If I ran Nikon


Okay, it's a daydream. But I think it's a good one...

[I've gotten quite a bit of feedback on this article, including some off-the-record responses from various Nikon employees around the world. I've considered all of those emails in my most recent update of this article. The most depressing aspect of this article is that I wrote many of these things for the first time on this site in 2001. Here it is six years later and not a lot has changed. 7/26/07]

Nikon is an interesting company. I'm generalizing here, but unlike Canon, which has a decided business and marketing outward focus (be #1 or #2 in your product markets; advertise the brand advantage), Nikon is more traditionally engineering based and mostly inwardly focused. You're more likely to see a Technical Brochure on a new product from Nikon than a coordinated and well-targeted advertising campaign (the D80 Flickr and D40 Town campaigns being recent, welcome exceptions).

More than once I've talked with a Nikon engineer who was justifiably proud of a new product but perplexed about why it wasn't dominating the market. Canon treats their overseas subsidiaries as part of their primary business and expects marketing to drive sales; Nikon seems to consider their overseas subsidiaries as necessary distribution points that should be self-supporting, and expects quality engineering to drive sales.

The net result of these differences is that Nikon has built some fine products (though some seem to be more the pet projects of the engineers: witness the FM3a and the 85mm PC-Nikkor), but has never broken through as the International leader in imaging that they should be (after losing the initial leadership they had with the Nikon F [see right column]). Canon's fancier and more ubiquitous advertising is what people remember (quick, which famous tennis player touted which 35mm SLR?). Nikon's surprise launch of the original D1 took the whole industry by surprise and caught Canon flat-footed, but it wasn't particularly well supported on the business and marketing side, so the early momentum Nikon had in DSLR sales didn't carry them for long. Canon's marketing of the D60 and later the 10D and Digital Rebel is a case in point: to get back market share, Canon became very aggressive on price, eventually undercutting the every-bit-as-equivalent Nikon D100 by as much as US$500 with the 10D, which eventually forced Nikon to lower their price.

In the first generation consumer DSLR wars (10D/30D/60D versus D100/D70), Canon built up a substantive market share lead (typically ~45% to Nikon's ~33%). Nikon's continuous onslaught of consumer models and price competitiveness appears to have worn this down. In Japan in the first half of 2007, for instance, the Canon/Nikon market shares have reversed from their traditional position. Worldwide, however, Canon is still holding a slim lead. But I'd hesitate to think that this is due to "better marketing" on the part of Nikon (again, I like the D80 and D40 campaigns--they were the best Nikon has ever done). It appears the success is more due to "more models, more choices, engineered well." The Canon consumer models look long in the tooth as I write this, so it's to be expected that they'd see drop-off in market share.

Unfortunately, in the professional DSLR wars (1D/1Ds versus first the D1h/D1x, then the D2h/D2x), where long-term reputations are made, Canon built an even stronger and more commanding lead amongst pros (many D2x purchasers were advanced amateurs), and there's no sign that Nikon has a well-coordinated response yet. The D3 generation is a late, and Canon continues to incrementally push the primary pro camera--the 1D--upwards. Nikon's pro marketing has essentially 100% disappeared.

But it's not just "ramp up the marketing" that would help secure Nikon's market position. Anyone who's used Nikon equipment and dealt with them as long as I have can tell you that there are multiple issues with Nikon's practices that essentially validate one of Newton's laws: a body at rest tends to stay at rest unless acted on by a force. Nikon is still mostly a body at rest to the outside world (I'm sure they think they're a whirlwind of activity internally). We Nikon users need to be the force to move them.

And so, on to my suggestions. Here's what I'd do if I ran Nikon:

