The Best Thing for the Camera Industry Is for Nikon to Exit

The Best Thing for the Camera Industry Is for Nikon to Exit

Current orthodoxy in the camera market is based around the triumvirate of Sony, Nikon, and Canon. They hold the keys to the professional full frame sector, supported by wide ranging lens systems. However the last decade has taught us that change is normal, so would the best future for the sector lie in Nikon ending camera production?

No business is too big to fail, with some failing more spectacularly than others, Kodak being a case in point. However reality is often far more nuanced and Olympus' recent offloading of its camera division has shown that there are actually a myriad of ways for this to happen, which doesn't necessarily mean the loss of a product line. Just witness Minolta's transformation under Sony. Sales, bankruptcies, hostile take-overs, and closures are all on the cards when it comes to an imaging division moving on to a new future. It has been the same since the birth of photography: businesses start up and sell products before morphing in to something new. However the period of camera history we now find ourselves in is markedly different from anything else that has gone before and there are two key reasons why this is the case.

The Present Day is Unique

Firstly, it's no secret that sales of digital cameras have fallen off the edge of a cliff. We are regularly regaled with large year-on-year reductions in sales, but it pays to see what that actually looks like over the history of the digital camera (from CIPA sales data). As the graph below shows, the change has been seismic. They haven't just dropped, they've imploded. In 1999, film and digital sales had parity but since then it's all been about the digital camera. It was a success story predicated on increased consumer spending and microelectronics. Everyone wanted a digital camera and the golden years were 2007-2012, all with over 100M units sold. That's a lot of cameras. 

Fable likes to point to the release of the iPhone in 2008 as the turning point when the smartphone outgunned and then outsold the compact camera market. The truth is that digital cameras were already in feature phones, starting with Sharp's J-SH04 in 2000, then outselling compact cameras by 2003. It took a few more years before consumers realized that they no longer needed a separate device. The impact was catastrophic with sales crashing from 120M to 60M in three short years, before entering free fall. In fact the last time camera sales dropped below 20M units was 1984 which gives an idea of the scale of collapse within the sector, except this time there are large companies contracting rather than small companies expanding.

The business impact has reverberated ever since. Building 120M cameras doesn't occur magically. The design, manufacturing, and sales channels needed to be spun up with profit returning to those that cornered this part of the market. Capacity expanded and cash flowed back to investors. The peak in sales coincided with the development of mirrorless which subsequently saw an unprecedented amount of research, development, and innovation. New camera systems abounded, born out of the compact camera boom; they were the perfect antidote to weening a wealthy public on to more expensive systems.

The reality was somewhat different as sales crashed, surplus stock was sold off, excess manufacturing capacity was wound down, and dwindling profits clung to. Those companies that made the right strategic choices at the start of the 2010s would reap at least some of the benefits and Sony was particularly successful in this regard when you consider that before 2006 they didn't have a camera division, yet by 2019 they were the number one seller of full frame cameras in Japan.

Secondly, digital cameras have become complex, high cost, devices which are as much about successful design as they are about supply chain sourcing and just-in-time manufacturing. Gone are the days of a small number of suppliers piecing together purely mechanical devices in a single factory. As this CNBC article about electronic suuply chains shows, in 2018 Apple worked with 43 suppliers across six continents but when you break this down in to raw materials it gets even more complicated. Apple sits at one end of the spectrum where it undertakes the design itself, but then outsources component manufacture and assembly to a global production line. Camera manufacturers tend to undertake much more manufacturing and assembly themselves, but this still relies upon a chain of third party suppliers. The complexity of design and manufacturing is at a level unseen in the past and is therefore a significant barrier to entry in to the market.

