An official Nikon Q&A on the occasion of financial results for Q2 of the year ending March 31, 2014, reveals some interesting tidbits and strategic objectives; objectives that we actually discuss quite often here on THEME. Expect a shift to cameras with higher margins; might well be that the Nikon Df is a strategic corporate trendsetter.
As suggested here, the market wants fewer similar models and is willing to pay a premium for quality. As reported earlier, Nikon bets on the penetration of new markets to counter sagging DSLR sales. Now it emerges they’re keeping inventory at an extremely low level, meaning they only produce what they sell, so older models will disappear more quickly from the shelves than in the past when you had the awkward choice between new, nearly new and not so new models…
Here’s the transcript:
What is the reason for the lowered market forecast for interchangeable lens type digital cameras?
As the market for digital cameras expands, sales of digital SLR cameras have expanded among not only professionals and high amateurs, but sales of entry-models such as the D3000 Series have also skyrocketed, expanding the customer base globally. For this reason, sales have been affected greatly by the economy and consumption trends of each country. The market in Japan has been favorable, but the market conditions in the U.S., Europe, China and Asia have been severe, and a downward revision of the market was made from 19.5 million cameras predicted last August, to 18.7 million.
Though the annual growth of 20 to 30% experienced previously will be difficult to achieve given the current economic environment and consumer confidence, the penetration level of digital SLR cameras is still quite low in markets in China and other neighboring Asian countries. We believe these markets have a lot of potential when the economy turns bullish.
We are keeping inventory of our digital SLR camera at the extremely low level. In the latter half of the fiscal year, we expect a shift from older products to newer products that have higher profit margins.
What are your future strategies in response to the shrinking compact digital camera market?
We are adjusting production in accordance with the shrinking market. We have an extensive lineup ranging from high-end to entry level products, and we have secured the leading or nearly top share of the market in various regions around the world since last year or so. We plan to maintain this product mix, but we will cut costs and ensure profitability by reducing the number of models.
Compare this to Canon’s consolidated results for Q3, 2013. World’s camera leader sees less need for action than Nikon:
Within the Imaging System Business Unit, sales of the EOS 5D Mark III, 6D and 70D advanced amateur model interchangeable lens digital cameras continued to grow. Furthermore, especially in Japan, the new entry level EOS Digital Rebel SL1/T5i cameras proved popular, further contributing to sales and helping the company to maintain its top share of the global market. As for digital compact cameras, although total sales volume declined due to the market slowdown and the increasing popularity of smartphones, sales volume increased from the previous year.
Nikon aims to become more agile and increase margins while the sheer volume of the Canon colossus makes direct comparisons between the two difficult. Nikon will focus more on imaging devices while Canon diversifies “creating fresh growth in new directions,” according to a recent sustainability report.
Canon today makes more money with its office business unit than imaging systems. The Canon of tomorrow will be more of a business conglomerate than the company founded in 1937 as a camera maker.
Interestingly, during its early years the company originally called Kwanon did not have any facilities to produce its own optical glass, so the first Canon cameras incorporated Nikkor lenses from Nippon Kogata, the company later known as Nikon…
BTW, fittingly Digital Trends publishes an analysis on camera makers risking to go bust. Excerpt:
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 (…) 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.