  • Cut the warranty run-around. There are several ways to deal with the gray market camera problem. The first would simply be for Nikon to stop supplying excess inventory to the gray market. Still, let's assume for a moment that gray market serves some purpose to Nikon (it serves a purpose for the customer, as it effectively lowers prices), and thus should continue. The customer issue is that Nikon's current warranty and repair practices for gray market products are so unfriendly and anti-consumer that it makes one pause before purchasing any Nikon product. It most certainly hurts the used marketplace and uninformed consumer. With my first act in running Nikon, I propose to turn that around. First, out-of-warranty products will no longer be refused for repair. Second, in-warranty-but-gray products will have a place that they can be shipped to for warranty work: a well-publicized repair station, even if that is in Japan. Third, in-country-non-gray warranties will run longer than gray warranties (note Nikon already does a form of this in the US with lenses). Fourth, there will be an obvious and publicized way to tell if a product is Nikon-imported or gray (e.g., the barcode on the side of the box) and any reseller found trying to modify that will be immediately prosecuted for fraud. Why is this necessary? Because current practices make it impossible to purchase used equipment reliably; because Canon and some other camera companies have less rigorous policies and thus attract consumers who are worried about possible repair issues; because consumers want to know that the company stands behind its products; because it's the right thing to do.
  • Work with third parties. That means an SDK (software development kit) for every product, just like Kodak did. Capture NX and other Nikon software products will be made "open socket" and extensible, and information on how to interface to these functions will be in the SDK. Proprietary connectors will be freed (either they won't be used, or they will be made readily available to others). All Nikon products will have open and extensive documentation in all but absolutely trade secret areas. Why is this necessary? Because when there are two equal-sized markets developers go where they get the most support, which right now would be Canon; because better supported products attract more customers.
  • Register serial numbers. Here's my proposal: Nikon will act as a clearing house for stolen Nikon equipment. As part of the longer warranty offer (see above) you will have to register the serial number. Should your camera/lens/whatever ever be stolen, you can report it stolen to the database. First, the stolen numbers would be publicly available on a Web site (hey, look at that great bargain on eBay, what's the serial number?). Second, if an item with a reported stolen number ever shows up for repair (and since all equipment is now repaired by Nikon, it very well might), you're notified and the authorities are given the information they need to back-trace. Why is this necessary? It's not, but it's a marketable advantage over any other camera company that costs very little to implement.
  • Improve tech support. I can't begin to count how many times someone has told me that Nikon's Level 1 tech support has told them that the problem they were having was because they weren't using an approved CompactFlash card. I believe it to be the incorrect posture. Nikon should be helping customers regardless of why they're having a problem. Each week I get emails from users who've given up on getting an answer from Nikon technical support asking for my help, so I know that the current level of support is not working for a significant number of users. And here's an amusing anecdote: I once had to call tech support on an issue with a Capture serial number change. The tech support person recognized my name and told me that he read all my articles and posts on the Internet because that was the only way he got good information to answer questions. Are you kidding me? If my writing is the best source of training for Nikon technical support reps, then the current training is indeed badly broken. [Note: I had previously written that Nikon should test and approve more cards. Someone from Nikon emailed to tell me that they had. At present the D100 support list includes 42 cards, though from only four manufacturers other than Nikon, and still only a small subset of what's available and what people are actually using in the cameras. I had also suggested that Nikon needed to have more information and FAQs posted. Apparently, they have been working at this, though the information is buried a bit in the NikonUSA site, so it's easy to miss. My apologies to Nikon for not catching this earlier. Still, Nikon has a long ways to go to be considered doing a better-than-average job at tech support.] Why is this necessary? Because photographic equipment isn't as simple to operate as a toaster, and customers appreciate companies that understand that and do things to address it; because the current tech support system still needs work.
  • Improve parts availability. Here's an actual customer nightmare that was related to me recently: a D1x body was sent to Nikon for firmware upgrade, cleaning, and check by an NPS member (Nikon Professional Services; members are working professionals who get faster service and close attention due to their verified status). Nikon's repair department told the customer that the shutter appeared to be near failure and should be replaced. The customer told them to replace it. Nikon said that the parts were on back order and it might be a long while before they got them. The customer asked for his camera back, figuring he could at least shoot with it until the shutter failed. Nikon indicated that they would not order a part for a camera that wasn't in their possession for repair. Say what? Essentially Nikon has told a working professional with whom they have a special relationship that their camera is about to fail, and when that happens they will be without a camera for a long period of time. This is unacceptable behavior. Yes, I understand that parts are in short supply due to the rapid growth in the DSLR market. Still, I wouldn't tolerate such behavior from my auto dealer, and I don't think we should tolerate it from camera manufacturers, either. Nikon's current policy shows that they do not value working relationships with professionals (let alone consumers). Why is this necessary? Because professionals can't afford to be without their cameras for long, indeterminate periods of time; because long repair times lead to unhappy customers and bad word of mouth; because you shouldn't be stiffing your paying customers by using the entire parts supply to make new cameras instead; because short of having a working JIT (just in time) inventory system, not stocking parts is a potential quagmire.
  • Unleash the knowledgeable. Perhaps its an ombudsmen (see below), perhaps its an knowledgeable engineer or two, perhaps they need to hire a few Thom Hogans to be proactive, but Nikon needs a presence in the online forums and photographic communities throughout the world. It is so much better to simply give out reliable, useful, and accurate information and respond to questions than it is to let consumer communities run wild with speculation and innuendo, it's no contest. [Side note: assuming spam blocking doesn't gobble it up, I try to answer every email question I receive. I do not get paid by anyone to do this. Just don't send attachments or photos with your email.] There is one small, product-specific online forum that two Nikon engineers follow and post responses on, and it's a breath of fresh air. About one Nikon product we get accurate, up-to-date, and useful information because of that (and indeed, it even seems as if a few customer feature requests have been heard that way, too). I'm sure the Nikon employees do this on their own initiative and on their own time, but it's so much better than the alternative, it needs to be encouraged corporately. No, I'm not advocating that every Nikon employee get online or go to photo clubs every week, and I'm not even advocating that they answer every post/question. But a policy of monitoring and responding/involving when necessary needs to be put in place. Why is this necessary? Because Nikon employees ought to be best and most knowledgeable Nikon product advocates, not Thom Hogan or Moose Petersen or whoever.
