[Christine Tham]

Who/what/where is the "core market" (demand) for personal imaging devices?

There is no such thing, because no one can define what a "personal imaging device" is anymore.

Imaging sensors are embedded into everything - smartwatches, bike computers, cars.

Of course, DSLRs won't disappear. Vinyl didn't disappear when CDs appeared (I still have hundreds of LPs). But it will be a niche and small market.

In fact, the "record player" industry is a good parallel case study. Major manufacturers all stopped making turntables, but the high end players (like Linn) are still there. And after a while, some niche players came into the market offering value for money products (Rega initially, then Projekt) and now the industry is small but surviving.

And just in case anyone thinks mirrorless will take over, they won't - it's just a different niche market. iTunes killed CDs, and now on line streaming is killing iTunes.

That's why I don't have great advice for Nikon - they are really in a difficult position - be a niche player, do something completely different, or sell themselves to a bigger company?

[Rondec]

These are companies that are geared to selling high volumes of SLRs to people who will upgrade cameras every couple of years. But that isn't the current market. SLRs aren't going to disappear and it isn't mirrorless that is hurting Canon and Nikon. It is a maturation of the camera market.

Both of them need to cut down on models of camera -- maybe 3 APS-C and 2 full frame and produce fewer cameras. No inventory of old cameras sitting on shelves when the new model is released. Extend model lives somewhat. There is no reason, even on entry level cameras, to release a new camera less than a year apart. All it does is confuse the consumer. Release cameras when there is some real improvement -- better sensor, connectivity, whatever.

Ricoh is helped in that they aren't over producing right now and they aren't focused on parts of the market that are saturated.

And I'm not an analyst so take everything I say with a shaker of salt.

[RobA_Oz]

…In fact, the "record player" industry is a good parallel case study. Major manufacturers all stopped making turntables, but the high end players (like Linn) are still there. And after a while, some niche players came into the market offering value for money products (Rega initially, then Projekt) and now the industry is small but surviving.

To be clear, Rega has been around for the same amount of time as Linn, and used to offer products that were also fairly high-end, which, of course, supports your case study. Linn was the stand-out, to which most other turntable manufacturers outside the mass market aspired. The really interesting thing about this market is that there are probably more, and more expensive, high-standard turntables on the market now than at the height of vinyl's popularity. While this tells us what might happen with the camera market, though, it's just one scenario. Personally, I hope it's fulfilled, and that's something for the future, but if we all stop buying cameras it won't.

[wildman]

And just in case anyone thinks mirrorless will take over, they won't - it's just a different niche market.

I'm not so sure. After all mirrorless is at the bottom of it's development curve with, perhaps, three or four more generations before they become fully mature technically. Look at the impact Sony has had with just it's first generation bodies.

I don't think mirrorless will take over completely either. I do think that in the future mirrorless may be mainstream while reflex cameras will become a niche market for those with a atavistic attachment to opto-mechancial cameras rather like those that still use film and shot with expensive rangefinders.

If so, and I was an rational investor, I'd put my money on a electronics company like Sony rather than Nikon.

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Last edited by wildman; 08-18-2014 at 04:07 AM.

[Christine Tham]

To be clear, Rega has been around for the same amount of time as Linn, and used to offer products that were also fairly high-end, which, of course, supports your case study.

Agreed - my statement was a bit misleading, in that it implied Rega came in after the demise of LP whereas what I really wanted to say was that companies like Rega and Projekt actually thrived on "value for money" products long after LPs were regarded as "dead."

And you are right in that very high end turntables continue to be designed - there are now several models far more expensive than Linn - I've had the pleasure of hearing one of those vacuum suction designs that required a purpose designed closet to hold the suction motor - you have to basically add the cost of a specially designed house to the cost of the turntable (itself around $100k).

We may see the camera industry evolve that way - extremely high end "cost no object" type designs that well-heeled enthusiasts will buy. Or we may not. Time will tell.

If so, and I was an rational investor, I'd put my money on a electronics company like Sony rather than Nikon.

I wouldn't invest in any electronics company - it's a low margin business with very little upside and lots of downside - check out this graph from Jackdaw Research:

[Digitalis]

in fact, the "record player" industry is a good parallel case study.

you could say the same for the vacuum tube amplifier community.

[RobA_Oz]

Agreed - my statement was a bit misleading, in that it implied Rega came in after the demise of LP whereas what I really wanted to say was that companies like Rega and Projekt actually thrived on "value for money" products long after LPs were regarded as "dead."