Exacerbating Factors

The above two unique features that are shaping the current camera industry have been exacerbated by two further factors. The first of these was the impact of mirrorless interchangeable lens cameras (MILC). Were they an inevitable outcome of digital camera development? Yes, in the sense that at least some manufacturers were always going to produce a MILC design. However more broadly no, at least not in the manner in which they have currently disrupted the market. The unique combination of timing and manufacturers has led to the current slow decline of the DSLR. Timing was important as all the seeds for mirrorless had been sown in the previous decade, in large part by Olympus starting with the Four-Thirds E1. With the peak in camera sales just about to arrive, manufacturers rushed to market with a plethora of new mirrorless systems. Foremost amongst these was Sony fresh from its 2006 purchase of Minolta with its E-mount sporting MILCs. Sony had the capacity, expertise, breadth, and vision to define the market and was also not heavily invested in DSLRs. They saw an opportunity and ran with it. Perhaps if sales had remained buoyant then the DSLR market would have persisted longer — it's difficult to know, but the knock on effect was to invest heavily in the development of top-shelf MILCs and so the balance of power shifted in this direction. Nikon and Canon rapidly followed suit as it became evident that not only was their core compact market largely gone, but that the DSLR sector was contracting.

As the graph above shows, the camera market has been gradually shrinking, with some manufacturers teetering on the edge of financial viability, as evidenced by Olympus' recent announcement. What the market didn't need was a shock to the system and this is precisely what it has got in the form of the COVID-19 pandemic. CIPAs sales figures for 2020 make pretty grim reading. January was down 20% on 2019 with 800k units, however this crashed to 370k units in May. Many businesses have been hit by the pandemic, but those that don't have a financial cushion will be severely impacted.

A Sustainable Camera Market?

The chain of events which I've outlined above has led to one key problem: the market has shrunk back to the size (in unit sales) it was at in 1984. In short there are too many companies, too many products, and too much production. The net result is excessive competition for an ever diminishing market. In order to combat this, production needs to downscale and become more efficient. The latter could in-part be addressed by following Apple's lead and focusing upon core camera expertise in terms of design and then outsourcing production in order to streamline supply chains and then manufacture in lower cost domains. Some camera manufacturers already do this, it's just that the scale of operations needs to increase.

In order to address excess production, there needs to be a net reduction in capacity. Whilst this may occur with Olympus' sale of its imaging division, this is currently a transfer of operations not a closure and, anyway, accounts for a relatively small proportion. In order for there to be a bigger market shift we would need to see one of the bigger producers — and specifically one of the big three — to pull out of the market. Canon and Sony are both too heavily invested, too diversified, and too successful to want to withdraw. That leaves Nikon as the single prime candidate for closing its production line. This would have the benefit of reducing capacity and so competition, allowing a lift in prices and so margins for the sector.

It would also benefit Nikon in terms of its focus as a company which has significantly shifted away from its Imaging Division. It is increasingly accounting for a smaller amount of income whilst incurring losses as it loses market share. Unlike all of the other main camera manufacturers who have much broader income streams, Nikon is still largely an optical company. Imaging Divisions can also be vanity projects for some corporations, persisting longer than they rightfully should given the lack of revenue.

Should Nikon cut its losses and exit the camera market? And would this result in a more balanced and better performing camera sector?

Mike Smith's picture

Mike Smith is a professional wedding and portrait photographer and writer based in London, UK.

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This article is an example of scaping the barrel in a slow news period. Utter rubbish click bait.

Actually, the real problem is that FStoppers articles are 90% rubbish. When you promote quantity over quality, FStoopers articles is what you get. DPReview is slipping into this range also and other publications that are relying on articles written by amateurs. I skim DPReview and FStoppers, I don't take most of their articles seriously at all. Also, they are aimed at beginner and amateur photogs. No offense, but when you're past that point, you are more interested in honing your craft and not reading newbie articles.

You are correct, this article was pure clickbait disguised as an erudite article with a couple of graphs thrown in to make it look 'factual'

By the way, I own Canon, so I really don't have a dog in the fight.

DPReview hasn't been credible as anything more than a place to read specifications ever since Amazon bought them back in 2007. Every single product they do a so-called review on is minimally "recommended" no matter what.

The comments on DPReview seem to be full of gear snobs. They’ll rave about high end gear, shout down anyone who has a different opinion and flock to reviews of cheaper or niche camera products just to make fun of them.

Thats why I generally don't bother with forums like that. I'm a working pro and my interest in keyboard warriors is somewhere between stepping on an ant and what I flushed down the toilet this morning.

