The Contraction(s) of the Camera Market -Part 2

  Updated June 18, 2022

    In our previous article, we started searching for a possible precedent in the film SLR era for today's sea-change in the digital (and DSLR, in particular) age. Is Canon president Fujio Mitarai's forecast of a possible 50% reduction in digital camera sales within the next two years overly pessimistic? (UPDATE: As it turned out the decline from 2018 to 2020 came to 55%, so no it wasn't :-)) Sigma Corporation president Kazuto Yamaki's recent comparison of the current state of transition from DSLRs to Mirrorless ILCs (Interchangeable Lens Cameras) with the MF to AF SLR transition of the late-'80s begs further investigation. So, just how quickly did the transition from manual focus (MF) to auto focus (AF) SLRs as far as market dominance actually take in the late-1980's? Before we answer that, let's identify our Cast of Corresponding Characters.

Cast of Characters

Film Era

Digital Era

Manual Focus SLRs

Auto Focus SLRs

Auto Focus Compacts

Canon

Nikon

Minolta

DSLRs

Mirrorless ILCs

Smartphones

Canon

Nikon

Sony (containing ashes of Minolta)

 
  From Downhill to Off a Cliff   
​

    MF SLRs were already in serious decline by the time February 1985 rolled around (production had fallen by 25% since its peak in 1981). But they were about to experience a much more precipitous slide than anyone (including the manufacturers :-)) had imagined. Now, the idea of an AF-capable SLR was not new; as a matter of fact, there had been three such cameras released by Pentax (ME-F), Nikon (F3AF), and Olympus (OM-30/OM-F) respectively, since 1981. (All of these required special lenses with AF motors built-in to offer AF function.) But their overall poor performance and high prices had convinced the industry as a whole that the MF/AF transition would be a gradual process, while they milked the MF market dry. This left room for a major disruptor, which turned out to be Minolta. The post-1981 SLR slump hit Minolta as hard as any manufacturer, and harder than Canon or Nikon, thus their motivation was high to find a sales spark. Minolta decided to go all-in on AF as their competitors hedged their bets. With the introduction of their Alpha (A) mount and model 7000 SLR in early 1985, Minolta shocked their rivals with the advanced capability and scope of their AF system.  

     There were three keys to the overnight success of the Minolta 7000:​

1. Performance - It was the first AF SLR that could actually focus quickly (for the time), accurately, and down to reasonably dim light levels (at least 2 EV less than anything that had come before).
2. Features - Minolta provided an initial selection of a dozen lenses as well as flash & accessories to maximize the capability of the camera and they had an ambitious program of more lens and accessory introductions that they rolled out expediently. The 7000 also hit the balance between a camera that an enthusiast would be satisfied with while providing such consumer-friendly ingredients as: auto film-loading & rewind, auto ISO setting, and full Program auto exposure. This took care of many of the niggles consumers had with previous SLRs that were touted as being "practically point & shoot", when they really weren't (here's lookin' at you Canon AE-1 ;-)). 
3. Price - Minolta wisely targeted the 7000 at a relatively affordable price point for mid-level enthusiasts and one that even some consumers were willing to step up to when they saw the AF performance of the camera along with its ease of use. 

    Minolta kept its foot on the pedal, and introduced the professional-targeted 9000 in the fall of 1985. Nikon was the first of Minolta's competitors to reply (and it took them fourteen months to do so) with a comparable camera (the Nikon F-501/N2020) to the 7000. Canon had introduced their first AF SLR (the T80) only two months after the 7000, but its performance was far more akin to that of the Pentax ME-F and they had actually already decided to scrap it and start fresh in March of 1985 (before it was even released to the public). Game Changer is not too strong of a descriptor for the Minolta 7000. Let's try and put that in perspective:

