Recently we attended a gathering of photo reporters and analysts to test some new high-end cameras. While the products were certainly cool, some of the things we discovered about the overall digital imaging business would frighten veteran Navy Seals, making one wonder whether the industry as we currently know it will be recognizable in five years. Folks, we’re talking about companies that have been around for 100 years and survived World War II, suddenly facing extinction. One analyst we know and respect speculated Nikon – yes, Nikon – might be gone in five years, although the company reacted with outrage and denials when this occurred. You can tick off really bad news for nearly every brand from Canon to Ricoh, sprinkled with collapsing demand and falling revenues. Clearly these are dangerous times for the camera industry – and what’s so ironic is the fact the gear has never been better, with some fantastic cameras hitting the scene such as the new Sony Alpha A7/A7R, Nikon Df, Canon 70D, and so on.
It’s absolutely no secret what is pushing the traditional camera business off the cliff – the smartphone. While sales of photo/video capturing smartphones continue to soar, the appeal of classic point-and-shoot digicams is evaporating. Another analyst told us sales of aim-and-forget cameras are on a downhill ski-slope with no end in sight. How bad is it? At the peak just a few years ago, over 35 million cameras were sold. We were told the number for 2013 might be 14 million – or less. At the recent PhotoPlus Expo in New York City, a panel of experts from the camera companies finally acknowledged that the smartphone effect on their business is very real, and they must face this new formidable challenge quickly. But the smartphone is just one of the many headaches facing camera companies.
Think of it this way. Almost all of the majors, such as Canon, Nikon, Olympus, and Sony, built factories to meet the digital camera demand of the last decade. So not only did they spend billions building facilities in Thailand, China, and other countries, they have thousands of employees to maintain. Unless you’re a smart company like Apple that contracts out all its manufacturing, this is an unmitigated disaster. With the drop in sales they simply don’t have money to keep their current infrastructures. Given this dire situation, coupled with fluctuating currencies and natural disasters, the respective managements should be shutting factories and laying-off thousands, right-sizing to meet the challenge of this decade and beyond. Yes, we know this sounds harsh but what’s the alternative – bankruptcy? (You don’t have to look further than Kodak.)
Alas, knowing the corporate cultures of many of these firms the way we do, asking them to make such radical moves is like asking a chimp to formulate the Theory of Relativity – it ain’t happening. Nikon’s president recently stated that the company is going to stick with making cameras, and have no immediate plans to enter new businesses. Many are living in hopes the good old days will return. Dream on, boys, dream on.
Yet, even though the wolf is banging on the door and most managements dither – shades of Blackberry – companies are trying almost anything to gain some traction to stop the downhill sales trajectory of the business. That’s why we’re seeing Sony create some truly out-of-the box ideas like the QX10/QX100, which is basically a camera/lens combo that gets attached to your smartphone. We recently used this device and while we applaud the concept, the operation is not nearly as seamless as snapping a shot on your iPhone and sharing with friends. When we stepped back we realized this was a unique way to use the components generated by those point-and-shoot factories and marrying them to the smartphone. Sure it will improve the quality of your smartphone images, but we’re not sure hundreds of thousands of shutterbugs will buy this $250/$499 add-on. Still, a big A-plus on effort for Sony.
To give camera makers their due, adding Wi-Fi/NFC (near-field communication) capability to most newer, more expensive cameras is a real plus. We’ve used many of them and found the combination of Wi-Fi and apps to be quite good and useful. Unfortunately, this was something that needed to be done at least three years ago to stop the coming bloodbath.
In meantime, you as a camera buyer are in a good spot. The quality of Compact System Cameras, DSLRs, and sophisticated compacts will continue to improve while prices edge down – but don’t expect full-frame models to break below a grand for a long time. Companies will continue to try new concepts in hopes one or more will stick to the wall, grabbing consumers’ fancy. But really now, can any camera compete with a smartphone for all-around convenience? An iPhone 5S is only $299 with a contract, as is a Samsung Galaxy S4 – even less for a 41-megapixel Lumia 1020. Yes, we’re well aware of the photographic limitations of any smartphone but the images are certainly good enough for 90 percent of consumers, and it’s only going to get better as the technology advances.
We can’t predict whether Nikon or any other camera firm will be forced to say adios in five years. But we certainly know if the companies do not make radical changes, the future looks bleak indeed. Even though Japan Inc. is notoriously slow in making changes, just look at Panasonic. For all its protestations, the company is moving away from the consumer side of the consumer electronics business to concentrate on supplying components and services to other manufacturers. After sinking billions into plasma HDTVs, the company recently pulled the plug on consumer displays. Rather than reacting with dismay, Panasonic shareholders have backed the company’s strategic moves. And, if Panasonic can make such a bold (but necessary) execution, we’re sure it won’t hold back on axing its consumer digital imaging if sales get worse. Olympus and Fujifilm have already signaled they’re moving away from budget cams and exploiting other areas with better returns. This shows there’s hope for truly forward-thinking firms that realize the past is the past and the glory days of hardware-only success will never, ever return. The way most of the major camera makers have acted over the past few years, it’s hard to put them in that category.