Olympus abdicating entry level ILS market?

Thumbing through the glossy holiday ad brochures for Nikon, Sony and Canon that came in the Boston Globe, it struck me how seriously they take the entry level ILS market in terms of value.

Then checking Amazon I found that for under $500 you can purchase:

• D3300 w/24MP sensor and 18-55mm kit lens
• D3200 w/24MP sensor and 18-55mm kit lens plus 55-200mm lens
• a5000 w/24MP sensor and 16-50mm lens

Under $600:

• SL1 w/18MP sensor and 18-55mm lens
• a6000 w/24MP sensor and 16-50mm lens
• D5200 w/24MP sensor and 18-55mm kit lens

Under $650:

• D5300 w/24MP sensor and 18-55mm kit lens

Virtually all of the above are very competent cameras offering lots of growing room for a fledgling photography enthusiast.

Olympus, by contrast, currently has the E-PL7 and E-M10 as their lowest priced cameras, both on Amazon for $699 w/16MP sensor and 14-42mm lens. The older E-PM2 and E-PL5's are pretty much gone now, and never aroused much market fervor when available in any case.

Panasonic fares better for now, with the heavily discounted GX7 kit selling for $599 (now that's a value) and GM1 kit for $499 (also a great value). But at this time they appear to have nothing in the entry level pipeline, having remained silent on a G6 replacement, and with the GM5 kit selling for a real premium at $899.

The Olympus sales model clearly needs to include a value model similarly competent to the competition for long term success. They hopefully recognize this and are working on it.

Funny thing is, one of the key advantages touted for mirrorless at its advent was lower manufacturing costs. Interesting how this has yet to translate into the marketplace.

Just some observations from a long term Olympus FT/mFT user  interested in hearing the take of others on this.

No cheap E-M5s?

sderdiarian wrote:

Then checking Amazon I found that for under $500 you can purchase:

It was already reported couple of times that the reason for that is largely over-production and (on several occasions) repurposing of remaining stock of outdated parts.

Nobody really can't compete with such price dumping.

N.B. "Under $500" is a poor example. If you look hard enough, you can easily find deals even below $400.

Funny thing is, one of the key advantages touted for mirrorless at its advent was lower manufacturing costs. Interesting how this has yet to translate into the marketplace.

They are cheaper. The problem is that death of P&S and advent of smartphones put enormous pressure on manufacturers to find new (higher) price brackets to survive.

That's why new top level FF cameras start well above the $3000 mark. Market is shrinking - less units are sold - development costs has to be amortized with higher margins.

The mirrorless was caught in the middle. No manufacturer(*) risks to set prices too low, because that might establish "price expectation" and consumers simply would not buy more expensive gear.

(*) With exception of Sony. They priced A6000 and A5100 well below the rest of the market. But they (and the rest) might suffer the consequences of such price policies in mid-/long-term.

That's also why USA has often times such poor availability of new gear. The market in USA is structured differently, price expectations are very low, making it unattractive market for manufacturers. They might sell more units there, but margins are lower compared to, for example, Europe.

Otherwise, honestly, mirrorless delivers everything I expected from it. Even basic EVF of modern mirrorless trumps easily the halfbaked OVF of the entry-/mid-level DSLRs. Hard, literally impossible, to go back. And in case of m43 specifically, no DSRL system can beat the handy collection of small lenses.

markintosh13 wrote: Is there anything to be gained by fighting it out on the low end?

I doubt it.The P&S wars are over - and everybody lost.

Here lies the problem with your over simply analysis. 1. A Low-End M43 isn't a point/shoot. While a retailer only makes money on 1 transaction in a point/shoot sales, a retailer stands to make Multiple Transaction in a "Low-End" System camera sales.

