I believe Pentax started losing market share with K-7.
With K10D and K100 lineup especially with K10Ds Pentax started re-earning it's film-era reputation in the digital era. Actually Pentax created a legend and big excitement among DSLR users with flagship of K10D. Actually why most of us is here, existence of this forum, todays peoples opinions why I converted and purchased Pentax debates are
all epended on Pentax huge success with K10D and K100Ds.
Then very reasonable upgrades came up like K20 and K200D, everything was settled, Pentax saga continued, people still had a faith about Pentax can create upgrades and will create legendary cameras like K10D again , not in K20D but it will be in the future cameras.
Then K-7 arrived with a lot of issues, first of all it wasn't a MP upgrade camera, don't underestimate this silly MP issue, try to think like a DSLR starter in the tech store, asking questions to store staff questions like, "Oh! how many pixels new Pentax K-7 has? How many is Canon Xsi?, and how much is the Pentax and Canon". These kind of questions are very important for the marketshare. These kind of possible newbies and convertees don't ask and most of them won't ask questions about IQ, like we talk here most of the time. Not to mention green line and zillions of firmware update issues.
They got the answers in the store from staff most likely as "Pentax didn't upgrade megapixels in their new camera, it's still 14.5 MP and with kit lens it's 1300 bucks, but Canon XSi or whatecer Xti has same or more megapixels and it's 700 buckswith kit lens".
What do you expect how a uninformed newbie will act like in the store? And how much marketshare gain would you expect from an upgrade camera which has no megapixel count upgrade also no IQ improvement over it's ancestor camera? I would expect None!
I's normal people selling their cameras for an upgrade or converting systems, but above story is my *biased guess* to answer your question, from my view. Photo world still waiting for a decent upgrade from Pentax, if it doesn't happen, what happens next? Nothing. We will be like scarce weirdos insists using a old-weird name brand. What happens to Pentax name if it fails badly with next camera? With 20+million sold lenses in history, Pentax will not and can not die. My worst case-scenerio is Pentax becames a Chinese brand,
but not likely in the near future. I hope.