I got piled on by some keyboard warriors here when I stated that the cheap Chinese brand strobes that have no real manufacturer's representation outside of their dealers didn't work for me. The responses were hilarious and I have to admit I enjoyed throwing a little gas on the fire of those who had yet to move out of their mother's basement.

I’d say the majority of photography articles/videos across the internet are aimed at
beginners - how many articles do we need explaining the exposure triangle? Still, there’s only so much reading/video watching you can do before the need to practice out in the field becomes the best way to hone your skills further.

Second that. No meat. I would add in VideoMaker to the thrown-together articles which may impress beginners, very beginners. But there is no real meat on the bones. Usually I avoid them. Once in a while I hit the bait. So now I have a few lost-forever minutes, right here.
I started in 1967 on Speed and Crown Graphics and a Canon rangefinder. I'm pretty agnostic on equipment recommendations except that I stick with what works as a system. I loved that Canon but it had shutter bounce that the store couldn't fix so I wound up trading and eventually had a Nikon the next year. I just kept with it as I added lenses.
Canon has always had great equipment but kept changing systems. I can still use lenses from 1968 on my D850. However, working part time in a camera store in Cheyenne, Wyoming while in the Air Force I came to realize that the best camera ("best camera" is the wrong question) is the one you feel most comfortable with. A lot of equipment never got used because it was the "best camera" as rated or recommended but didn't fit the person. I got a pair of sweet Leica M-2's at a steal that way along with a Mamiya C-33, all of which I still have and which still work, although I'm all digital now for many years.
I don't know any other photogs who seriously want to return to film for regular work. Comparing my D850 against my old film work (good work) the newest digital machines are really in a class beyond film. I may wax nostalgic for some of the smooth print tones but my D850 is just too good to hang on to some outdated version of what is better. The film-v-digital debate reminds me of the "is photography art" debate - something I haven't had to see in some time. Those were lame too.
And, as Fred said above, the "keyboard warriors" aren't worth reading.

I agree with you 100%.

A brave new world confronts us. For example the global car industry in terminal decline; with many car plants set to close with less workers. Young people no longer buying new cars as status symbols considering the damage to the environment. City congestion charges make cars less desirable for the average person now facing tough times. Consolidation coming to the camera industry. Nikon was caught in the slow lane like Canon without semi-pro mirrorless cameras. The Leica company survived but only just because it offered something different; at a price. Your Nikon D850 a great camera but it may find its way to Boot Hill like many champions before? Life is unfair.

I'd vote this comment up about 1000 times if I were able to. Edited for clarity: Voting up the comment by Frank Cornfield.

Yes, when they pay for quantity and not quality, plus with the pandemic causing many photographers not to have work, you get many articles that are written to be written that are pure garbage. Plus, Fstoppers editors are not really good. The majority of the articles are just previews of YouTube videos, very little effort to post an article like that,

What Fstoppers needs to do is pay on a sliding scale, where original tutorials and reviews get the highest pay, and YouTube previews get the lowest.

What irks me the most of the YouTube preview videos, is they think we are dummies. We all have YouTube subscriptions and we see the video way before they post the so called article. We really don't need to Fstoppers to show us something we are capable of seeing by ourselves. Now if they want to do original content, and premiere it first on Fstoppers, then I will watch.

" Utter rubbish click bait."
Worked like a charm tho...

I'm a long time Canon shooter and fan boy. I dare say that the existence of Sony and Nikon has brought us the R5. More to the point, they've forced Canon to do better; to be better. Would we have mirrorless Canon offerings without their competition?

"Canon is still making their own sensors" True, true!

In terms of dynamic range canons in house sensors are the worst on the market. There first generation of mirrorless cameras was a joke, not even in the same league as the z cameras, unless you like 4K with a 1.8x crop, no ibis and old outdated sensors. The R5 is also turning out to be a serious fail, unless you shoot wildlife. Canon doesn’t care about their customers and have blatantly proved this with their entire R line, $2300 for an EOS R and you were probably stupid enough to buy it😂

Why do you think Canon beat Nikon in either Film or Digital in the early days?

Film, the F5 was king in the end and Canon had nothing that could beat it.

As for Digital, the 1D was the only body that cornered any part of the market.

The 10D had focusing issues and was only better than the D100 in one area and that area was noise levels.