  • Hire an ombudsman. Back in the old days, Nikon's service for professionals (NPS) used to have what essentially was an ombudsman. If you needed a repair expedited, weren't happy with something, needed a loaner, whatever, you could call up one of two people in NPS and usually get rapid satisfaction. These days, by comparison, NPS seems to be nothing more than a way to get equipment repaired slightly faster. I haven't heard a peep out of Nikon since re-joining a couple of years back, their NPS Web site is a joke, and I've heard tale after tale of professionals who couldn't easily reach a human to find out where their equipment went. But even when NPS worked, that only applied to professionals, so I propose that there be separate consumer ombudsmen for Asia, North America, and Europe. These ombudsmen would have a small budget (not controlled by the subsidiaries!) and demo inventory to "do what's right" by the customer. In order to keep the ombudsman from being overwhelmed with every Nikon user question and complaint, the process for getting to the ombudsman would require that you show that you've first exhausted the usual method of problem resolution (which is another reason why Tier 1 and Tier 2 tech support have to improve). Why is this necessary? Because as cameras get more complex and expensive, there's more chance of a single lemon causing a bad taste in all consumers mouths (note, the auto companies have ombudsmen); because it's another marketable consumer-oriented service.
  • Fix the delivery issues. It's been clear ever since the launch of the original D1 that Nikon has product launch problems. With the D1h, D1x, D2h, and D2x, they attempted to partially fix that by allowing NPS members to cut in line, which was part of the right idea, but wasn't handled well and didn't address consumer issues. Virtually everything Nikon has announced except the lowest end products has been late to market and demand for it has exceeded supply in such an overwhelming manner that most people experience months of delay in getting a product. Long term, that hurts. When products are relatively equal in quality/ability but one is unavailable, the available product wins. Fortunately, Nikon has been lucky that Canon has also had difficulties keeping up with DSLR demand at times. Lenses are a real delivery issue for Nikon right now. Shortages of almost every key lens seem to happen with regularity. It doesn't really help to sell a body if the user is going to be frustrated by not being able to get the lens they want. And if lenses are bad, accessories are worse. Some cable releases have been out of stock for long periods of time, as have various AC adapters and chargers. There appear to be three things that need to be addressed by Nikon: manufacturing capacity, demand estimation, and delivery consistency. And until all three are fixed, this problem will continue, and consumer frustration will build. Why is this necessary? Because even professionals can't get new products in a timely fashion, and guess what that means in terms of brand loyalty? Because you waste enormous money and energy building up the marketing message and then waste it when the customer doesn't find the product in stock today, next week, or even next month. By the time the stores have the product, the initial marketing has been forgotten or overridden by some other company's newer message; because you don't want to establish a pattern where every new announcement is greeted by the customer reaction "who cares, I won't be able to get one in the next six months, anyway."
  • Find a real marketing message. I don't know if you ever noticed, but every new Nikon SLR and digital camera has had a different slogan that follows it around. This slogan is used in the advertising, in the product brochures, on the boxes, basically everywhere the product is presented (F5: "Imported from the Future," FM3a: "Crafted for Your Personal Control," N80: "Engineered to Exhilarate," D1h/D1x: "Two Solutions, One Ideal," Coolpix 995: "Driven by your Imagination," or the day the creative department was out to lunch--F100: "Professional."). Personally, almost none of these catch phrases manages to do much for me, especially since so many of them seem interchangeable (can't an F5 be "driven by your imagination?"). They also tell prospective customers almost nothing about what to tangibly expect out of Nikon products. You'll note that most of Nikon's messages tend to have an engineering implication to them, which does reflect the kind of company Nikon thinks of itself as. But did you notice that none of the ones I list say anything about images or image quality? Only when we get to the true consumer cameras do we get anything that suggests that you take pictures with these things--N55: "Make Sharp and Colorful Pictures," or N65: "Expect More From Your Pictures." Still, all this word play is somehow vague and insubstantial, and it really doesn't tell me much about the brand. Nikon needs an overriding brand marketing position that is communicated with all their products, in all their materials. Of course, some of you will point out that Nikon recently introduced such a position: "At the heart of the image." Anyone care to tell me what that means to the casual observer? We get no indication of why Nikon is any different than any other imaging company, we have to understand that heart is a metaphor, and "image" is not the word most people would use to describe the end result. And I've yet to see Nikon use that as anything more than a throwaway phrase in their materials. Moreover, I find it interesting that a company that thinks of itself of a precision engineering company would choose the heart over the brain as the metaphor--this new slogan is going to be a real stretch for Nikon to embrace, I think. A more direct and meaningful variant would have been "We engineer the heart of your camera," or if we can drop the heart metaphor for a moment: "Better engineering makes better pictures" or " Engineering products that make better pictures." (These are, obviously, off the top of my head, and are used to illustrate my point, not to say that these should be the final Nikon marketing statements. Still, I wouldn't be complaining about this point if either of the last two were Nikon's new image statement, though I might mumble under my breath that they weren't very creative ;~). In short, Nikon needs something akin to "Like a Rock." And they need to use it everywhere and for a long period of time, just as Chevy has. And, lest I forget: this new marketing message must not be contradicted by any of the other problems I've listed above. Update: recently, Nikon has run two campaigns that impress: the D80 Flickr campaign ("we gave Flickr users a D80 and this is what they did...") and the D40 Town campaign ("we gave everyone in a town in Georgia a D40 and this is what they did..."). The campaigns actually worked well for the individual products (my next door neighbor wants a D40 now). But these campaigns still need to be tied to a Nikon-wide thrust (as in "when we lend someone a Nikon, they take better pictures because it's a better camera"). I fear, actually, that this improvement in advertising is solely due to the agency involved and not because Nikon themselves "get it." Why is this necessary? Because Nikon's chief competitor, Canon, is very much a sales and marketing driven company that is very good at delivering consistent and understandable messages to customers; because getting the message right will help attract the right customer.