• 1984 - SLR production destined for Japan was 518,000 (CIPA figures), almost exclusively MF models. The Pentax ME-F, for instance, was outsold by its MF doppelganger (the ME super), by a ratio of 20 to 1. And the ratio was far higher for the Nikon F3AF, with its pucker-inducing price for the body alone of over $2,100 USD (inflation-adjusted) versus the standard F3HP, which was half of that.
• 1985 - SLR production for Japan was 600,000, with the 7000 being introduced in February. The overall increase in sales was due solely to the Minolta AF bodies as the MF SLR decline continued into its fifth year in Japan.   
• 1986 - SLR production for Japan was 595,000, which included four AF models: the Minolta 5000 (entry-level), 7000 (mid-level), 9000 (pro), and the Nikon F-501 (mid-level). Those four models accounted for over half of the entire SLR market, meaning that MF SLRs fell well under 300,000 units for the year. 
• 1987 - Canon introduced the EOS 650 in March and, within two months, it became the best-selling SLR in Japan (and Europe, for that matter). The EOS 620 followed in May. Pentax introduced their SF-1 and Nikon the F-401/N4004 in the summer. Total SLRs produced for Japan were 614,000.
• 1988 - The second generation of AF SLRs began to appear: the Minolta 7000i and Nikon F-801/N8008 being the most notable. Canon introduced its first true consumer models: the EOS 750 and EOS 850. Overall SLRs produced for Japan number 644,000.
• 1989 - Here was the coup de grace. Total SLR production for Japan was 818,000. Over 90% were AF models. Canon had taken back the number one sales position in SLRs and Nikon was hot on Minolta's heels and would pass them for second place in short order. 

     In five short years, MF SLR production for Japan dropped by 85%. And over half of that took place in the first two years after the Minolta 7000 came on the scene.  A wave of discontinuations washed through the various manufacturers' lineups as inventories of consumer- and enthusiast-level MF bodies piled up. For example, Canon's very successful top-level enthusiast body, the A-1 (introduced in 1978 and which sold nearly 2.5 million copies), though discontinued in 1985, could still be had brand-new off the shelf from B&H in early 1988. And its successor, the tremendous T-90, had the misfortune of debuting a year after the Minolta 7000. The T-90 was to SLR styling and ergonomics what the 7000 was to auto focus, a seminal camera. Yet, because it was a manual focus body in the new age of AF, it quickly faded into near-obscurity. Manual focus SLRs became niche-market (for students and a few pro holdouts) items as AF went mainstream. But the MF SLR decline was not just attributable to AF SLRs. There was another factor that actually predated Minolta's masterstroke but that ran concurrently with it to drive MF into the back forty. And it was actually more culpable in the death of the consumer-level MF SLR than AF SLRs would be. This would be more a case of AF SLRs filling the vacuum left by the MF decline rather than just direct displacement.

  When Convenience Trumps Capability

​   History points us to the Canon AE-1 (1976) as the camera that moved SLRs from machines for professionals/serious enthusiasts into mainstream consumers' consciousness. That was due, in large part, to the first major TV ad campaign for SLRs. Canon did their market research and decided to use professional athletes as pitchmen & women for their technical wunderkind SLR and slotted their ad spots during primetime sporting events. Here are a couple of examples for your perusal:

    "About all you do is focus and click"; "So advanced - it's simple". Canon was selling convenience and they sold it alright...5.7 million AE-1s were purchased over a nine-year period. Most of those purchasers turned out to be dilettantes, suckered into the idea that action photography was easy, as long as you had an AE-1 ;-). Notice Canon's clever use of the word "about" as a throwaway to "all you do is focus and click". Here's what "about" included:

• manually threading the film leader into fiddly (for non-enthusiasts) take-up spool slots
• having to manually rewind that film at the end of the roll
• learning the relationship between shutter speeds and aperture settings
• reading a 76-page instruction manual to achieve the above
• manual(ly) = effort required

