One View of 2005


Here we go again. Another wild stab at predicting the future.


[Warning: metaphors ahead] Before we get to the meat, let's talk about the courses in our meal.

In terms of the transition from film to digital, for point-and-shoot cameras it's already happened: sales of new PS cameras are over 90% digital (I call these digital compact cameras [DCC]), and growth rates are now slowing. Where Best Buy and other big chains used to have more film PS cameras than digital, some have eradicated film, while most of the others have cut back their selections of film PS cameras considerably (and will again after Christmas 2004). This is actually mostly an inventory thing, as new production of film PS cameras has withered into nothingness (Nikon has stopped it entirely, for example). For compact digital cameras, then, we're on the final course of our meal and entering into the dessert phase. The average sale price of a DCC is already less than US$200, so further price drops aren't going to gather much additional unit volume. Whether it be 5, 6, 7, 8, or more megapixels, these cameras already do pretty much what the majority of folk need them to do. Thus, there are two ways to move forward if you're a compact digital manufacturer: price to get the uninitiated to buy into the market (which means sub US$100 DCCs with substantive megapixels), or do the fashion thing and get into regular model year changes where marketing plays more of a role than substantive change. For the former, your goal is to make the cash register go ring ring. For the latter, your goal is to get the customer thinking bling bling. As you'll see from some of my predictions, companies like Nikon, which is neither good at being the low cost provider nor good at marketing are going to have a hard time in this changing market. A non-camera company like HP might actually have a chance to improve their position because they are good at both of those things. But most of you reading this already have a compact digital camera, so you're in the bling bling realm: the only thing that's going to get you buying again is if the dessert menu has something especially appealing, such as Death by Megapixels [yes, a Death by Chocolate reference], or perhaps a nice Creme de Photoshop sauce on top of a standard offering.

In the DSLR marketplace, things are a little different. We're still headed up the adoption ramp, and market growth is still in the high double and low triple figures for 2005. I'll say this: the coming year is the last of the heady, wow years. We'll still see impressive gains in ability, new features we hadn't thought of, and there's enough market growth that even weak players can stay in the game and achieve unit volume growth. In other words, we're about to get our main entree, and it's going to be delicious. A lot of us will be abandoning our appetizers and salads to start working on the meat and potatoes that Canon, Nikon, and a few others present us in 2005. But be aware of this: by 2007 we'll be satiated and getting us to sample a dessert will be a chore. Fortunately, the DSLR makers can serve up lenses, flash units, and other accessories to keep their sales growth going beyond the end of 2006, but we'll still be tough customers to persuade.

So where is all this "new" going to come from (for both DCC and DSLRs)? [Warning: metaphor change] In 2005, most of the digital cruise ships (manufacturers) haven't yet started trying to turn, and they'll be a little slow in coming around once they begin to do so. The real activity is in the shore excursions. Sony, Canon, Kodak, and Olympus recognize the relavance of snapshot printers to digital camera sales, but they haven't yet bridged the right gaps (found the right port, fill-in-your-own over-metaphored allusion, etc.). What we won't need soon is bigger boats (megapixels), but better places to take our boats, more accessibility to shore, and less of a need to read the ship's maintenance and operations manuals. I've always been somewhat bothered by the "Point and Shoot" label. Point, Shoot, and then what? Answer that question, it seems, and you'll find the market waiting for you. Okay, if all that made any sense to you, congratulations, the drugs haven't worn off yet.

