The Trend at the End of 2011 was Down, Down, Down, with a bit of Up
Original: January 10, 2012
We're now deep into the trend I predicted quite a few years ago: that smartphones and low-end system cameras would cannibalize compact cameras.
DCWatch reported that compact camera sales were down 17% over the first 11 months of 2011 over the same period in 2010. At the same time, interchangeable lens cameras were up 12%. Since the interchanageable lens camera market is about one-eighth the size of the compact camera market, the overall camera market probably declined.
Worse still, NPD has now reported that the five-week Christmas sales tally here in the US showed that point and shoot camera sales were down 20.8%, digital picture frames down 37.5%, and camcorders down a whopping 42.5%. It was not a imaging Christmas season, especially since Nikon and Sony interchanageable lens camera sales were limited by supply due to the Thailand floods.
Dealers were hard pressed during the Christmas buying season, partly due to product availability, but also due to that demand reduction. Penn Camera Exchange, an eight-store retailer in the Washington DC area, announced it was filing for bankruptcy protection and closing five of its stores.
The traditional response by the camera makers to lower demand for compact cameras in the US has been "we'll push those products into developing countries, instead." Unfortunately, everyone's finding that strategy isn't exactly a great one, as (1) the demand in those countries is for lower priced product, putting margin pressures on what sales you do get; and (2) cell phones are well established in those countries, and the trend towards just using the phone for stills and video is just as rampant in the developing world as it is in the developed.
Since this is Photo Marketing Association (PMA) week, it seems like a good time to ask who's doing what to fight the trend?
Canon: doubles down on compact cameras! Instead of producing a mirrorless camera, they've chosen to produce a large sensor compact camera (G1 X). Actually, possibly more than one according to rumors. The G and S models still do decently, despite terrible marketing support (at least here in the US). However, Canon also seems distracted by wanting to convert their still users into videographers. Tackling pro video is a niche business, though with decent growth at the moment. The top-end DSLR refresh was a bit disappointing. Canon seems a bit random at the moment.
Nikon: bet big on interchangeable (Nikon 1, complete DSLR line refresh in less than two years [though the quake and floods slowed this]). Also continues betting that they can market compacts better than the others and gain market share while others lose it (so far, so good). More than any other company, Nikon is a camera company first and foremost, and they are the most vulnerable should they misjudge the future of cameras. Fortunately, the Nikon 1 shows that they still have some technology skills that make for interesting and useful products (and Nikon just announced the J1 model was the best selling mirrorless camera in the UK in the week before Christmas, and Nikon is now the second best selling brand of mirrorless cameras in Britain). The D4 shows that they still can produce the best pro products. The devil is in the details, and Nikon still gets too many of those wrong. Still, Nikon is more seemingly on target than the other camera companies, and executing well.
Fujifilm: bet hugely on compact cameras and continues to do so. Technically, their numerous bridge cameras and X100 are compact cameras, but they have plenty of regular compacts, too. Their marketing messages tend to be good, but they don't generate the in-store customer traffic Nikon does from their ads (hint to Fujifilm: coop promotions work). Minor bet made by putting interchangeable primes on an updated X100 frame (upcoming X-Pro1). Fujifilm also has a sub-theme of retro, mainly because a retro design worked for them on the X100. Duh. I've been telling the camera companies that for years: cameras weren't broken. They didn't need to be redesigned into button-laden, mode-filled, option-overloaded devices. Still, the overrelliance on compacts without a marketing program pushing them into customers' hands means they aren't making market share progress easily, if at all. They're betting on a declining market, and going high end in that market to retain margin.
Sony: bet big on interchangeable (NEX, complete refresh of Alpha to EVF). Seems to have lost their way with compacts, but has some winners in the interchangeable arena and has started to work better with dealers in promoting them (Thailand floods notwithstanding). Unlike Canon, real Sony Video is still mostly being done by Sony Video, not Sony Stills. Nevertheless, the decline of compact sales is hurting them, as that was where they had their biggest share, and now they're losing that both to competitors and to the shrinking market.
Olympus: bet big on mirrorless, almost exactly where I would have bet big (though with programmability and communications). But they've cratered on compacts (other than the XZ-1 and perhaps their underwater compact), cratered on DSLRs, and thus are a smaller player than they should be. Moreover, it's been fire sales of their older Pen models that are giving them volume, not list price on the new stuff. With management distracted and marketing stalling, they need someone to come in and fix both those things, fast.
Panasonic: bet big on mirrorless, but also still trying to regenerate momentum in compacts (they've been losing share to Nikon, and Fujifilm now wants their market share, too). Simple problem: they suck at marketing their products, especially in the US. Nothing wrong with their products. Everything wrong with their distribution, sales, support, and marketing (again, especially in the critical US market). Unfortunately, that's not likely to get fixed.
Samsung: bet on everything except DSLRs, where they've retreated. However, I still scratch my head about them. What are they really trying to prove? That they can create all the same products as ALL other consumer manufacturers? The synergy is missing. Samsung cameras don't really drive anything else Samsung, and Samsung TVs, et.al., don't really drive camera sales. If any maker was going to take a flying leap and reinvent the camera (programmable, modular, communicating), it should have been Samsung, as they have all the components to do so, and that would create synergy with other products. That's the problem with copying others rather than leading. Instead of copying the curves of iPhone and iPad, Samsung should have been sticking in bigger sensors and making better smartcameraphones.
Pentax/Ricoh: incomplete information as they're still meshing. Ricoh was primarily a niche compact company and Pentax had become primarily a DSLR company. The growth is in between, so they have a lot of work to do.
Meanwhile, one compact camera producer, Kodak, is rumored to be very near filing for bankruptcy (source: Wall Street Journal).
The overall problem is only going to get worse, I think. On a recent trip to the Galapagos I counted cameras: smartphones outnumbered everything else in use, and by a substantial margin. That was a bit of a shocker to me, and shows how fast things have changed in the photo taking world. Not too long ago, Galapagos tourism was mostly a SLR/DSLR world.
The trend lines in photography have a lot of conflicts in them. Overall, the smartphone trend is driven by the young (and getting younger), the retro/interchangeable trend driven by an older, more mature user. Photos are heading more and more into the cloud rather than local hard drives, getting printed less, and neither camera companies nor camera users seem to get the fact that electronic display is the likely future but is typically maxed out at 1920x1080 due to HD TV definitions (and 16:9 aspect ratio, to boot). Workflow is still broken, and more so for the mass market than the pro user. There's opportunity in all this confusion and conflict, but no camera maker has managed to take advantage of it. Maybe it's time for a startup...