• Camera body + kit lens
• UV filter for that kit lens
• more powerful external flash
• a Portrait Lens (olympus 45mm f/1.8)
• a 2nd battery is a must with mirrorlesss camera

That's 5 transactions you can easily push for during the 1st purchased. In the near future, the buyer will likely suffer from G.A.S (gear acquire syndrome) and upgrade their camera, upgrade their lens for fancy PRO 12-40mm f/2.8 lens. My point is that having a LOW-END M43 CAMERA is vitally important to the growth of Micro43 as a whole. Abandon the Low-End M43 = Death of M43 in the near future.

A retailer once told me that when catering to a niche market, especially one that is shrinking, own the high end, build the cachet of your brand and service the heck out of your customers.

Except you're forgetting the Competition! A Full Frame Sony A7 can be have around $1200 new/$800 used. A sensor that is 4X's bigger than M43 and capture 4x's more lieght, produce (imho) 4x better bokeh. Sony A7 is a hot seller, even your own M43 MOD is shooting with one

Don't write off the Canon yet. Canon 70D has no faults. It is the 1st DSLR that can truly compete against M43 in Video Tracking AF (something most DSLR struggle to do). In action, 70D PDAF is far more reliable, and all this can be have for around $1200.

Canon is also assaulting the Low-End market with a refurbished Canon SL1 + 18-55 STM lens + Canon 1400 point/shoot for just $324!

http://www.canonwatch.com/hot-deal-refurbished-canon-rebel-sl1-18-55mm-stm-powershot-a1400-324/

Canon is sacrificing the profit margin on a SL1 to locked the new user into their System, away from Micro43, or other mirrorless competitor.  @$324, I admit, I find it nearly irresistible.

If you're gonna start pointing at refurbs and limited time deals you really gotta look a little harder on both ends...You can get a GF6 or an E-PM2 for like $350...

Margins are too slim. Sales must be high to make so little and its easy to have large loses if a camera does not sell well.

Hi Peter,

do some research. The average mirrorless/DSLR user owns less than 1.5 lenses per camera. So your hopes for gas kicking in may be overly optimistic. And I somehow doubt that most people buying the cheapest camera on the market are willing to pay 350 Dollars on top for a portrait lens like the Oly 45.

Even today day there are plenty of reasons to buy a m43 or other mirrorless cam. Manual focus for example is much easier with an egg which sports focus peaking and magnification than with any OVF. Live view focus on the 70D is much improved but Even with STM lenses it is still noticably slower than m43. It is Vetter not to compete on price with new models because creating these cheap cameras would require extra R&D spending without a viable extra profit. Olympus is on a great strategy right now (considering their difficult position). And Panasonic did some good moves as well with the GM line, the GH4 and the LX100. They need to find a way to survive not a way to become the biggest fool on the graveyard of camera makers.

markintosh13 wrote: Bull. Most entry level camera buyers buy cheap period. They don't buy lenses, they don't buy batteries, they don't buy flashes. They take a few photos, and don't understand why the results are terrible and put the camera on a shelf.

Mirrorless battery life sucks. They're not even remotely comaprable to 800+ of a dslr. When was the last time you bought a camera from a camera store or Best Buy without hearing the sell staff pushing your for accessory?  Not everyone shop online ordering form B&H, particularly not the 1st time buyers.  They walk into Best Buy or camera store, and they walk out with UV, 2nd battery, and that lame extended warranty.

Enthusiasts, who do buy lenses like PRO lenses, and flashes and accessories, on the other hand don't usually buy entry level cameras. And it's very tough to make a profit on a camera aimed at enthusiasts if you then price it at an entry level.

Yet, all "enthusists" were one time "entry-level-buyer" We all started somewhere, do we not?

1st time buyer do not fork out $1300 for an Olympus EM1. They started small with entry-level E-PM1, E-PM2, then build they way up to advance camera upgrade.

M43 users base is small in North America. Without an Entry-Level-Buyers to grow the M43 market, we are only selling to the dwindling based of existing M43 users, ergo, a dying market.  In business, you either GROW or you Died.  I don't want M43 to become a dying MySpace.  I want M43 to become as popular as Instagram. And the only way to do so, is to have an Entry-Level-M43 camera that Lower the Entry of Barrier to camera buyer.  We can agree to disagree.