Yes Nikon relied on Sony, until they made the D1H sensor and in all fairness, Sony was slow transitioning to CMOS, but that was the only thing that hurt Nikon… within a few years Nikon was on top of the world for Camera bodies and Canon’s sensors were faltering big time.

Even now, the R5 looks like the only modern camera from what people are saying about the R6 sensor not being on the same level as the R6 sensor.

Preach!!!! What nonsense. I shoot Sony and Fuji.

I am so disappointed by Fstoppers to publish this, and even worse, to keep it as top headline with a huge image for so long. I barely even return to read anything at Fstoppers. They turned into a kind of worse of the breed tabloid.

Thanks for outing yourself as another sensationalist looking for clicks that I will never bother to click on again. I looked back over the titles of articles you have written and I see why your name meant nothing to me. You should probably find something you're good at and quickly.

preach !!!

I prefer to see the photographic market reduced to dust, that Nikon leave the game !!!

If there is excess production, then the camera companies would tailor there output to minimize unsold units. Nikon dropping out wouldn't solve a thing, because the other companies would fill the gap. Also Nikon dropping out reduces competition which reduces the need to be innovative. Innovation wouldn't stop, but could slow down.

I just spent the whole weekend using my D850. I am not sure what you are talking about? Did you ever use that camera? It is still one of the best cameras ever made.

Agree, 1984 was the normal. The advent of digital photography created an exponential demand for cameras. Japanese companies industrial clout figured out then how to shift from producing thousands of cameras to hundreds of thousands. In the same way, they will be able to reorganize production and adapt to present realities.

It may be "practical" but Nikon could easily keep profitably making camera equipment at a smaller scale. It'll go out of business when people don't buy enough of their products.

The Best Thing for the Fstoppers Is for mike exit.

I like Canon first, Nikon second, Fuji third. That's enough for me. The rest need to take a powder. Absurd? You bet! But you combat absurdity by being absurd.

I liked your list. But for me it's 1st Nikon, 2nd Canon and 3rd Fuji.

I had to chuckle just a bit. :-) If I had to start over, I just might go with Nikon. I still go with the D850 as the best FF camera on the market.

Truth. I have the Nikon D850, and it is undoubtedly the best DSLR on the market. It is an unbeatable camera.

Agree but a niche market well served by Canon and Sony. Fuji also have a slice of that cake with some classic lenses. Then we have Leica Q / Q2 making a name for itself. Quality at a price for those who appreciate the finer things of life. Maybe medium format as the ultimate format for perfectionists. In the end its a business decision...Apple could buy all these great Japanese camera manufacturers...just to prove their invincibility. Pity.

i switched to sony a9 and a7riv but still blown away when I need to use 810(or d4). hope to buy the d850 when i find $3000 under my couch cushions. nikon skin tones and color looks amazing via capture one.

I agree Nikon, then Canon. Fuji has never done anything that has grabbed my attention. I do have to say that as a longtime Nikon DSLR shooter, I left them for Olympus MFT totally a year ago.

I didn't leave Nikon for Olympus, but I added an Olympus kit to my arsenal and I do like it quite a bit more than the Nikon.

Maybe would be better that Mike Smith leave the journalism industry because of lack of sense and sensationalism. What a bad article with poor arguments.

He sure knows how to troll for clicks, though. Now if that only provided some kind of value for someone other than him.

US dollar crashes against all other major currencies; standby for higher import prices. Then the proverbial hits the fan. The age of enlightenment without digital cameras. Pass the Tri-X / Kodachrome?

This does nothing more than make this site look like shills that lack any credibility. Seriously what a stupid article with added "fluff" (like a bar graph) to make it seem like it has weight.

Everyone benefits if Nikon continues to exist and innovate. I fell for the clickbait headline because I assumed the author would offer some type of rationale beyond the obvious "too little demand and too much competition" argument. I was wrong. This post ranks right up there with posts that try to get clicks by saying, "Hey, watch this video someone else made. I have nothing to add."

Not sure what inspired you to write this article but it is interesting.