    Oh, and "focus" (meaning MANUAL focus) was not nearly so easy in practice as the simulated professionals and their simulated photos made it out to be. That's a lot of work for a convenience-oriented consumer before the "click" comes. For a couple of generations raised on Kodak Instamatics, this was a far cry from the convenience they were familiar with, even if the capability of the AE-1 blew the little Kodaks into the weeds. On top of all the other "inconveniences", weight was another big factor; with the lenses and film winders shown in the ads, you were looking at anywhere from 1 to 1.5 kg versus 200 to 350 grams. Want to know why you can find AE-1s today in almost-new condition on a regular basis? Because they were relegated to closets, attics, and basements by their overmatched owners within a few years. Now, it took a few years for reality to set in and in the meantime there was an SLR sales boom that would not be surpassed for over 25 years (well into the DSLR era). But when the decline came in 1981, there was our smartphone equivalent that not only ate Instamatics as appetizers, but would soon relegate the consumer-level MF SLR to has-been status, and squeeze even those newfangled AF SLRs into a narrower market than ever. Its initial appearance was overshadowed by the 1976 - 81 SLR boom, but within a few short years, its rapid technological advancement would result in the SLR drop of doom. 

    Only a year following the raucous debut of the AE-1 (and soon a gaggle of imitators: Pentax ME; Minolta XG; Nikon EM; Olympus OM-10; etc.) the first AF compact 35mm camera (the Konica C35 AF) appeared. And it was quickly followed by a host of imitators that used the same Honeywell Visitronic AF system (there's a theme here, I just know it ;-)). Intense development by Japanese camera companies, large and small, contributed to the fast-track evolution of the compact AF 35mm camera into a market contender. By 1979, Canon (surprise, surprise ;-)) had come up with a superior AF system (they called it Canon Auto Focus System, how original :-)) to the Honeywell Visitronic that soon became the industry standard for compact 35mms. Along with CAFS, auto loading, winding, and rewind also were incorporated into the Canon AF35M (aka Autoboy; aka Sure Shot). Let's have a look at the worldwide market share (CIPA figures) of Japanese 35mm SLRs versus Japanese 35mm compacts (AF and non-AF) from 1977 to 1989:

YEAR

1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989

SLR Share %

57
57
58
57
53
46
37
33
30
23
19
16
15

Compact Share %

43
43
42
43
47
54
63
67
70
77
81
84
85

     So, what can we draw from our dry old figures? Remember, appreciable AF SLR sales did not start until 1985, by which time AF compacts had already been around for eight years. So the drop in SLR market share from 1981 to 1984 directly resulted from the impact of compact AF cameras which started to hit their stride in 1981 (which, coincidentally was the all time peak for MF SLR sales worldwide). In that space of four years, there was a 40% swing in market share between the two categories. The reason? The compacts were offering what the disappointed dilettantes had actually needed/wanted all along: a true "point & shoot" experience. Herbert Keppler, longtime editor of Modern (and later, Popular) Photography put it this way in 1993:

In 1981, SLR sales in the U.S. climbed to a record 2.6 million. In 1993, it's expected that SLR sales will drop to about 850,000. What happened?
     Back in 1981, camera purchasers bought some 800,000 lens-shutter 35mm cameras -- many were basic autofocus types, of course. Today they purchase close to 13 million!
      What caused SLRs to lose popularity compared to P/S cameras?

    He continued:

The P/S cameras are what shooters really wanted. A vast percentage of snapshooters originally bought SLRs because they were then highly touted in in ads and TV commercials as being "point-and-shoot." But they weren't. The new owners were suddenly confronted, against their will, with inserting film leaders into little take-up spool slots and learning about shutter speeds, apertures, and metering systems. They never wanted to know basic photography but were forced to study the instruction book.
     Then AF P/S cameras began offering dual focal length lenses, zooms, autoload, autowinding and rewinding, plus built-in flash on demand in a relatively compact camera. Users needed to know nothing about exposure, shutter speeds, or apertures. The disappointed SLR owners, who only desired snapshots with no hassle, ditched the SLRs for the really simple-to-use cameras they had originally thought they had bought.
    New snapshooters logically ignored the SLRs completely and went right to the P/S cameras

