NIkon slumping hard - expected to be #3 in camera sales
A new report out of the Nikkei Shimbun has Nikon falling to #3 overall in the camera market, with Sony upstaging Nikon to take the #2 spot. From the Nikkei report;
The main cause is the camera business, which has been reduced by 22 billion yen. Global shipments of digital cameras were 19.42 million units in 2018, a 80% decrease from the peak of 10 years. 19 will also be 20% lower than 18 years. The first deficit after the fiscal year ended March 1999 is due to the lack of sales of well-profited single lens reflex cameras and interchangeable lenses.
From the chart below we see that Nikon (dotted line) is expected to slip to #3.
While the transition to the Z mount (and also for Canon, to the Canon RF mount) has been very difficult, the lack of success of the Z system overall seems to me (at least) to be a puzzlement. It's everything that everyone seems to hate about the EOS RF system, which, means; it has IBIS, it has a nice sensor in both high resolution and low-resolution cameras. It has great video. They made economical F1.8 lenses versus Canon's astronomically priced F1.2's. Everything points, according to pundits to Nikon should have done better out of the gate than Canon.
So what happened?
The only thing that I can think of is that Nikon's DSLR's are SO good and that Nikon users just aren't willing to let the F mount go right now and combined with the huge start that Sony has it's just a complete disaster right now.
While I notice some websites today proudly proclaiming that Canon (and Nikon) have lost the full frame war to Sony, I should take a moment to caution people that it's a bit early to state that Sony has won the war. Sony has certainly won the battles in the last year, but the war is a long path ahead to all those EF and F mount users that are waiting to see what happens. Both Nikon and Canon will be switching from the EF mount and the F mount as a long term plan that will stretch out over 3 or 4 years. Until then it’s largely going to be a rough ride for both manufactures.
One thing that Nikkei notes that may be a longer term concern for Nikon is operating margin, as Nikkei notes, Canon has maintained a high operating margin because they manufacture everything in house, and have worked hard to automate much of the manufacturing. That will lend itself well to mirrorless which has less delicate mechanical assemblies.
Nikon originally has a lower profit margin in the camera business than the competing Canon. Canon's camera-related business has an average operating margin of 14% over the five years up to FY18, compared with 9% for Nikon. Canon has a low cost rate due to the fact that most parts are manufactured in-house in the group and high production technology.
It will be interesting to watch Nikon and how they navigate the future challenges of switching from the F mount to the EF mount.
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