The Contraction(s) of the Camera Market - Part 1

  Updated June 18, 2022

"plus ça change, plus c'est la même chose"

- Jean-Baptisite Alphonse Karr c. 1849

or as it is commonly rendered en Anglais:

"the more things change, the more they stay the same"

    As of the spring of 2019, this maxim still rings true in the photographic equipment world (and the larger world in general :-)). 

 ***FAIR WARNING*** - This series of articles contains numbers (please, no), history (bleccch!), and eventually, analysis (make it stop!). 678 Vintage Cameras cannot be held responsible for drowsiness, general lethargy or any other sleep-inducing effects should you choose to continue. Parallels are about to be drawn between the digital and film eras, which will be an immediate turnoff for adherents of the "either/or" crowd, and therefore an utter and complete waste of such a person's time. (As opposed to the standard waste of a person's time that this space traditionally occupies ;-))

    Now that we've got that out of the way (is it too early in the spring for crickets to be out and about?), let's see how a 170-year-old saying relates to events in the camera industry today. In this first portion, we will look at the present state of affairs and some underlying factors, and Part 2 will deal with the breathtaking details of the Auto Focus revolution of the 1980s. (I swear I keep hearing crickets...) 

    So what has set me off on this ridiculous tangent? Well, a couple of things...(really? Oh, do tell. Thank you, I will.) It's kind of humorous, actually. First off, the reaction of the photographic section of the Interwebs (which comprises roughly 0.01% of the whole, at best ;-)) to Canon president Fujio Mitarai's comment that the digital camera market could contract by up to 50% in the next two years. Immediately, his comments were taken out of context by certain media sources as applying only to interchangeable-lens cameras (ILCs, which include both DSLRs and mirrorless). He was actually referring to the entire digital camera market, which also includes fixed-lens point & shoots, action cameras, etc. The same sources then seized upon quotes from Canon's competitors pooh-poohing such a dramatic decline (not surprising, since they have shareholders to try and placate and also have different perceptions of the market due to their goals and positions ;-)). But should we so quickly try to discount the thinking of a company that still owns half of the market and yet is not beholden to it for its economic survival? What sort of a drop in sales would it take to confirm Canon's prognostication, and is that a realistic possibility? Is there any historical precedent for such a massive market contraction? 

  The Current State of Affairs

    According to CIPA (Camera & Imaging Products Association), 2018 production of all dedicated digital cameras was 19.5 million units (8.6 million units were fixed-lens, 44% of the entire market). For Canon's estimate to become reality, total camera sales would have to drop to just under 10 million by 2021 (UPDATE: actual total sales for 2021 came to a bit over 8.3 million, with the pandemic partially being responsible, something Canon obviously couldn't have forseen). Now, as far as fixed-lens sales go, a drop of 5 million units over two years is very possible (UPDATE: and was, as 3 million units were sold in 2021, 33% of the entire market). Check out the annual overall decline (aside from 2009 & 2017) in fixed-lens digital cameras from their production peak in 2008:

• 2008 - 110 million units
• 2009 - 95.9 million units (-14.1 million)
• 2010 - 108.8 million units (+ 12.9 million)
• 2011 - 98.8 million units (-10 million)
• 2012 - 79.3 million units (-19.5 million)
• 2013 - 44.2 million units (-35.1 million)
• 2014 -  29.3 million (-14.9 million)
• 2015 - 22.2 million (-7.1 million)
• 2016 - 12.4 million (-9.8 million)
• 2017 - 13.4 million (+1 million, ooh look at that trend reversal :-0)
• 2018 - 8.6 million (-4.8 million, move along...nothing to see here ;-))
• 2019 - 6.6 million (-2 million)
• 2020 - 3.5 million (-3 million; partial pandemic year)
• 2021 - 3 million (-0.5 million; pandemic year)

    Now, it is pretty much a universal point of agreement that smartphones have been the undoing of the traditional fixed-lens digital camera; that trend has been accelerating with every new generation of phones; and, therefore, the final collapse of that part of the digital camera market is a foregone conclusion. But what about interchangeable lens cameras? There is no way that they could drop as precipitously, right? Well, Canon has projected for 2019 sales of ILCs by all members of CIPA at 8.6 million (UPDATE: actual shipments came to just under 8.5 million; pretty close :-)) of which Canon expects to supply 4.2 million (CIPA's prediction was 10 million units, for a discrepancy of 14%). A key reason for this pessimism cited by Canon was:

• "...accelerated market contraction for DSLRs, in particular entry-level models..." (Italics ours)

   Again, the often-promulgated explanation for the decline of DSLRs has been the rise of mirrorless alternatives (but according to the CIPA figures, mirrorless production has only slightly increased from 4.23 million units in 2012 to 4.26 million in 2018, with average annual production in between those years ranging from 3.1 - 3.3 million). (UPDATE: due mainly to the pandemic, mirrorless production fell to 2.9 million in 2020, and slightly rebounded back to 3.1 million in 2021) But there have been at least two other more far-reaching reasons for the DSLR decline:

