As part of their E-3 announcement earlier this week, Olympus let it be known that they are targeting themselves to be #3 in DSLRs, with a 20% market share within five years (they claim their current market share is between 7 and 8%; the last published figures I'm aware of would put it at 6%).
Funny thing is, Olympus' marketing materials began leaking months prior to introduction (I was anonymously provided copies of various internal presentations along the way; to what purpose I was getting these items, I don't know), and it's clear from the first of those that they were initially aiming at the D200 and 30D and their possible replacements with the E-3; the last iteration that I received did mention the D300 and 40D directly. Fortunately, the 40D that replaced the 30D didn't substantively move the mark for Canon, but the D300 does move the mark substantially for Nikon. In particular, it appears that Oly felt that their new AF system would beat whatever Nikon did. It's unclear to me (since both cameras are not yet released) whether that's true (Nikon moved the mark considerably with the D300). It still really feels to me like Olympus is aiming at where the target has been, not where it will be.
But let's for a moment suppose that the E-3 can hold its own against the 40D and D300. Can you gain 14% of market share in a modestly growing market with such a product? The answer is no. Right now that would imply sales of the E-3 at well over the 50,000 a month rate for the entire year, a rate Olympus won't (and can't) hit. Oh, and one of your competitors would have to stop selling over 50,000 units a month. That won't happen, either. And those numbers go up considerably when you push out five year (over 100,000 units/month).
Thus, in order to get that 20% market share, Olympus needs many more successful DSLR products. The problem I have with that is that I just don't see them getting in front of Canon and Nikon competitively. The E-3 is a good case in point. While some Olympus supporters will point to a feature here and there (dust reduction, sensor IS), Olympus has some other problems that get in their way. For example, why is an E-3 as big and heavy as a D300 but using a smaller sensor? That's like trying to compete with a 4-cylinder engine in a car the same weight as a competitor's that has a 6-cylinder one. Historically, that type of approach hasn't worked for increasing share in mainstream products, and a 20% market share would require Olympus to be mainstream. Don't get me wrong. The E-510 is a nice camera, and the E-3 looks like another nice camera. But neither of these are the leaps Olympus would need to almost triple their market share. DSLRs are a hugely competitive market, and the market is cooling off (slower growth). Heck, Apple is on a roll with the Macintosh and probably won't achieve the kind of growth in market share that Olympus is targeting over the same time period.
New material: Olympus' last forecast for DSLR unit volume in the coming year was 500k+ units, a year-to-year increase of 100%. Put another way, Olympus is forecasting increased unit sales of ~20k units a month. That's at the edge of possible, IMHO. The problem is the declining growth in the DSLR market, likely changes in the yen/dollar and yen/euro rates that'll increase the cost of cameras (or decrease profits), and the likelihood of increased competition (we haven't yet seen all the products the E-410, E-510, and E-3 will be competing with during that period). The current 2007 CIPA forecast for DSLRs is ~7m units, so Oly's ~500k is a ~7% share. The CIPA forecast for 2009 (as far as they forecast) is ~9m units. To continue to progress towards a 20% share five years out, Oly would have to be at a ~1.3m units in 2009. Put another way, that means two more years of at least 60% growth in a market that's only growing 22%. That means stealing market share from someone else. (Note: the Olympus and CIPA years are off by a quarter, but even if I adjust for that the basic point doesn't change: Olympus needs to steal significant market share from someone and grow significantly faster than the competition to reach the 20% goal.) I should also point out that sales to distribution (which is what Olympus and CIPA report) is not the same as sales to users. That's actually the reason why Canon's retail market share has gone down at the low end of the market this year: they've failed to keep those Digital Rebels moving off the dealers' shelves, while Nikon seems to have no problem doing so with their D40-D80 models.
The real question to ask is this: whose market share does Olympus think it's going to take? Nikon has incredible momentum across the line at the moment, and that doesn't seem like it's going to change any time soon. Sony isn't going up or down at the moment, and I don't see that changing, either, but even taking Sony's entire market share doesn't get Olympus where they want (and Sony, if you recall, also indicated it wanted a 20% market share in DSLRs; perhaps there's some "Intro to DSLRs" brochure circulating at the camera companies that says "aim for a 20% market share" ;~). Pentax has lost their momentum, but it also doesn't have enough share for Olympus to steal to reach their goal. So that leaves Canon. Would you really bet against Canon and for Olympus? If you believe Oly's 20% goal is reachable, that's probably what you're doing, because a significant portion of that gain has to come at Canon's expense. Oh, and the E-3 successor will have to appear in a lot less than the four years it took to go from the E-1 to the E-3. And Olympus will need a lot more than an E-510 and E-3 to move off shelves.
Olympus should take the non-mainstream approach, ala Mazda and their zoom-zoom marketing. Pick a submarket and try to own it. To me, the E-3 fails in that respect, as its size and weight simply don't take advantage of the smaller sensor they're using. Give me the E-3 in a D40-sized body and I start to get interested. But when it goes spec for spec against a D300, I immediately worry about those smaller photosites. For the pro targeted camera, image quality is going to be an issue that's looked at.
Sorry, Olympus, I'm putting you in the dreamer category until you can show me something more.
When I originally posted this, I was attacked on several forums for my comments. Many of those amounted to "attack the messenger not the message." I was traveling at the time and didn't have the chance to go back and doublecheck facts that were in the article. I have now done so and made some minor corrections to wording. My apologies for any ambiguities in the original article. In particular, I was attacked because several thought that I had misquoted a document they had seen. Sorry, but the truth is slightly more nuanced, and I've reflected that nuance in the re-wording. Moreover, a common thread keeps coming up where people claim that the E-410 is significantly smaller and lighter than the D40 (something I didn't dispute in this article, but apparently people are quoting something I wrote earlier in the year in an attempt to discredit me). I think those people need to do a little fact checking of their own. The E-410 is smaller than the D40 by .1, .1, and .4" across the three dimensions. That's not really enough smaller for me to consider it significant. I'll grant that the E-410 is lighter than a D40 (by slightly more than 100g with the kit lenses and batteries), but lightness isn't the key issue to my use of a small DSLR, and lightness can be manipulated by build quality.
Thus, while I've edited this article to be more clear and correct, I still stand by my point. I don't see Olympus getting to a 20% market share in the next five years. Not without something extremely dramatic happening that none of us are currently aware of. That, by the way, was really my only point.