[Metaphor free area ahead]

Once again, before we talk about the coming year, we must talk about what happened over the past 12 months. I made a lot of predictions for 2004, so here's a quick summary of my major hits and misses:

Prediction Was I right? Comment
D70 Yes A big Nikon hit on Canon's Digital Rebel battleship
D2x Yes (half credit) Announced in Sept, not March; more rez than predicted
20-60mm DX Yes (half credit) Missed by 12mm (18-70mm)
D100 remains Yes No, Nikon hasn't stopped making them (yet)
F6 No Surprisingly, my 2003 prediction of the film F6 came true (maybe I'm just a year ahead)
3 new Canons Yes 1DMkII, 20D, 1DsMkII (I thought we'd get a new mid-level, though)
2 new Fujis 1/2 right S3 Pro was the lone Fujifilm DSLR announced, and it barely made it into 2004
New 35mm Yes Nikon did me proud (F6), Canon gave me twins (7n, 7ne)
24-300mm Sort of 18-200mm Tamron
TC VRs No But we did get the TC-17E
70-300mm AF-S No Where is it?
Canon DX lenses Yes 3 and counting
f/2 Telephoto Yes 200mm f/2 Nikkor
85mm f/1.4 AF-S No Where is it?
Other lenses No, No, No But Nikon says they're coming
No Leica in 2004 Yes A last minute postponement saved me
35mm compacts go Yes  
US$299 price point Yes HSN has been selling a 5mp camera for US$119, but in mainstream competitors HP wins the current game with their 5mp DCC selling for US$274 (with rebate from some stores)
Top 5 Remain Yes Sony not as vulnerable as I thought, except in US
Traditional Folds Half Credit Half Point for Bronica
Agfa closes film plant Yes  
Labs fold No I don't know of any high-profile closures, just some low profile ones
Phones kill <3mp Yes At least I think that's what happened
Home camera phone Yes !
One minute processing Yes  
Virus in DP Close JPEG vulnerability points the way; demonstration virus was transmitted
DC made in China Close Heavy outsourcing into SE and mainland Asia for the low to middle models
Films Disappear Incomplete Some of products mentioned aren't currently being manufactured, but haven't been "discontinued"
Cameras Disappear No Dealers seem to have inventory stretching back to 2003 right now; until those things sell, the cameras aren't officially discontinued...

Final score: 16.5 out of 31. Considering how outrageous most folk thought my 2004 predictions were, well, I'll consider that a decent score. Let's see if I can be more outrageous (or maybe more accurate) this time around:

