2010 Nikon Predictions


Will he ever stop? (Yes, in 2012 when my calendar says the world ends ;~)



If you haven't seen my 2009 predictions and results, you can click here and get to that page. I suggest you do so before reading on.

I generally don't revise my predictions once done, but I'm going to this time around since I've heard a few more tidbits that tie together some loose ends. Revisions are in red.

Once again I tread into the danger zone. I'll remind folks up front that my predictions are partly source-based, partly provocative, and never 100% right. The purpose of these articles is to get a sense of where the industry is at, what is likely (or possible) next, and what we might expect in the coming year.

As always, let's talk first about the past year, 2009. Compact camera sales were basicallly flat, though a few vendors (Nikon was one of them) did manage to increase their unit shipments. DSLR sales were up slightly, perhaps 10% overall. But when you look at the financial statements from every camera vendor you see the same thing: dollars collected per unit was down. In some cases, way down. And that's driving profits down (or losses up in a couple of cases). There's no real growth for revenues in sight.

Or is there? Some of the DSLR (actually interchangeable lens cameras) volume increase was due to the Panasonic and Olympus m4/3 cameras. These are essentially low-end DSLR-like in features and performance, but look at the prices people are paying for them: more than low-end DSLR prices. As I write this, I can get an Olympus E-620 (not the lowest end Oly) with lens for less than I can get an E-P1 with lens. Yet I'm pretty sure the costs involved in creating an E-620 are higher. Put another way, I'm betting that Panasonic and Olympus have very good product margins on the m4/3 cameras. Moreover, they're popular and selling well (especially in Japan, where all the other camera makers are looking at weekly sales numbers). You know what happens when someone discovers a lucrative high-margin niche: all the other makers soon are making similar products to try to capture some of the same magic dust. Which means that while Panasonic and Olympus had the large sensor, interchangeable lens compact camera market pretty much to themselves in 2009, they won't in 2010. Correct assessment as it turns out. And the E-620 remark was on target: Olympus has decided not to produce a successor to that camera, it just doesn't work at to be profitable like the m4/3 models have.

But other things loom on the horizon, too. I've been looking at camera phone numbers and predictions lately. Camera phones are already a market two orders of magnitude larger than the compact camera business. Most of the sensor orders for upcoming camera phones are in the 3 and 5mp range, with 8mp right behind that (a 14mp sensor was just announced). Within two years, 5mp camera phones will be ubiquitous and 8mp will be readily available. This puts the low end compact camera market at jeopardy. Realistically, how often do you really need 10mp or more out of your compact camera? Well, for Facebook et.al, not so much. I don't see a lot of people paying US$100-250 for a basic compact camera in the future. Frankly, that's probably good news for the camera companies (they won't think so), because those units are either barely profitable or non-profitable for them right now, anyway. I would have never thought that we'd have so many remaining competitors clammoring for a market with no growth and declining per unit revenues, but I'm an entrepreneur at heart: I want to knock off the big companies with disruption. Well, guess what, the disruption is happening, and it's happening simultaneously with the video market as well as stills (my iPod Nano does credible video).

A bit of an aside: I proselitize a lot about open platforms versus closed systems (cameras being completely closed systems for the most part). The amusing thing to me is that a company normally regarded as proprietary--Apple--is proving that even a little bit of openness--platform documentation and applications--suddenly makes a 3mp camera in the iPhone much more interesting (and fun!) than any 3mp dedicated compact camera that came before it. This pattern is going to continue, because we've got Google involved now, too. It's a darned good thing that neither Apple nor Google has bought, say, Leica, and created a monster of a real camera competitor for the Japanese. Fortunately (and unfortunately) for the Japanese, Apple and Google are after mass markets, not small speciality markets. Message to the Japanese: selling lots of cameras isn't going be your future. Selling smaller quantities of dedicated, highly specialized cameras will be. Even then, if someone really figures out that open platforms and close customer relationships could apply to a camera company, too, the camera companies might start looking a bit like the US auto industry: slow to react, too big to change course, and continually iterating what used to work instead of what will work. (A punctuation to the aside: check out this article from the Economist and read the part specifically about Nikon and Canon versus ASML in the stepper market. They went from owning the market--and steppers being the dominant force within Nikon's financials--to being also rans--and steppers being the drain on Nikon's financials. What brought them down? Lack of open partnering and close customer relations.)