Panasonic didn't want to compete in the low-end HDTV using LCD.  Instead, Panasonic concentrated on the increasing esoteric Plasma TV, siting its superior contrast, superior refresh rates, superior color as the justification for its higher cost.

While there are "enthusist" who are willing to pay the plasma premium, not many people do.  The result is 10,000 layoff and complete shut down of Panasonic Plasma TV business by October 2013.

Going niche didn't pay off for Panasonic then, I doubt its going to payoff now.

007peter wrote:

markintosh13 wrote: Is there anything to be gained by fighting it out on the low end?

I doubt it.The P&S wars are over - and everybody lost.

Here lies the problem with your over simply analysis. 1. A Low-End M43 isn't a point/shoot.

Didn't say it was.

Just pointing out that many companies, including Olympus, have generally given up on the much higher volume by units shipped P&S segment due to the rise of good cell phone cameras and the race to the bottom on pricing.

Kind of like what's happening now for the rest of the camera industry.

While a retailer only makes money on 1 transaction in a point/shoot sales, a retailer stands to make Multiple Transaction in a "Low-End" System camera sales.

• Camera body + kit lens
• UV filter for that kit lens
• more powerful external flash
• a Portrait Lens (olympus 45mm f/1.8)
• a 2nd battery is a must with mirrorlesss camera

Oly for the most part, barring online direct sales, is not the retailer.

Many ILC cameras buyers never have anything other than the kit lens attached, or buy another lens or a flash... etc and if a retailer talks them into a filter kit, and a backpack carrying case, and a lens pen, etc etc.... Oly still makes nothing.

That's 5 transactions you can easily push for during the 1st purchased. In the near future, the buyer will likely suffer from G.A.S (gear acquire syndrome) and upgrade their camera, upgrade their lens for fancy PRO 12-40mm f/2.8 lens. My point is that having a LOW-END M43 CAMERA is vitally important to the growth of Micro43 as a whole. Abandon the Low-End M43 = Death of M43 in the near future.

Bull. Most entry level camera buyers buy cheap period. They don't buy lenses, they don't buy batteries, they don't buy flashes. They take a few photos, and don't understand why the results are terrible and put the camera on a shelf.

Enthusiasts, who do buy lenses like PRO lenses, and flashes and accessories,  on the other hand don't usually buy entry level cameras. And it's very tough to make a profit on a camera aimed at enthusiasts if you then price it at an entry level.

A retailer once told me that when catering to a niche market, especially one that is shrinking, own the high end, build the cachet of your brand and service the heck out of your customers.

Except you're forgetting the Competition! A Full Frame Sony A7 can be have around $1200 new/$800 used. A sensor that is 4X's bigger than M43 and capture 4x's more lieght, produce (imho) 4x better bokeh. Sony A7 is a hot seller, even your own M43 MOD is shooting with one

And with Sony doing that on the high end, and selling A6000s for $400 - 600 on clearance, and A3000 faux-DSLRs for $199 at Costco (terrible body, very nice sensor)...

Don't write off the Canon yet. Canon 70D has no faults. It is the 1st DSLR that can truly compete against M43 in Video Tracking AF (something most DSLR struggle to do). In action, 70D PDAF is far more reliable, and all this can be have for around $1200.

Canon is also assaulting the Low-End market with a refurbished Canon SL1 + 18-55 STM lens + Canon 1400 point/shoot for just $324!

http://www.canonwatch.com/hot-deal-refurbished-canon-rebel-sl1-18-55mm-stm-powershot-a1400-324/

Canon is sacrificing the profit margin on a SL1 to locked the new user into their System, away from Micro43, or other mirrorless competitor. @$324, I admit, I find it nearly irresistible.

...And Canon as you say dumping endless entry level Rebels.... etc etc

Are you suggesting that the path to profitability for Olympus lies in competing on price?

