The camera makers weren’t ready for smartphones (again).
That’s right, the smart folk in Tokyo have once again not been ready for something that was extremely predictable in the phone market. What did they miss this time? The inevitable sales plateau for phones, particularly given the cost increases for the latest models as the smartphone makers try to cram several kitchen sinks into their camera slabs.
Depending upon whose surveys you believe, smartphone unit volume is anywhere from flat (0% growth) to 7% growth over the last two years. Smartphones have reached the top of the growth sigmoid. Many makers now are seeing flat or even declining unit volumes. Moreover, when you couple that with another bit, you'll see where the camera makers weren’t ready to exploit this.
Think about smartphones for a moment. They work incredibly well as a phone. Designs for the last five years using 4G or 5G communications are way more than adequate for virtually everything smartphones do except for two things: photos and AI. You wouldn’t need a new phone unless you broke yours if all you’re doing is phoning, interneting, and entertaining yourself with streams from afar. Yet virtually every smartphone maker is dropping full new product lines of phones every 12 months still. And what is being updated that justifies you paying US$2000+ for a new phone? Better camera, more AI capabilities.
But as the smartphone makers update their camera systems, they’re adding higher cost components: bigger image sensors, more image sensors, advanced lenses (IS, apertures, periscope telephoto, etc.). And the bill of materials costs for that keep going up, so, in turn the smartphones are pricing themselves out of having people upgrade every year. It’s a classic Silicon Valley attempt “to make a wave on the sigmoid plateau” to keep growing. I was looking at one estimated bill of materials for the iPhone 17 recently, and the camera component costs were responsible for about 25% of the retail price (and 20% of Apple’s actual component costs). Those percentages will be lower for the iPhone 18, as CPU and memory costs have skyrocketed as Apple tries to embue more space and speed for AI into the latest units, but still, look at how much the smartphone companies are touting that the camera portion of the phone is one of the key reasons why you should upgrade to a new one. “Hey, we have apertures now…”
I’m pretty sure that the camera makers could make a dedicated camera that beats the smartphone photo capabilities and sell the result for under US$1000. User problem solved: they want a better camera but don’t want to pay for a new US$2000 phone every year to get that. Buying a US$800 camera would save people money while giving them better results and more control. Their phones would still work fine for everything else. (Yes, I’m being loose with the numbers here, but I’m trying to illustrate the overall point, so I need to generalize some.)
So where are those <US$1000 dedicated cameras that would allow smartphone users to keep their current phone instead of paying US$2000 a year to get a camera upgrade? Oh, and how would those missing dedicated cameras communicate better with the phone so that they didn’t cripple the social media use these people want? Tokyo doesn’t know. They’re so gun shy right now that they’re chasing small niches they think might keep them afloat.
It’s almost as if the camera makers want to be bit players now. I don’t see the future in that. But then again, Sony just introduced a US$6000 Walkman, so maybe that’s the future of cameras: low volume but gold plated.