Staying in a Lane Versus Changing Lanes

At times in the interchangeable lens camera (ILC) business we've had periods where people mostly stayed in their lane. Canon users bought Canon, Nikon users bought Nikon, and so on. At other times, we've seen people changing lanes. Long-term readers will know that I've been pointing out for almost a decade that DSLR owners were sampling, leaking, or switching, mostly to a competitor's mirrorless system. 

We're now in a period where people are being forced to choose which lane to be in if they want to have "current" equipment. That's led to a lot of discussion about brand loyalty and the future of some companies. For the most part, though, we've always just had a Triopoly in ILC, where three companies chew up an overwhelming majority of the market. Moreover, if we conflate Minolta and Sony (Sony bought KonicaMinolta's camera business), it's been pretty much the same three since the 70's: Canon, Nikon, and now Sony. 

How those three divvy up the 80%+ of the ILC market they consistently seem to own has varied some over the years (the best publicly available data says the number is currently 84% for the Triopoly), with the most recent change being that Nikon is no longer #2, Sony has now taken that spot. But that's not necessarily the best way to look at the camera market in terms of predicting a company's success or profitability. 

I try to monitor four streams of numbers: consumer mirrorless, prosumer/pro mirrorless, consumer DSLR, and prosumer/pro DSLR. Each of the companies are doing differently in each of those four areas.

It should be obvious that Sony gave up on DSLRs and now effectively has no sales there. So, when trying to figure out how Sony is doing, it's really just about analyzing the balance between their consumer mirrorless and prosumer/pro mirrorless sales. 

Canon is overproducing consumer DSLRs still, and their consumer mirrorless offering (M mount) doesn't align well with where Canon is driving both the prosumer/pro still camera sales and eventually their video line (RF mount). 

Nikon overproduced (note the tense difference) consumer DSLRs and underproduces consumer mirrorless. Virtually all of Nikon's concentration starts with the Z5 and goes up through the (currently) D6. 

Each company is steering themselves differently, and that's causing customers to think more about what lane they're in. Nikon, for instance, seems to have shifted most of their revenue collection to the prosumer/pro market, which given the collapse of the consumer DSLR, makes sense. The net result of them continuing to follow that path will be that they become a smaller company in terms of market share than they were during the DSLR era. How much so will depend on what models they add to their mirrorless lineup in coming months. If they were to launch one DX Z in the next 12 months, for example, a Z30 might slow the market share shift, while a Z70 would accelerate it even if the model was "successful". Both models are probably needed.

But in analyzing where we were, where we are, and where we're likely to be, I'd say that the Triopoly will likely stay Canon, Nikon, and Sony, but the shares will shift, as happens over time. These three companies essentially play a perpetual game of leap frog.

What's more interesting is trying to figure this out:

  • The consumer DSLR installed base is enormous. They've slowed their updating or stopped buying completely. Do these folk just go away completely or do they eventually show back up, perhaps in lower numbers, but in the mirrorless world? If so, do they stay in their chosen lane or switch?
  • The prosumer/pro DSLR installed base is large and loyal. They, too, slowed their updating and buying. Many really still want "a better DSLR." Canon seems to suggest that won't ever happen, while Nikon seems somewhat more likely to iterate a DSLR or two. So what happens when these folk don't get what they want?
  • The consumer mirrorless business is completely disloyal. I see a lot of brand switching and sampling as people look for "the right answer" and don't find it. 
  • The prosumer/pro mirrorless business is small but slowly growing. This is where most of us see the heart of the ILC business ending up. Both Canon and Nikon are slow to get there and still in the middle of their transformation, so it's unclear just what we'll get and when, though we're getting better and better choices as the transition continues. 

I don't know the answers, nor do the Japanese camera companies know the answers. As a long-time product line manager, the second and fourth bullets would get my (mostly) undivided attention, though the first bullet has some intriguing possibilities in it. 

The third bullet—which is where the majority of the mirrorless camera sales have been and which fuel the "market share" win/fail posts from the brand fans—sends many warning signals to me. Something's wrong in this portion of the ILC market: the right product hasn't evolved, or there isn't a right product. You can waste a lot of time, effort, and money in that morass if you're not careful. Moreover, winning is not necessarily very profitable in this segment.

Much of the angst being shared in various ways around the Internet has to do with the fact that we're still in a transition period and it's somewhat unclear what the landscape will look like once the transition is mostly completed. So let me state my thoughts clearly: 

  • I don't see any companies going away any time soon, even Pentax.
  • I don't see any ILC products dying in 2021 other than perhaps low-end consumer DSLRs.
  • The exact market shares will adjust, but some of that will be intentional on the part of the companies as they retarget.
  • Because of the previous two bullets, I'm not sure we'll see the big discounts and deals we've seen in the past, as overall everyone wants to raise their average selling price to make up for the market contraction going on at the bottom. Maybe they'll be a consumer DSLR fire sale.
  • We haven't yet seen the best of what any camera company can do, though Sony might have a tougher time pushing further quickly given the A1. 

My advice? Relax. Pick a lane and stick with it (caution: your lane might merge from DSLR to mirrorless). It's a rare person I've met that's maximized the potential of the camera they already have, so concentrate on that first, as it will inform what you should get in the future.

Finally, a tangential thought: if I were concentrating on the second and fourth bullet in my product management, I would want to also up the number of lenses that people are buying per camera body (currently runs about 1.6x). These two groups should be more receptive to additional optical options, but you have to produce them in order to take advantage of that. And no, Sony, I really don't think we need any more 35mm or 50mm options ;~).

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