The market on the high and high middle segments is tough enough without diverting resources to a bloodbath on the unprofitable entry level segment.
Sometimes strategy is deciding what NOT to do.
Seems to me Oly has been doing just fine with what they've been doing - good bodies and good lenses.

I'm not disputing your point because I actually agree with you, a race to the bottom isn't remotely profitable for any of the smaller players... That being said, Oly's camera division hasn't exactly been doing fine, financially speaking.

Plasma isn't the best analogy... Tho I get what you're saying and I agree that they shouldn't ignore the low end wholesale, I think as long as there's older stuff like $350 GF6/E-PM2 on sale then they aren't really ignoring the low end... They just need to position those older bodies better and not try to rid themselves of them by all means possible.

The GM1 at $450-500 nicely rounds out Panasonic's lowest end lineup IMO, Olympus has a bigger hole but I think the GM line caught them but surprise and the price/size gap between their PENs was already getting blurred anyway. They'll figure it out tho... I doubt they're giving up on anything under $600, they just aren't reacting as fast as some would like.

Back to the plasma analogy tho, big plasmas were actually cheaper than comparable LCD HDTV (still are really, there's just a glut of mediocre LCD/LED displays at similar sizes that are now cheaper, good ones are still spendy)... Plasma had a perception problem more than anything, first it was all the image retention issues (rightfully so, manufacturers were slow to implement proper protection, it's a non issue today)...

Second to that initial issue was the fact that plasmas never looked as good on a store under harsh overly bright store lights, because they couldn't reach the peak brightness of most LCD (Samsung F8500 aside), they still looked better in most homes under more typical lighting tho. A whole lineup of Panasonic plasma TVs from two years ago, along with the recently discontinued Samsung F8500 line, are STILL better TVs than pretty much 99% of LCDs.

Perception, power usage along with the EU's taxation/restrictions, and 4K are what killed plasmas. There were never any small cheap plasmas because it wasn't physically feasible, same with a 4K plasma, so they sorta gave up on it... Still the superior display tech tho. The only thing that can truly match plasma's black levels and motion smoothness are OLED displays and LG's current OLED TVs are 3x the price (and smaller).

In a way your analogy actually fits, M4/3 has a big perception problem (along with lack of exposure, which is worse still)... But at least the EU isn't breathing down their neck and 4K is actually on M4/3's side, so it's not bound to join he extinct species list like plasma did anytime soon. I might be biased tho, bought one of Samsung's last plasmas this year and I own M4/3 gear.

007peter wrote:

markintosh13 wrote: Bull. Most entry level camera buyers buy cheap period. They don't buy lenses, they don't buy batteries, they don't buy flashes. They take a few photos, and don't understand why the results are terrible and put the camera on a shelf.

Mirrorless battery life sucks. They're not even remotely comaprable to 800+ of a dslr. When was the last time you bought a camera from a camera store or Best Buy without hearing the sell staff pushing your for accessory? Not everyone shop online ordering form B&H, particularly not the 1st time buyers. They walk into Best Buy or camera store, and they walk out with UV, 2nd battery, and that lame extended warranty.

just because staff is pushing accessories does not mean people buy it. And than most of the time it will not even be the original accessories from Olympus or Panasonic. I got a battery recommended from a third party. I did not buy it because I know I never take more than 250 photos per day.

Enthusiasts, who do buy lenses like PRO lenses, and flashes and accessories, on the other hand don't usually buy entry level cameras. And it's very tough to make a profit on a camera aimed at enthusiasts if you then price it at an entry level.

Yet, all "enthusists" were one time "entry-level-buyer" We all started somewhere, do we not?

1st time buyer do not fork out $1300 for an Olympus EM1. They started small with entry-level E-PM1, E-PM2, then build they way up to advance camera upgrade.