Yes, I thought that's what you were getting at. They've certainly come up with some very good VFM designs in that part of the market.

And you are right in that very high end turntables continue to be designed - there are now several models far more expensive than Linn - I've had the pleasure of hearing one of those vacuum suction designs that required a purpose designed closet to hold the suction motor - you have to basically add the cost of a specially designed house to the cost of the turntable (itself around $100k).

Lucky you! I've only seen those referred to in hi-fi magazines.

We may see the camera industry evolve that way - extremely high end "cost no object" type designs that well-heeled enthusiasts will buy. Or we may not. Time will tell.

That may well be what's starting to happen now, although the Hasselblad pointers (ie the Lunar vanity camera etc) are the only ones I've seen, aside from the highly specialised stuff from Alpa etc. Digital technology has a habit of taking stuff from the high to the low price brackets fairly rapidly, so rare materials and hand-crafting are probably the only sustainable cost elements of design and manufacture that would keep something at the high end for very long, unlike analogue turntables, where the reproduction technology itself involves exotica and highly specialist labour.

[wildman]

I wouldn't invest in any electronics company

Further clarification;

I'd put my money on a electronics company like Sony rather than Nikon - so far as which is most likely to survive as a major player in the mass consumer camera market of the future considering the direction camera technology is apparently going at this point.

[Christine Tham]

I'd put my money on a electronics company like Sony rather than Nikon - so far as which is most likely to survive as a major player in the mass consumer camera market of the future considering the direction camera technology is apparently going at this point.

Agree.

Sony's strategy is a little different because they are primarily a sensor manufacturer. They "win" regardless of what device or form factor a consumer chooses in order to take a photo.

Their strategy in the camera manufacturing space seems to be to explore as many use cases and form factors as possible. Hence all the disparate models - RX, Alpha, QX, Action Cam. They don't "need" any of these models to succeed, their objective is to generate demand and mind share from consumers.

Both Sony and Pentax are playing the role of "disruptors" - they try to find new markets (Pentax - Q and 645Z) in new product segments and play catchup in the established segments (eg. DSLR). They "win" by essentially taking wallet spend away from Canon and Nikon, and attracting new consumers who will never have purchased a DSLR.

[clackers]

Sony's strategy is a little different because they are primarily a sensor manufacturer. They "win" regardless of what device or form factor a consumer chooses in order to take a photo.

Not sure any of Sony's electronics divisions are winning, Christine, whether selling their own devices or components for others. Yet another terrible year:

http://mobile.reuters.com/article/idUSBREA4D08W20140514?irpc=932

They are an important supplier to Ricoh, so their performance continues to be troubling.

[rawr]

Technology markets are extremely hard to predict.

I've participated in various high level attempts to do so over the years, and all pretty much failed because they missed a big disruptor (or two). Like smart mobile, LOL, which was never even on the radar in one big review I was a part of.

Established behemoths like Sony and the other current market incombents will usually be amongst the last to know (and act) on significant technology or consumer change agents.

[Christine Tham]

Not sure any of Sony's electronics divisions are winning, Christine, whether selling their own devices or components for others. Yet another terrible year:

Sony vows deeper restructuring, warns of another loss this year

They are an important supplier to Ricoh, so their performance continues to be troubling.

You do realise this is an old article? (dated May).

In the first post, I provided a link to their actual financial results (1st quarter), dated 31 July.

Their operating income for this quarter has doubled from the same period last year (consolidated, as well as for the imaging products division). They are actually doing really well on almost all divisions, with the only exception being the PC business which they are exiting.

Their forecast for the end of the year is a 400% increase in operating income. However, forecast for imaging products expected to be unchanged from last year, because they are hurt by the market like everyone else.

[wildman]

Sony's strategy is a little different because they are primarily a sensor manufacturer. They "win" regardless of what device or form factor a consumer chooses in order to take a photo.

One could argue that Nikon is a "child" of Sony - the limits of sony's sensors are the fundamental limits Nikon must live with in their "own" cameras. In a very real sense most of us are all buying "Sony" cameras.

[clackers]

You do realise this is an old article? (dated May).

In the first post, I provided a link to their actual financial results (1st quarter), dated 31 July.

Your figures show imaging sales will actually be worse than originally predicted, the OI maintained by the drastic cost-cutting mentioned in the 'old' article.

They now don't own their own headquarters.

[Christine Tham]

Your figures show imaging sales will actually be worse than originally predicted,

Yes, by about 9%. Compared to the 20-40% drop in BOTH sales and operating income that Nikon and Canon reported. So who's "winning"?