    To illustrate the rapidity of this swing, let's take a look at Nikon's first compact AF 35mm camera, the highly-regarded L35AF "Pikaichi" (One Touch in North America). Nikon was the last of the major SLR manufacturers to jump on the compact AF bandwagon, in March 1983. Even so, by the end of 1984, that single model had outsold all seven of Nikon's SLR bodies (count 'em: F3, FA, FE2, FM2, FG, FG-20, and EM) combined in that same time period. And that was the norm, not the exception, when it came to the compact AF onslaught. In fact, if it wasn't for the arrival of the AF SLR proper in 1985, the market drop for SLRs as a whole would have been even more precipitous in relation to the compacts. And even with the rise of AF SLR sales over the last four years of the decade, the total SLR market share bottomed out at 15% in 1989, a far cry from a decade before (57%) as only 3.9 million SLRs (both AF & MF) were produced versus 7.3 million (all MF) in 1980. Meanwhile, compact 35mm sales (almost entirely AF) had quadrupled from 5.4 million units in 1980 to 21.6 million in 1989. 

​  Parallels?

    Today, we are seeing the same pattern between smartphones and consumer-level DSLRs as occurred with compact AF 35s and consumer MF film SLRs, only on a larger scale. And the sliding of mirrorless ILCs into the DSLR vacuum also mirrors (sorry, couldn't help myself ;-)) what AF film SLRs did to their MF counterparts in the mid-to-late 1980s. At the outset, the question of Canon's forecast of a 50% decline in digital cameras within the next two years as being overly pessimistic was raised. Well, in the space of 14 months (from Feb. 1985 to April 1986) AF SLRs went from a negligible sales sector to owning half of the total SLR market in Japan. And that was on the strength of only two cameras: the Minolta 7000 & 9000 (with the 7000 making up the vast majority of sales) as the Nikon F-501 was not released until the end of April 1986. With the F-501 and Minolta's consumer-level 5000 in the mix for the rest of that year, by the end of 1986 the disparity between MF and AF SLR sales had only widened. As was already pointed out in Part 1, there only needs to be a reduction of 5 million compact digital cameras in the next two years (which is no stretch of the imagination, they declined 4.8 million last year, alone) together with a similar collapse in consumer DSLRs for Canon's prognosis to be correct. The 2019 first quarter financial results for Canon and Nikon (the only two major remaining purveyors of consumer DSLRs) are bearing Canon's grim forecast out: both have had sales drops of over 20% (Canon 23% and Nikon 21%) compared to the same quarter in 2018. And the models suffering the most? Consumer- to mid-level DSLRs and fixed-lens digital. Most tellingly, both companies are throwing major discounts (20% - 33%) on those classes of SLRs (D3xxx, D5xxx & D7xxx for Nikon and Rebels & 80Ds for Canon) in a desperate effort to move product. But even the most successful members of the mirrorless brigade are also facing the squeeze of smartphones on their lower-end products: Sony (-7%), Fujifilm (-3%). And that's not even looking at the worst of the mirrorless lot: Olympus (one of the initiators of the mirrorless movement) has suffered worst of all with a 24% drop in 1st-quarter sales from  2018 to 2019.

  Wrap-Up

    So what does all of this tell us? 

1. Canon's forecast of a 50% decline in total digital camera sales is definitely within the realm of possibility and has a strong historical precedent, to boot. (UPDATE: as noted at the outset, the actual decrease turned out to be 55%, with the pandemic obviously playing a role)
2. The consumer-level dominance of the Japanese camera manufacturers has ended, after nearly four decades, for good. And the reason is: convenience. Smartphones have cameras built-in that offer "good-enough" image quality (that is getting better all the time) coupled with a far-simpler and speedier method of sharing those images. And those cameras are included in devices that have come to be viewed as necessities rather than an accessory item. As far as the consumer is concerned, convenience always wins.
3. The same two factors that have always driven the technology industry: (a) Market Saturation (which forces the opening of new markets to sustain growth), and (b) Obsolescence (if you cease to innovate, someone else will ;-)) continue to shape the photographic industry today.

    Next time, we will look at why this present collapse of the Japanese camera industry as a whole will be unprecedented in scale and severity. What will that mean for the long-suffering die-hard enthusiast? Part 3 awaits...

​  References:

    Various CIPA Reports @ http://www.cipa.jp/stats/report_e.html
    Popular Photography Sept. 1993 - SLR Column by Herbert Keppler