So what did the industry learn from 2008 and 2009 and will be applying to 2010? Well, I'm going to break this down by company:

  • Canon: they began losing significant market share in several areas (to be clear, not overall share, but share in several key segments), so they know they need to do something. But they're so Nikon focused (with a side of Sony) that they think that they have to use the old tactics to wrest it back (more megapixels, lower noise). Canon seems preoccupied with competing with the Nikon D3, D3x, and D300 at the moment. But I'm not sure that's the root of their loss of market share. Correct. They're being nibbled at the low end and middle according to market research; they've also already lost much of the high end as they have no real answer to the D3s or D3x.
  • Nikon: they lost a bit of market share in DSLRs and gained it in compacts, so they think that what they did in the past is working. Thus, they wouldn't see any real need to change from the development plan already in progress. (Note to Nikon: downfalls usually start with complacency.) Also mostly correct. If anything, Nikon pushed back a few of their dates. The one surprise: Nikon is pushing further into Nikon-only territory on sensors.
  • Sony: they gained market share, but not as much as they thought they would and not all new products are selling the way they'd like them to. It appears that Sony is forgoing product margin in an attempt to gain share, but that's done little but lower their revenue even further when it was already being assaulted. Meanwhile, Sony is looking at the GH1 with dismay. It's outselling pretty much every Sony DSLR in Japan, it hits at the heart of both the Sony still and video divisions, it doesn't use a Sony sensor...well, you get the idea. Mostly correct. Sony isn't really gaining meaningful share anywhere that I can see, though the NEX did add a short burst of energy to their sales.
  • Olympus: they're finally executing on the premise that 4/3 means small, and it's finally working. They'll stay small. Dead on. It's m4/3 only from this point on.
  • Panasonic: they, too, finally learned that there are exploitable niches that will get them some traction. However, they're so naive at worldwide marketing, they're making a lot of sales, marketing, and distribution mistakes that are robbing them of momentum. But what they learned in 2008/2009 will continue to be rolled into new products in 2010. The G1 and GH1 will be updated soon, we'll get more useful lenses, and their m4/3 lineup will be their main thrust and influence everything below (and eventually above) until some other change hits. Correct.
  • Pentax: continues to plug along the same path as before and continues to get the same results. It was interesting to hear the parent company's executives start saying that they felt that Pentax needed to partner with someone. But that doesn't tell me that they understand where Pentax needs to go, only that it needs help to get there.
  • Fujifilm: continues to think that their sensor will win the day. Only the sensor's progression and advantages haven't proceeded apace those of other sensors, so now the benefits of EXR are, well, more difficult to see.
  • Leica: quite a refreshing story, actually. They listened to M8 customers. They looked for exploitable niches. They partnered with other companies (Kodak and Adobe, for example) to provide things that they couldn't do on their own (sound a bit like ASML in the Economist story?). I'll bet that they can't build enough M9, X1, or S2 cameras to meet demand in 2010. Pretty much correct. It wasn't until October that you could find M9's and X1's in stock anywhere. They still have issues they need to correct, though. Too many M mount lenses still provoke red/blue shifts across the frame due to the thickness of the infrared block filter. That keeps too many people from stepping over to the M9, I think. For example, I might consider an M9 with an 18mm or 21mm lens for landscapes, especially those I have to do long hikes to. But these lenses absolutely seem to provoke the side-to-side color issues, so my interest is immediately weakened.

