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Nikon is staying true to its camera heritage, looks to emerging markets for new money

Check out our review of the Nikon Df camera.

At nearly 100 years old, Nikon is one of the oldest and storied camera makers that are still in business today. With its strong collection of optics and cameras – both analog and digital – the company takes pride in its photographic heritage and remains steadfast as a camera company (it’s one of the top DSLR makers), even though many of its fellow competitors have ventured into other business sectors. (Take the new Df, for example, a digital camera with a throwback design that’s all about photography.) So, despite falling sales – including the first-ever drop in DSLRs back in August, its bread and butter – and a smartphone industry that’s pummeling its point-and-shoot segment, the company is sticking with the camera business and has no immediate plans to enter other sectors, according to Reuters.

Nikon’s president, Makoto Kimura, told Reuters that, instead, the company would look to emerging markets like India and Brazil to drive its DSLR business in the midterm, and is confident that sales growth is still possible even in established markets.

“Penetration in emerging markets is still very low,” Kimura said. “Look at Brazil where we sell around 8 million cameras overall. Only some tens of thousands of those are SLRs. That’s why I don’t think that sales will drop that much… When people realize the value of an SLR I think we will naturally see growth.

While rivals like Canon, Sony, and Olympus are facing similar difficulties, they also have other revenue streams that Nikon lacks, such as surveillance, semiconductor, and medical. The company relies on cameras for two-thirds of its revenue, while it’ll be years before it sees any profit from new ventures. Despite Kimura’s confidence in the business model, it’s what troubles analysts during a time when camera makers continue to face pressure from the smartphone market. Nikon has already cuts its forecast twice for interchangeable lens cameras this year. Yet, the company has remained in the black, thanks to the high-end camera market.

But Kimura acknowledges the smartphone challenge his company faces, and told Reuters that Nikon is unlikely to have the type of growth it had in the past decade. But he sees opportunities in developing markets, despite smartphone penetration, and says Nikon’s products will have to offer more connectivity. (Kimura hinted back in July that Nikon might enter a non-camera business – possibly smartphone-related – in some form.)

“A surprisingly number of people don’t realize how different the quality between smartphone and proper camera photos are…and that’s our fault,” he said. “For a lot of users now, a Web connection is the priority and photo quality comes second. But if a camera has both then they’re interested. That’s what we have to offer more of.”

We love many of Nikon’s products. But, while Kimura might be confident of a turnaround – he’s the president, he has to be – it makes us wonder if he is truly aware of the challenges Nikon and other camera makers are facing. There may be growth opportunities in emerging markets, but don’t forget, smartphone growth are also growing there too. Connectivity is absolutely important, but Nikon has yet to really implement Wi-Fi in many of its cameras, preferring to offer it as an add-on option (it only recently came out with its first DSLR with Wi-Fi built in, the new D5300). We don’t want to call Kimura naïve, but statements like his have put many companies in trouble, including BlackBerry and even Microsoft. Or perhaps Kimura is more prescient that we are. Let’s pray for the latter.