[SashasMom]

Read this in the news just now:

Except for market leaders like Canon (CAJ), Sony (SNE) and Nikon (NINOY), no one wants to be in the digital camera business anymore. Worldwide unit sales fell 18 percent in the two years following their peak in 2010, and the decline is accelerating this year.

It is no surprise, then, that Olympus (OCPNY), which only has 7 percent market share, has failed to generate a profit from its imaging business in any of the past three years. The decline caught the company’s management off guard. Actual sales were less than two-thirds of forecasts.

For the next fiscal year, the outlook is grim. Olympus expects compact camera sales to fall from 5.1 million to 2.7 million units worldwide. A major reason for declining sales has been the increased adoption of smartphones -- which now offer lenses and chips that capture high-quality images -- as an alternative to digital cameras. Based on increased interest in high-end cameras, the company plans to focus on increasing sales of SLR cameras, which accounted for just 35 percent of its imaging business.

Meanwhile, sales of its largest camera segment, compact cameras, will be cut in half. Of concern to investors, the company has pledged to stop issuing dividends until the camera business is restored to profitability.

[Miguel]

As with Pentax, someone will buy Olympus's camera organization (the medical imaging division is doing very well). If not Sony, then someone, Panasonic maybe, or could even be Ricoh.

M

[philbaum]

Its sort of an odd situation. Most of the research and development efforts seem to be going to FF and mirrorless ILC cameras, yet the problem primarily is the decimation of the compact camera market. Yet even the DSLRs and mirrorless are down 18%, don't know recent numbers. This is probably not the best time to sell off parts of a camera company with the market as bad as it is.

[Miguel]

This is probably not the best time to sell off parts of a camera company

Mirrorless sales are high in Asia. That may be enough to matter.

If a company is in trouble and a buyer is interested, anytime is the best time to sell, because you may have less to sell tomorrow.

I figure if Pentax was sold (for chicken feed), then it will be easy for Olympus camera to be picked up as well.

M

[Rupert]

This year I read a business article that predicted Olympus as one of the top ten Brand Name Corporations that will fail in 2014. JC Penney was also on the list, and there were a good many more borderline predictions.
It's a changing world, and those that miss a step can collapse quickly. Investors are hungry and have little if any patience for a company that is not moving up. Seems no corporation is immune to the greed of rabid dog investors.

Regards!

[6BQ5]

I also read somewhere (whatdigitalcamera.com, maybe?) that Panasonic is losing money on it's Lumix line of cameras too. They plan to cut back on their new product introductions next year. With Panasonic and Olympus both suffering I wonder if the u4/3 format is in trouble.

[Miguel]

I wonder if the u4/3 format is in trouble.

Perhaps that helps explain the massive upsurge in u4/3 proselytizing I get spritzed with on forums. The weaker the product sales, the more intense the insecurity of the true believers. May just turn into the 110 film format of the digital age.

M

[Parry]

In the near future we'll have two options . . .

1. A smartphone with zoom lens and Instagram;

2. Very expensive high end ILC's, both DSLR and mirrorless, full frame and medium format.


These firms are not going to continue losing money on consumer/prosumer products and will cut back to specialist divisions like medical imaging. This will leave the two options above for consumers and Option 2 will not be cheap due to massively reduced competition in the market. It'll be pro camera or no camera.

I wouldn't blame most of this sales drop on smartphones either. The middle class economic group is disappearing around the world and with increased living costs and increasingly unstable employment (particularly for the younger generations of would be ILC buyers) having an expensive camera is the last thing on the consumers mind right now and in the future. Smartphones are definitely killing the point and shoot market, but it's a drop in disposable income that's killing the ILC market.

[philbaum]

I hope that one of the first things we'll see in DSLRs is the end of the practice to come out with new small iteration models every 18 months. That takes a lot more staff to do than a slower model development effort. It also forces QC and user testing onto the customers instead of working out problems before models are released. Ricoh's effort on the K3 and Canikon's periodicity on their higher end FF cameras are more what i'm thinking about.

So i think we'll see staff reductions in the camera mfr, reduced number of models and lengthened periods of release. All good things in my mind.

Other predictions:
a. Lower end DSLRs will continue - as Thom Hogan has pointed out, several mirrorless cameras were inefficient in bringing features to market that were often available on the average DSLR at the same price range.

b. I don't have one, but i think micro 4/3 will continue even if Olympus doesn't. Too many lenses out there and too good of systems.

c. Increasing penetration of mirrorless cams into the market place. Mfr have been reluctant to spec out mirrorless the way they have dslrs, but once they do and once they solve focus speed problems, they will take over more of the marketplace

d. FF penetration of the marketplace will be slower than projected by Canikon.

