big time.
It's pretty simple really ...

I don't care if you read my "analysis", because it requires an
education to comprehend, and a grasp of reality.

Wow! Too bad it didn't required an education to write in the first
place ...

Radu

========

Since I'm not the OP, what's your point? Can't you even tell who's
posting?

12 percent is fiction. Perhaps a mis-translation, or a mis-statement
about what the point was.

"Sony plunged 8.7 per cent after Goldman Sachs cut its rating, citing
increasing risks to its LCD TV, digital camera and mobile phone
businesses."

This is the point ... there can be no accurate discussion based on inaccurate facts. This "report" is either bogus, misquoted or inaccurate so all the "what company gained market share and what lost" talk it's just fantasy. If Sony's 12 percent is fiction so can be all the other's numbers ... plain and simple there is nothing to elaborate further based on this "report".

Radu

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