  • Nikon Rounds Out the DSLR Line. The D100 gets dumped and replaced, and four new DSLRs get announced, three released in 2005. That makes the lineup D50 (new announcement), D70, D80 (new announcement and ship), D2h, D2h 2nd Edition, D2x, and the full-frame-but-not-available-in-2005 D3. So you want to know what the details for the new models are? Well, I've already described them all, actually. See here. D80 and D2h 2nd Edition would be early 2005, D50 and D3 late 2005. [5 predictions total: 1 drop, 4 new] Actual: Nikon shipped five new DSLRs in 2005: the D50, D70s, D2hs, D2x, and D200. I got the name and timing wrong on the D80 (it turned out to be the D70s). I got the timing wrong on the D50. I got the specs wrong on the D2hs. I got the D3 wrong (it turned out to be the D200). Technically, the D100 still hasn't been dropped as I write this, though for practical matters it has. A mixed bag of predictions. I'll give myself 2 out of 5.
  • The Nikkor Lens Log-Jam Breaks. At least two of the remaining exotic telephotos get their VR makeover (400mm and 600mm probably), a 300-600mm exotic zoom appears, either the 70-300mm finally goes AF-S (and maybe VR) or the 80-400mm VR get AF-S, we finally get a fixed focal length DX lens that isn't a specialty lens like the 10.5mm fullframe fisheye, a new macro lens appears (actually a redesign of an old macro lens). Plus, just for the heck of it, they'll be a couple of "consumer-oriented" zooms thrown in for good measure. [8 predictions] Sigh. The log-jam didn't break. Yes, we got consumer zooms (18-55m, 55-200m, 18-200mm), but not much else. The 70-300mm AF-S is just around the corner, though (likely at PMA in Feb 2006), as is a new macro. But the rest of the lineup is conspicuously missing in action. 2 of 8.
  • Canon Does the Same. I don't expect Canon to let Nikon have a wider range of DSLRs than they do, so expect the Rebel to get bracketed. The Uber Rebel might get the 8mp chip and target the D70 at US$999. The Under Rebel is trying to make US$599. Which makes the Rebel Original target US$799 (a price it currently hits as I write this, assuming rebates). Likewise, there's a big gap between the 20D and 1D (19!), so I expect we'll see a variant of one or the other (e.g., a 30D that has more features and speed, or a 1D Jr that isn't quite as robust). Lenswise, Canon needs more wide angle and mid-range zoom options, especially EF-S lenses for the Rebel Family. Expect at least three new Canon lenses targeted at the digital users. The big question in my mind is whether the 1D will go Mark III in 2005. If I'm right about an 8mp D2h update, Canon will be antsy to go full-frame on the 1D; perhaps we'll get 11mp back, but at 8 fps this time [7 predictions] The Uber Rebel (350DX) appeared, as did the 1D Jr (5D). Lenswise, I wasn't very accurate, with the 24-105mm being about the only thing that might be said to coincide with my predictions (it isn't technically digital specific, but it is definitely intended as a digital mid-range zoom option). 2.5 of 7.
  • Coolpix Loses it. While Nikon's DSLR lineup is going to be pretty solid in 2005, you won't be able to say that about the Coolpix lineup. At the high end, the already announced 8800 will do just fine, as will the new 7mp model (easy prediction). But the rest of the lineup will look even more "me-too" than it already does. (Remember, Nikon got into compact digital cameras early and was an innovator with the twist-and-shoot 9xx Coolpix designs.) Me-too isn't good enough when everyone is using the same chips and running pretty much the same features. Nikon is at a disadvantage to Canon, Epson, HP, Olympus, and Sony in that they can't "package" camera with printer. The net result is that Nikon will be passed by one or two companies in compact digital unit volume in 2005, and that's not good in a market that's losing its growth. (Note to Nikon: BLING BLING) [2 predictions: one camera, one market share loss] Market share loss was significant. But Nikon had more than just one new Coolpix, some with strange attributes (WiFi). Nice to see the S4 bring back the twist-and-shoot. 2 of 2, but it should be 2 of 8.
  • Firsts (most are likely announced, but not shipped). 2005 will see the first non-Foveon sensor that provides more than one color at a photosite . Unlike the Foveon, it will be single-layer. First DSLR that allows direct connection of a USB hard drive (yes, I know the MF backs have been doing that; it'll be a little different when truly portable cameras go this route). First new dedicated B&W-only DSLR (yes, we had one a long time ago from Kodak, but back then digital wasn't mainstream yet). First under US$599 minimum advertised price DSLR. First mass market, non-phone, built-into X digital cameras (built-into briefcase, built-into auto, built-into doors, etc.). As far as I know, none of the above happened.