Or they started like me and many others with a small DSLR and switched later

M43 users base is small in North America. Without an Entry-Level-Buyers to grow the M43 market, we are only selling to the dwindling based of existing M43 users, ergo, a dying market. In business, you either GROW or you Died. I don't want M43 to become a dying MySpace. I want M43 to become as popular as Instagram. And the only way to do so, is to have an Entry-Level-M43 camera that Lower the Entry of Barrier to camera buyer. We can agree to disagree.

It is great you want m43 to flourish. But Instagram is a free service and not comparable to an expansive hobby like photography.

Panasonic didn't want to compete in the low-end HDTV using LCD. Instead, Panasonic concentrated on the increasing esoteric Plasma TV, siting its superior contrast, superior refresh rates, superior color as the justification for its higher cost.

While there are "enthusist" who are willing to pay the plasma premium, not many people do. The result is 10,000 layoff and complete shut down of Panasonic Plasma TV business by October 2013.

Going niche didn't pay off for Panasonic then, I doubt its going to payoff now.

Leica is going Niche in cameras, same goes for Ferrari in the car industry. M43 is applying a strategy like BMW or Audi: Affordable premium.

Sergey Borachev wrote:

It's been going on for some time already, the silent war between the dominent DSLR makers and the small MILC makers. While it is true that MILCs can be made cheaper, that relies on everything else being the same, especially on volume of sales or economy of scale. Olympus, and also Panasonic, do not have enough volume and therefore find it tough to recover costs of development. They have to maintain a certain volume even knowing it means over-production and then they have had to resort to fire sales in a shrinking market as a result. So, selling old mid-level models cheap as "entry level" models is killing 2 birds with 1 stone, to clear stock and to reduce development cost and more of the same overstock problem.

Canikon also suffer in a shrinking market but they can with their lower cost of goods sold (due to a larger volume) afford to undercut Olympus and Panasonic with abnormally low prices for their entry level cameras, making sure that the smaller fish to die first if conditions should continue like this. I believe they are doing exactly this, cutting their own profit to make Olympus and Panasonic unprofitable and hence less able to compete with frequent new models all the time like previous years. Market share first. Those entry level DSLR prices are unbelievable and are clearly a strategic move. It's war.

It is important to have entry level models to let the user base grow and let them become enthusiasts later. However the companies have to first survive and at this time, it seems they are trying to drag their feet and hope to wait until the market bottoms out before getting entry level models out.

Sergey --

Your comments are the only ones in this thread that i resonate with, though i would express it slightly differently.  There is no one "cost" for a product from the producer's point of view:  there are two costs.  The fixed cost to develop the product as well as that part of the enterprise costs that are insensitive to scale.  Those costs must be spread over the production volume; the more yah sell, the lower they are.  Then there is the marginal cost of production which is largely, in this market, dependent on parts count.

Mirrorless/m4/3 wins on the latter; its parts counts are from five to eight times less than dSLRs.  But mirrorless sellers -- Fuji, Oly, Panny, almost certainly Sony -- all generally lose money (Oly's recent claim to break even notwithstanding) in their imagine divisions in recent years.  The volumes simply can't cover the pro rata fixed costs, even with dramatically lower marginal per unit costs.  This will hold true as long as Canikon volumes are so dramatically higher than mirrorless.  Thom Hogan points out that he has been surprised at how LOW mirrorless sales are fully five years into the m4/3 "revolution."

So as long as dSLR sales hold up mirrorless in general loses in this cruel arithmetic, and Canikon will continue to be able to profitably sell dSLRs at much closer to marginal cost while undercutting m4/3 prices.  Life isn't fair; poor Oly.

But dSLR sales will hit household saturation shortly; it has happened multiple times in camera business history.  The younger generation isn't all that impressed with dSLRs either.  And there is that huge marginal cost advantage to mirrorless.  So it is understandable that the players will stay in the game.  But it seems inevitable that some will drop out.  I expect Panny to buy Oly for example.  Sony's corporate strategy is a cipher to me; that is one reason i have avoided buying one.  Fuji may be able to keep their botique marque.  We shall see.  Good fun.