I think 2010 is a very pivotable year for the camera companies. Olympus, Panasonic, and Leica have made changes that flip them from downward trends to upward. Sony continues to try to buy market share. Pentax is still doing the same-old, same-old (even down to the digital 645 being on-again, off-again, on-again). Nikon and Canon seem to be mostly only seeing each other and more worried that the other gets the upper hand on them. Put another way, I'd say that Olympus, Panasonic, Leica, and Sony have a plan. Pentax has no plan. Fujfilm thinks they have a plan, but don't actually possess one. Nikon and Canon have their old plan and think it will work forever. Let me put all that into a momentum chart:

Companies on the Rise Companies Falling Hard to Tell

Leica
Olympus
Panasonic
Sony

Canon
Fujifilm
Kodak
Sigma
Casio
Pentax
Ricoh
Samsung

I'd revise the chart by moving Olympus and Sony to the Hard to Tell column.

You'll note that I didn't put Nikon in that chart. Technically, they are in a middle ground between rising and falling (compacts rising, DSLRs falling very slightly). If I had to put them into a category I'd put them into the falling category, though. Why? Because this is about momentum. Nikon basically hit a low-momentum point with the intros of the D3000/D300s/D3s. By the end of the year, prices will be under strong pressure, so I'd tend to put them in the falling momentum category. Wrong. While prices are under strong pressure, the D3100 and D7000 look to regain some of the momentum.

2009 was also the year where DSLRs became video cameras for no particularly good reason. That's not to say that they aren't good video cameras--some of them are quite good at video. No, we're finally getting the impact of the newspaper craze of several years ago. You see, newspapers and news organizations buy large quantities of cameras at a time, which gets the makers interest. Back around the D2 generation, all those organizations thought that they needed to capture video, too. The goal was to send one person out into the field equipped with a camera, and that person would write the news story, take the still pictures, and capture video and interviews for the Web site. Call it Dreams of Productivity. Well, the makers listened. The engineers said it could be done, so it got the green light. And...well, the news organizations that asked for the capability are in deep financial difficulty and are finally starting to realize that it's a rare person that can do a quality written story, plus shoot quality stills and video all at once. Lucky for the camera makers there was another client they hadn't really talked much with waiting in the wings: the professional videographer trying to compete with the bigs. The ability to get shallow depth of field and shoot at 24 fps gave them Hollywood-like style abilities they couldn't get with their current pro video rigs (ironically, also from Japanese companies that don't seem to listen to their entire customer base much).

In case you aren't getting the picture (or is it a video now?), 2009 produced a bunch of surprises that are destined to disrupt the camera market for awhile. Some of that disruption will be good (small, large sensor cameras are a good thing) and some will be bad (adding more and more video features to a still camera doesn't make it a better still camera). What I'm not seeing from any major camera maker is a clarity of vision. They're busy grabbing at anything that looks like it might allow them to raise market share or product margin or both. Some of those things they grab at will turn out to be faux paths. I'm actually more worried about the financial health of many of these companies in the coming two years than I have been in the past. We're heading into the "make a big mistake and you're out" territory, I think.

Since this is a Nikon site, some people reading that last remark will be immediately panicking and getting ready to send me a "Is Nikon Dead?" email. No, Nikon is not dead. They are, however, vulnerable, and I'm not sure they realize how vulnerable they are. The stepper division (Precision) has been decimated. At one time earlier this decade, they provided the majority of Nikon's income and profits. Now Imaging (cameras and lenses) is 72% of the company. Nikon Precision lays the blame for their woes on the ups and downs of the semiconductor business. Yes, that business is highly cyclical, but there are more semiconductors being made today than there were yesterday or the day before. The thing that Nikon doesn't really want to admit is that an entrepreneurial European upstart managed to take a majority market share away from them. It's the double hit of losing market share and an industry downturn that has crippled the Precision division. One of those things was within their purvue to deal with (market share, by providing the products the market wanted the way they wanted them). I regard Nikon's Precision division as a major failure. (Yes, I understand that the Japanese reading this will react in shock over the use of the word "failure," but we here in the Western world don't look at that word the same way. You learn from failures and do better next time. That's it. Failure isn't a reason to hang your head in shame, it's a source to look at for lessons of what to do next time. There's always a next time.)