[RGlasel]

it's a drop in disposable income that's killing the ILC market

I agree with some of your camera market predictions, but this statement is wrong. The rate of acceleration in consumer debt is down in developed markets, so expenditure on non-essential goods is not growing, but disposable income hasn't dropped (not even during the Greatly Hyped Recession of 2008.) The difference is how much money the middle class is spending that they didn't earn. Another way to look at it is that ILS cameras are durable goods in a mature market, so there is little incentive to invest in new products. Which doesn't necessarily mean higher consumer prices, because R&D costs have been paid for, and as long as you can sell these cameras for more than what it costs to manufacture them, it is worth keeping that product line. Even if the smaller manufacturers are sold to larger competitors, it doesn't lead to higher prices, just less selection. So, my advice is to treat your K10D with kid gloves, you might be hard pressed to get a suitable replacement in 2043.

[Parry]

I agree with some of your camera market predictions, but this statement is wrong. The rate of acceleration in consumer debt is down in developed markets, so expenditure on non-essential goods is not growing, but disposable income hasn't dropped (not even during the Greatly Hyped Recession of 2008.) The difference is how much money the middle class is spending that they didn't earn. Another way to look at it is that ILS cameras are durable goods in a mature market, so there is little incentive to invest in new products. Which doesn't necessarily mean higher consumer prices, because R&D costs have been paid for, and as long as you can sell these cameras for more than what it costs to manufacture them, it is worth keeping that product line. Even if the smaller manufacturers are sold to larger competitors, it doesn't lead to higher prices, just less selection. So, my advice is to treat your K10D with kid gloves, you might be hard pressed to get a suitable replacement in 2043.

Disposable incomes may not have dropped in the likes of Canada, but believe me, they collapsed in the UK and of course across much of Europe. Of course, you are correct about consumer credit. It was used by many as a substitute to real wage growth, which hadn't happened since the 1970's and 1980's. Lifestyles had become debt based. That's thankfully over.

[Parry]

Good for a laugh, but very close to the truth . . .

Daughter, with iPhone, takes better photos than father, with Nikon D800 | New Camera News

Sonata’s first show, “Anxiety in the Post-Recession Middle Class,” opens next month at the Main Street Gallery.

[kenyee]

Perhaps that helps explain the massive upsurge in u4/3 proselytizing I get spritzed with on forums. The weaker the product sales, the more intense the insecurity of the true believers. May just turn into the 110 film format of the digital age.

Actually, I think it's more that m4/3 has actually come fairly close to APS-C performance...it's at the "it's good enough for the size" level that they promised so long ago and some people have gotten tired of heavy systems (glass+body).
Close enough = decent ISO1600/ISO3200 that'll look good blown up to 11x14 or shrunk down to screen resolution.

I've actually been debating Oly EM-1 vs. K-3 as an upgrade for my K20D/GX1 setup now. They're both "good enough" for what I do. They're not FF level where you can go to ISO6400 w/o problems, but I don't think I've ever needed ISO6400. The only definite survivors of the coming digital contraction are probably Canikon and Sony.

And the difference in 110 film is you can't buy it or develop it any more. Digital cameras are basically good until they the body dies off because cost to repair is higher than cost to replace usually...

[Parry]

Actually, I think it's more that m4/3 has actually come fairly close to APS-C performance...it's at the "it's good enough for the size" level that they promised so long ago and some people have gotten tired of heavy systems (glass+body).
Close enough = decent ISO1600/ISO3200 that'll look good blown up to 11x14 or shrunk down to screen resolution.

I've actually been debating Oly EM-1 vs. K-3 as an upgrade for my K20D/GX1 setup now. They're both "good enough" for what I do. They're not FF level where you can go to ISO6400 w/o problems, but I don't think I've ever needed ISO6400. The only definite survivors of the coming digital contraction are probably Canikon and Sony.

And the difference in 110 film is you can't buy it or develop it any more. Digital cameras are basically good until they the body dies off because cost to repair is higher than cost to replace usually...

I think this is quite right. Pentax may survive because of Ricoh although I'm very glad Sony are making a camera that will accept my full frame PK lenses, ala A7. It's been both a bother and a worry investing in PK glass up until that point.

Will this ongoing contraction in the consumer market push Ricoh into making a FF Pentax?

[philbaum]

I think this is quite right. Pentax may survive because of Ricoh although I'm very glad Sony are making a camera that will accept my full frame PK lenses, ala A7. It's been both a bother and a worry investing in PK glass up until that point.

Will this ongoing contraction in the consumer market push Ricoh into making a FF Pentax?

There may be some surprises in which companies survive and which don't. Some companies may choose to survive this contraction by turning out even more new models; the philosopy being if we just produce the right model, they will buy. These companies could be in big trouble if they heavily borrow for some new model line and it doesn't produce.

Other companies, more rationally, IMO, will say: we have to control costs and reduce staff, excess production facilities, rate of model introduction. Its the old hare vs turtle lesson. I think this is where Ricoh is at. Nikon is probably in the former mode. Just speculation on my part - good luck to all.