Now you may have noticed something interesting in all my suggestions. I didn't say anything about improving products! That's one of the things that makes Nikon's current practices so bothersome: there's nothing particularly wrong with Nikon products. Indeed, if you go back and look through Nikon's product history, they have a long, storied career of building excellent products and then engineering them to be even better. Nikon does not tend to add features at a whim, it tends to quickly fix UI mistakes, it eschews marketing gimmicks for real engineering advances, and it builds rock solid, excellent equipment. Yes, this means that they sometimes lag a bit on a feature here and there (IS/VR being the most notable one), but each generation of Nikon products moves forward, not laterally, as I've seen with some companies. In short, it's not Nikon's engineering that needs change. So if I were in charge of Nikon my primary goal would be to keep the internal engineering nature of the company intact while improving the external message, consistency, and customer contact.

Is Nikon listening, or will they suffer a heart-of-the-image attack? Only time will tell. [Well, I know they're listening. The question really is "when and how will they change?"]

 
 


As always, feedback is appreciated, and if you have additional ideas about how to improve Nikon, I'd love to hear them.

Will History Repeat?


Why am I so concerned about these non-engineering issues? Well, consider what history has taught us: Nikon once owned the advanced and pro SLR marketplace with the Nikon F. But Canon eventually eroded that by getting the non-technical side right. While Nikon managed to retain the #2 position in the 35mm film SLR market, they consistently lost market share over the years. There was even a time in the late 80's and early 90's when it appeared that Minolta's autofocus onslaught might manage to unseat Nikon's #2 position.

The introduction of the original D1 was much like the introduction of the F. It caught the rest of the market by surprise, it was well engineered and priced right, and it quickly dominated the pro market (this time for DSLRs). And while Nikon initially retained the larger overall market share (at least through mid-2003), the problems I list in this article, coupled with some slowness in delivering updated products, let Canon get the leg up again. In 2003 I made this prediction: regardless of how good the D2h, D2x, and D200 eventually prove to be, Nikon will slip to 2nd in DSLR market share if the problems I point out aren't fixed. Nikon indeed did slip to #2 in market share in the pro market. Was it because of the problems I mentioned? I don't know, but I'm certain that they contributed substantively.

Of course, #2 with a 25% pro market share isn't all bad, and Nikon has managed to thrive in this position in the past. But we are at a critical juncture this time. Failure to address the systemic consumer issues I point out gives other competitors an opening. Sony, Pentax, and Olympus all want to find Nikon weakening, so that they can pick up pro market users. Fix the problems I list at left, and I can think of no way in which anyone other than Canon could take market share from Nikon, and even that would be difficult and expensive.

Each new generation of pro equipment provides another opportunity to leverage back some market. Nikon, being the engineering-oriented company they are, tends to think that its just the specifics and technology in the new camera that'll win them converts (or re-converts as the case may be). I don't believe that to be true. More pros would still be shooting with the current Nikon DSLR offerings if Nikon had done the things I outline at left. That, essentially, is my point. Nikon must change its public persona just as much as it changes its products. To date, they've resisted. Stop the resistance, Nikon. Become the world-class global company you should be. It isn't that frightening. Others have done it. It's now time for you to join them.


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