No, what worries me is that Nikon doesn't seem to fully understand why Precision failed and that this was a fixable fault. That makes me wonder if they won't see when Imaging starts to fail and address the fixable faults there soon enough to make a difference. And when I say "failure" in this context, I don't mean bankruptcy and dissolution, I mean contraction and loss of a clear path to renewed success. Nikon Precision will continue on. But unless they figure out the real reason why they collapsed so dramatically and address it, Precision will just continue on as a footnote division that's smaller and not particularly mainstream in semiconductors' future. The same thing could happen to Nikon Imaging. Not looking like it will happen in the short term. I was wrong. However, just because products are currently successful doesn't mean they will stay successful. At some point, the DSLR and compact camera markets as they exist today will wither. As many companies on top of the world (Motorola and Nokia come to mind) can tell you, if you miss a change in direction, your position in the market can change very quickly.

That's sort of my message for 2010: anything goes. Too slow to react or react to the wrong thing, and your market share and profitability may change. Oh, one more thing: 2010 is a Photokina year (held every other year). Some companies shoot for making a splash at this huge trade show, some don't (Nikon generally doesn't). If there's a disruptive technology or product lurking, we'll likely see it in late summer, early fall, just prior to Photokina.

So what do I expect product-wise in 2010? Here's what I see for Nikon:

  • A Slightly Down Year: overall sales, market share, and profits will peak early in the year, decline thereafter. Wrong. All three things appear to be growing.
  • Something not called a D700x: announced by end of March 2010, and probably called something like D900.
    • D700-type body, new Nikon FX high resolution sensor
    • more than 18mp, probably 24mp
    • 4-5fps
    • Best video yet in terms of specs for a Nikon DSLR (not that this is of much interest to anyone reading this site)
    • Wrong: either I was wrong about when Nikon thought they'd put this into production, or Nikon changed their mind and decided that it needed changes that required more sensor work to be done.
  • D90 Redux: announced August 2010, and probably called a D7000 in order to conform to Nikon's new naming conventions. The real question is what changes from a D90?
    • A new sensor (e.g. not 12mp Sony). What sensor, I'm not sure
    • A new focus sensor, likely a simplified derivative of the D300's
    • Yep, more video capabilities (sensing a theme?)
    • Dead on right.
  • D3500: yes, this is like sqeezing the same lemon over and over hoping there's more juice in it:
    • 12mp Sony sensor
    • D3000-like body and controls, but with D5000-like video/Live View
    • I was too conservative and missed the actual number. The D3100 had a new sensor, much better than D5000 video/LV.
  • D3xs: announced by August 2010
    • Adds video and sensor updates from D900
    • Adds menu and feature updates from D3s
    • Didn't happen and now probably won't happen
  • D700s: announced by Nov 2010
    • Brings the D3s changes to the D3 to the D700
  • Coolerpix: Yes, finally a larger sensor Coolpix. Could be launched at PMA in February.
    • Lens options, check
    • Larger sensor, check
    • Video capability, check
    • Didn't happen. Got the P7000 instead (just a larger camera, not a larger sensor ;~)
  • Mirrorless: announced prior to Photokina
    • Smaller in every way: body, sensor
    • Targeted at the Coolpix P90 (soon to be P100) to D3000 gap more than competitors
    • Lower-priced than m4/3
    • Surprisingly not announced or even pre-announced, though Nikon executives have been talking openly about it for some time now.
  • Nikkors: Nothing has perplexed me more than the missing Nikkors. I've now heard specs on six lenses that haven't appeared yet. On four of those, I was told 2009 would be the year they'd appear. Well, 2009 is almost over and they are still MIA. Here's what I'm still expecting:
    • A 80-400mm f/4-5.6 replacment, but it'll be a bit differently specified than 80-400mm f/4-5.6 AF-S VR. There have been rumors of 100-500mm, and that may be it, but what Nikon is shooting for here is the highest end of the consumer zoom. The replacement, I'm told, will be far better than the original. Still coming, unfortunately.
    • Prime updates: 24mm, 35mm, 85mm, all fast. I'm pretty sure there are other primes in the works, too, the DC lenses being another candidate. Note the one thing that is common amongst the new prime designs: they're all fast aperture. I think the days of f/2.8 primes are gone for Nikon. Correct.
    • A long Micro-Nikkor: may not be 200mm. Nikon may try to kill two birds with one stone again by making it 180mm and faster than f/4. Still coming, unfortunately.
    • An FX mid-range zoom. Correct.
    • Historically speaking, 2010 should be a "consumer lens" year (based upon previous release patterns). Curiously, so far all I know about are "pro lenses" for near term release. Thus, I would not be surprised to see mid-to-late year fill-ins of more consumer-type lenses, particularly FX zooms. Correct.
    Other:
    • An SB-700: SB-600 capabilities with an SB-900 interface. Correct.