I think that if you compare the camera market to the produce market, you will see that this perspective is not ideal. If the smaller but high-quality grocer in your area closed so the market can improve with the larger retailers, would you enjoy that experience? Having a market has created the variety and innovation we now have access to. Having variety of choices is vitally important.

Click bait nonsense.

What’s f-stoppers issue with Nikon it’s getting a little predictable now we will have at least one article a months about Nikon going bust or some other rubbish. It’s as predictable as Andy Day writing some rubbish about racism at least once a week. Hopefully Covid-19 will go away and people can write some proper articles for a change

Rather harsh criticism...Nikon is exposed unlike Canon with many other departments like printers. Sony with Playstation as their main profits centre

Not really at all and Nikon really are not a one trick pony. In the engineering world they have lots of products. It’s just always about Nikon Nikon Nikon. How about Sony’s poor build quality and rubbish menus? Tbf cannon have been slammed about over heating and things lately. But I feel a bit like that’s there own fault the listened to you tube mumpets who wanted 8k not that you can edit or use it and all the other stuff people ask for forums and didn’t think about makeing a robust product. But it’s always the same here constant Nikon bashing

Where did Nikon get behind the curve? Sticking with F mount? Or never noticed Canon capture the bulk of the sports photographer market with more zoom lenses and better service support. The new Nikon mirrorless Z cameras without SD card compatibility. Canon R range better design than Nikon Z but time will tell. As owner of Sony and Fujifilm see no reason to jump ship. Yet.

Ever picked up a D5 ? I don’t think they are behind any curve for the pros that use them! Ever picked up a z camera or a d850 ? I wouldn’t say any are behind the curve. btw news flash SD cards suck !! They brake they are flimsy they are easily the most annoying thing ever! Yeah cf express and xqd look expensive but they are rugged and they work every time first time !! That means a lot! Also as some one who works in the sports shooting world I wouldn’t say that there is that many independent guys shooting cannon. I would say there’s a big mix tbh but I shoot Nikon and I do that for the same reason the military do I work up a mountain in horrendous conditions and I want my camera to work first try every try.

Yes Nikon Z line of attack accomplishes almost what it set out to do by slowing the exodus to Sony. But is it too late for Nikon as Sony offer tip top Zeiss lenses. Nikon D5 may be favoured by professionals but Canon has made significant inroads in that market. For me Sony and Nikon mirrorless cameras are too small for their zoom lenses. Canon R series wins on that score. Note Canon to stop selling EF lenses for their DSLR cameras speaks volumes. The future of Nikon answered if consumers decide it's time to stop buying expensive cameras. Manufacturers miss the boat like Nikon Series 1. Sony Betamax / Walkman?

Yes it seems Nikon is clinging to DSLRs the way Kodak clung to film. Big mistake, and too little too late.

I shoot mostly dance and have for 25+ years. My first Nikon was a Nikon back in 1968. I can still use those lenses on my D850 and Z5 (with adapter). The Z has a ton a latency for my in dance where I shoot production, not studio (well hardly, sometimes a few head shots or posed "action" shots with studio strobes). I am always in the worst possible lighting conditions, low light or over contrasty, changing shape, quality and color constantly, often 3-4 f-stops with a change in music and always needing the maximum aperture from my lenses. Dancers are moving fast with everything coming in fast and heavy and also watching out for position, timing and technique from the dancers (NO continuous drive - "C-drive" doesn't follow the music). That D850 is incredible and the Z gives me smooth tones at high ISO's with the larger pixel size which otherwise I would be getting either extra noise or shadows with partial (ghosted) detail. And the XQD card was a huge relief in terms of fast shooting for me. No more waiting for memory.
And my last camera is always my backup camera, just in case. The show goes on and that means my shooting also has to go on.

Nick don't let your blindness lead you off into the swampland. It's not about what sales look like today (which are abysmal for Nikon by the way), it's about what they're doing to be competitive tomorrow. They've held on to very long product cycles milking their cashcows and missing opportunities to listen to their customer base. I shot Nikon for way too long before switching. wasn't about the quality of their product, well, one of my bodies was plagued with issues, but it was about meeting customer demands with becoming a hybrid shooter. Let's face it, the very few real pros that keep Nikon in business are retiring...and the new replacements aren't shooting Nikon.

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