  • Trends. Anti-shake technology rolls further into digital compact cameras, DSLRs, lenses (won't be ubiquitous in 2005, but may be in 2006). Another self-cleaning sensor method is announced. Yes to the anti-shake, including a few things that sound like anti-shake in marketing terms but turn out to be auto ISO boost instead. No to the self-cleaning sensor method, although there is a new manual cleaning option about to appear that I think prefaces a new DSLR method.
  • Canon Makes a Consumer Digital Sensor. Canon's goal of controlling their own destiny passes down from the DSLRs to the consumer digital camera market. It might not be pretty, but it'll be tried soon, so let's call it for 2005: at least two new Canon compact digital cameras sport CMOS sensors made by Canon. My guess? They'll try it at the 4 or 5mp and lowest cost product first. [2 predictions] Surprisingly, no. 0 for 2.
  • Cameras Prove Better than you Think. Fujifilm keeps a tenuous hold on the cliff with the S3 Pro. Once again, their DSLR proves to have a sensor far better than the body it's in, which keeps them in the game. For how long? Olympus Evolt manages to Esell the brand. Turns out that it Esolves better than many of the Sony-based 8mp cameras and allows Olympus to grab the number three position and Emain in the DSLR market. Now if they'd only Ename it. The Leica digital back turns out to be decent, too, though as usual, Leica's alternative is so pricey it appeals to only a select few. Finally, the D2x has people scratching their heads: how'd they get that much image quality at 12mp and 1.5x? [free predictions; no grades on this one] All true.
  • Kodak Picks up the Ball...and Fumbles Again. The SLR/n and SLR/c get a surprise complete overhaul in early 2005, but bugs in the software get users grumbling again. Funny thing is, in the right hands with the right techniques, the images are quite good, but Kodak just continues to fail to get the word-of-mouth ball rolling down the positive slope. Meanwhile, Kodak tackles the Evolt with a 4/3 camera of their own, which for the lack of a better name I'll call the Ektavolt. [3 predictions, two product(s), one misadventure] (Hey Kodak, why haven't you used your best marketing names for digitals? Kodacolor/chrome, Ektachrome/color, etc. Even something that hints of it, like Ektasensor?) Nope, unless you count their quasi-SLR entrant. 0 for 3.
  • Minolta and Pentax Try Second and Third Gear. Both companies are using a previous generation 6mp chip in their DSLR offerings at the moment and proving that they can build a decent camera around it (watching what Nikon did had to have helped). Pentax has already announced a second stab (6mp low end again, which seems behind-the-times), but both companies will try with additional offerings in 2005 (Pentax 5*ist, Minolta 9D). But unless they surprise us all, they're going to seem stuck well behind Nikon and Canon in the resolution race. Okay, I'll take the Minolta 9D with Sony's existing 10mp CCD. [3 predictions, two cameras, one sensor use] Actually, Minolta went down instead of up, which is a bit of a surprise since their partnership with Sony will likely shorten the life span of the 5D. Maybe 1 for 3.
  • Olympus Breaks Out. I've already mentioned the Evolt, but I think 2005 has a chance to be Olympus' year to prove they belong in the race long-term. The E1 will be replaced by a better E2 (or E1+). The Evolt will eventually get a sibbling (might not make 2005). The redone consumer digicam lineup will start to pick up market share (likely at Nikon's expense). And the oddball special bling bling cameras will keep coming, with yet another new bizarre model in 2005. [4 predictions] The priorities were switched: the low end sibling made it out, the pro end is still brewing. Market share didn't slip more for the consumer cams, but it didn't gain, either. 1 for 4.
  • Compact Digital Market Share Leaders. Worldwide: Sony, Canon, Olympus, Fujifilm, Kodak, in that order. Market share increases: Olympus, Kodak, Casio, maybe HP. Market share decreases: Sony, Nikon, Fujifilm. US: Kodak, Canon, Sony, Olympus, Fujifilm, in that order. Market share increases: Kodak, Olympus, Canon. Market share decreases: Sony, Fujifilm, Nikon. [23 predictions] I'm still waiting to see the final numbers, but with a quarter to go all of these look pretty good.
  • Complete Packages for Christmas 2005. Sony, HP, Olympus, or Canon will decide that the way to get a marketing leg-up on the competition is to bundle complete packages (camera, cables, printer, storage, paper, ink, software) at highly competitive prices (make the margin up with the on-going printer supplies). Let's really go all out here: HP will couple with Apple again and get iPhoto to use with their R808 (or whatever the new model gets named) and an HP photo printer. Surprisingly less of this than I expected to see. Nikon's got the free Epson deal. Canon and HP certainly touted bundles here in the US. Sony and Olympus did less here than I expected.