Wait a second, that's it for Nikon? 5 DSLRs and a half dozen FX lenses? Well, I do expect a few more lenses than that, but I just don't know what they are. I seem to have lost any connection into what's really happening in the DX lens lineup, and there must be some more lenses coming there. I think Nikon's plan for the year is "big splash in FX, big splash just below DSLR, fill in gaps." Wrong (but it will right in 2011 ;~). Remember, 2011 is a big year for Nikon, as it will be year of the D4 and D400, and the introduction of many new technologies into the camera line, including a radically new AF system.

  • Fujifilm. A double play: a m4/3 DSLR with EXR sensor, and a sensor provided to Olympus for an Olympus camera, too. But 12mp EXR will be disappointing at m4/3 size, I think. Essentially, you return back to the old S3 Pro level of image quality: 6mp with dynamic range extension. I'm thinking that's not what people really want in a large sensor compact camera. I seriously don't understand why Fujifilm wouldn't have pushed more pixels here. I believe that Fujifilm had multiple prototypes around the X100 idea, and that one of these with an interchangeable lens mount was the source of the m4/3 rumor I elevated to prediction. I still believe that Olympus seriously looked at Fujifilm sensors, though.
  • Sony. Lots happening at the new Minolta.
    • First up will be Sony's GH1 killer. Only it won't kill the GH1, especially since Panasonic will be on the next model soon, too. APS sensor, interchangeable lens video/still camera without a mirror. Check. Correct (NEX 3/5). Unfortunately, it will be larger than many of the m4/3 cameras. Incorrect (unless you count the lens ;~). This has been a crash project for Sony, and I think it may explain why some of the other rumored items have been delayed. Still, I don't expect it until near Photokina time-frame, which means it shows up after Panasonic's next offering and after Samsung's. Showed up earlier than expected, but still later than Panasonic and Samsung. That puts a lot of pressure on it to be better in some clear, significant way.
    • The A700 replacement, which is long overdue. And yes, it will have video. As with Sony's latest fashion, it will probably come as multiple models (e.g. A750, A775) instead of a single model, though. Difference between the two models will be sensor (say 14mp and 16 or 18mp). Sony's using a shotgun to hit the target, then going back and finding which pellet hit the target and trying to figure out the gun that would do that by itself. Still (mostly) a no-show, though we've now seen the prototype.
    • I think we'll see the low end lineup go through some modest, small changes during the year, too (after analyzing which pellets hit the target). Modest? No. Major.
    • This should be a strong lens year for Sony, too. We'll finally see their 500mm, and we'll get a couple of fill-in-the-blanks lenses, too.
  • Canon. Canon, too, did a fair amount of impressive line refresh in 2009, most notably the 1DIV and 7D. At Photokina we'll get the 1DsIV, with yet another pixel count boost and all the new bits from the 1DIV, as well. I'm guessing 34mp. Didn't show up. What's less clear is what Canon will do in the sub-7D range. I suppose we might see 18mp consumer DSLRs popping up (yep), but this doesn't quite square with me--Canon doesn't have the consumer lenses that would make that many pixels perform well enough to be distinguished from where they are already. I also don't expect a mirrorless interchangeable lens solution from Canon this year. Correct. They'll be last to the plate, I think.
  • Olympus. Olympus has already announced the E-P2, but it's not much of a change (a tux for the body and an optional EVF). We'll get another m4/3 camera before the end of the year (yes), and it's likely to be a much higher specified one (no). Lenses have already been announced so will be no surprise (the 9-18mm and 14-150mm coming next, probably followed by another prime or two and a long zoom). Meanwhile, Olympus needs to get the 4/3 cameras down in size, too, if they want that line to live on. Apparently they don't. The APS crop cameras are now up to 18mp and still doing well with noise, so Olympus's recent "12mp is enough" won't hold, I think. We'll see a >12mp Olympus announced before the end of the year. Nope. Panasonic apparently won't let them have the GH2 sensor, which puts them in a bit of a bind. But we'll see Olympus break 12mp in 2011.
  • Panasonic. A GH2 and a GF2 seem pretty likely, in that order. Yes, since the GH2 is out and the GF2 still coming ;~). The tricky part is that to keep ahead of the pack the real advances are going to need to start coming at the sensor. Just adding features or gimmicks is not going to send a strong message. So, like Olympus, I think we'll see >12mp cameras out of Panasonic sometime during the year. Bingo. Like Olympus, Panasonic has telegraphed its lens lineup for the year, so no real surprises there. I do find it interesting, however, that every poll of m4/3 users and seriously considering m4/3 buyers shows that a 12mm prime is the number one lens request, yet we still haven't seem either company decide to produce one. I'm betting that Panasonic picks up on this and makes such an announcement before the end of the year (that doesn't mean we'll see such a lens in 2010, though). Correct.