1. DSLRs have been developed to the point that five- and even ten-year old models have plenty of capability for many users, to the point that they have abandoned the upgrade cycle that the manufacturers were able to establish in the first decade of DSLR development. For example, my local brick & mortar store is still trying to sell brand-new Nikon D5300s, a mid-level consumer DSLR introduced in 2013, and one that has since been (slightly) updated twice: D5500 (2015); D5600 (2016). The problem: the D5200 (2012). The D5200 was plenty of camera for its intended audience and none of the succeeding D5xxx iterations have made a significant-enough improvement to encourage upgrading. And this has become the rule rather than the exception with all levels of DSLRs. AKA: Market Saturation (hello, darkness my old friend...)
2. Surprise, surprise. The smartphone, not content with shoving fixed-lens compacts into its gaping maw, has been steadily eating into entry-level ILC sales (particularly DSLRs, but mirrorless hasn't been exempt), which has long been the ILCs' highest-volume segment. Entry-level DSLRs (of which Canon and Nikon are the only two remaining purveyors with any sort of market impact; sorry Pentax...I mean Ricoh ;-)) are dinosaurs (too big; too slow; and with relatively small brains ;-)) when compared to the convenience and ease-of-use offered by smartphones. For the consumer that previously used turn to such cameras for improved performance, what reason is there now to drop $500 - $700 on a camera that doesn't focus any better...photos that don't look any better when shared on social platforms...and that require a far more convoluted process to try and get those images to those social platforms? Not to mention that ILCs are a comparative nuisance to carry around as opposed to the device that is always with you anyways. Now that smartphones have already reduced the fixed-lens market by over  97% (UPDATED: as of 2021, a drop of 107 million units) from its 2010 peak, and development continues unabated, entry-to-mid-level DSLRs are next on the smartphone menu. It is mainly this (with a slight input from mirrorless) that has low-end DSLRs teetering on a sales precipice. Oh, and Canon and Nikon are very aware of the impact smartphones are having on their entry-level DSLRs. In Nikon's promotional literature for its current base-model, the D3500, smartphones are referenced seven times. Nikon's passive-aggressive marketing would be quite humorous if it wasn't tinged with such desperation: "Our camera can focus better and take higher-quality images than your smartphone...so please buy it and you can use your smartphone to display and share the wonderful pictures our camera takes for you". Might have been true five years ago, but not today, bwana :-). The last time Nikon updated the processor in the D3xxx series was five years ago, and they haven't updated the AF system in a decade, (not that those are the things consumers needed/wanted the most anyways, but that only serves to emphasize the disconnect between the manufacturers and consumers). Smartphones, on the other hand, are knee-deep in their development curve and have rapidly closed the gap in imaging capabilities, particularly on the computational side, not to mention the multi-lens and optical zooms now available in them. AKA: Obsolescence.

   Now, of course, it often takes time for obsolescence to trickle down into the consumer's mind. We are creatures of habit, and will often stick with what is familiar and comfortable. But the generation(s) that thought of cameras as standalone devices are aging and shrinking quickly as far as market influence is concerned. And here is where a second individual's remarks from the photographic manufacturing world flipped a little switch in my mind and will lead to us jumping back three or four decades in Part 2. 

   Kazuto Yamaki is the CEO of Sigma Corporation, one of the top third-party lens manufacturers around today, and he has been a keen participant/observer in the Japanese camera industry for the past three+ decades. In a recent interview with Dave Etchells of Imaging Resource, he mentioned the similarities he is seeing with the present DSLR/Mirrorless transition in ILCs with the Manual Focus/Auto Focus transition in film SLRs during the 1980s. Of particular note is his comment:

​We had a similar time about 30 years ago, when cameras changed from manual focus to autofocus. Many companies were going to [create] autofocus systems. It also happened suddenly, and the change from manual focus to autofocus was much quicker than we thought. At the time I was a student, but I know the market at the time. We thought it would take a while to change, but actually it was quick. (Italics ours) And at that time, Minolta become the number one [brand]. But right after that, Canon and Nikon took back share from them, and they become number one [again].

    Aha! So the market situation today, while perhaps unprecedented in scale, is not without a precursor (like just about everything else in history ;-)). So just how fast was the transition that took place in the MF/AF revolution? And can it give us any sort of indication as to the possibility of a drastic decline in DSLR sales in the next two years? Part 2 awaits...

  References:
 
    CIPA Statistics for Digital Cameras @ http://www.cipa.jp/stats/dc_e.html
    More Canon Negativity on the Market by Thom Hogan @ https://dslrbodies.com
    Sigma Q&A by Dave Etchells @ https://www.imaging-resource.com