  • Which brings me to: Apple Makes a Camera. Most people don't remember that one of the first stand-alone digital cameras was the Apple QuickTake. Thing is, Apple's on a roll with products and they get their new camera right first try: high quality, high bling bling factor (remember what I said about DCCs?), higher price than the competition, but simpler to understand and use. iPhoto crosses to Windows. Take that Sony... [three predictions: camera, iPhoto, market take on camera] Surprise, surprise. No camera but a fancy high-end professional photographer software program. 0 for 3. But I don't think we've seen the last of Apple's photography push.
  • Medium Format Makes its Last Stand. With Canon pushing 16mp and likely targeting 20mp for 2006, Medium Format makers have their last chance to grab the studio pros. The Mamiya ZD looks good on paper, as do several of the new 20-22mp backs, but the prices need to come down quickly for survival. Figure it this way: in 2006 at least one DSLR maker will be promoting 20mp for under US$7000. That's sensor and body. Anything above US$10,000 thus becomes untenable for a 20mp MF back by the end of the year (and at that I'd expect a built-in hard drive). There are two ways out of the danger zone: drop prices fast and furious, or keep the prices high and shoot for becoming the "next large format." That's right, target 4x5 and 8x10. Yikes. So what happens is this: Mamiya and Hasselblad stay mostly healthy through 2005 (note that both have their own backs now and both are being aggressive on price); Fujifilm and Contax need new strategies to survive; Bronica, Pentax, and the rest are gone. [6 predictions?] Can't find a US$7000 20mp MF, though some of the latest offerings are getting close. Mamiya and Hassleblad do seem mostly healthy; Fujifilm and Contax have no clear strategy; Bronica is gone, and Pentax hasn't made it to market yet. 2 of 6.
  • 1GB hits US$49. That's right, a 1GB CompactFlash card for half a C-note. 2GB hits somewhere around US$99. That's without rebates, folks. [2 predictions] Actually, I found a US$39 1GB with rebate, and I've seen 2GB hit US$99 twice during the year without rebate. 2 of 2. Curiously, neither offer stayed long on the market, which means they were probably loss leaders.
  • Film SLR Die-Off. It'll be done quietly for the most part, but a number of film SLRs will have their production discontinued; when the last remaining bodies are sold, the companies will announce the death, but only after dealers have cleared the inventory. Pentax, Canon, Minolta, and Nikon will all be participating in this, but I'll restrict my predictions here to the company I know best: Nikon. N65 and F5 discontinued for sure; N55, N75, and F100 probably. In the case of the latter three, they will remain available well into 2006, so it'll be nearly impossible to tell if I'm right here. [2 predictions {actually 5, but we likely can't measure 3}] Hard to tell. The F5 is still available but doesn't seem to be being produced any more. The N55, N65, and N75 all seem to be trickling out, but it's unclear whether those units are coming from built up inventory or new production. Incomplete score.
  • Traditional dealers fail. Well, I'm not the only one saying this, but I'm saying it for a different reason: the used inventory they have plummets so much in value that they take a big financial blow. It's already happening with MF equipment, where every dealer has a glut of bodies and lenses that don't sell at anything close to their old value, but what happens when a Nikon F5 sells for US$499 used? Especially when the dealer bought their two copies at US$899? It's a nasty squeeze: as sales of new digital cameras stops growing (and more competition from other sources appears, especially the big box stores), and the inventory sitting on the shelves stops moving and going down in value, the dealer had better have its financial ship in tip-top shape or it'll find itself with no credit line at the bank... [1 prediction: how some dealers fail due to inventory of used items] I've received five emails about particular stores that have closed with some indication that it was inventory buildup that killed them. 1 of 1.
  • Foveon is Acquired for its Patents. Move along people, nothing to look at here. [1 prediction] The Foveates still pummel me with "boy are you wrong" messages, since I've been predicting Foveon's demise for awhile now. But trust me, no news is NOT good news where Foveon is concerned. You can't build an investment payback from modest shipments of chips to Sigma and the Polaroid buyout, especially when you're paying someone else to produce them.

Well, there you have it. Check back in early 2006 and see how I did. In a word: terrible. About 33%, not counting the market share predictions, which would probably put things back up to about 50% if the final quarter plays out the way I think it will.

12/19/04: initial post
12/20/04: minor tweaks
12/15/05: end of year update


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