Finally, a word about my predictions. I write these to be provocative; to generate discussions about the health of the companies whose products we use and how they might best serve us in the future. When I write that I think a company or product line might not be long for the world, it's not that I want that to happen. Personally, the more players we have, the more competition we have and the faster we get new technologies and innovations that will make our lives as photographers better. While I make a modest living off of documenting Nikon products, I don't consider myself a Nikon fanboy. If you think I am, go back and read my Nikon Coolpix P6000 versus Canon G10 versus Panasonic LX-3 comparison for starters. Nikon themselves don't think I'm a fanboy ;~).

Okay, one more provocative prediction: interchangeable lens global market share for 2010.

Canon 4.1m units 37%
Nikon 3.6m units 33%
Sony 1.3m units 12%
Olympus/Panasonic 1.2m units 11%
Pentax 450k units 4%
Other 350k units 3%
Totals 11m units 100%

This represents a growth rate of <10%, by the way. It's looking like I was low in overall market growth. The mirrorless cameras and Nikon's success seem to be pushing the market more strongly than I thought they would. I won't be able to update the actual numbers until April 2011 or so, though. But it's currently looking like Canon lost share, Nikon gained share, and the others nibbled at Canon's share.

11/22/09: initial post
1/22/10: revised
10/14/10: update

What I Still Want in 2010

1. 20mp or more FX sensor in a D700 body. Preferably without the AA filter (or with a removable one).

2. 80-400mm VR replacement with AF-S and a new tripod collar. Nikon is missing a critical lens for both prosumers and pros compared to Canon. Either update this lens with AF-S or give us something better to replace it. Please! Soon!!

3. Three hours of fast-moving Q&A with the guys who design the Nikon flash system, one hour of the same with the autofocus designers, and two hours of motivational cheerleading with the Coolpix team. I'll bring my own translater and pay my way to Tokyo. Drinks afterward are on me ;~). Hey Nikon, I plan to be in Japan in early 2010. Mind if I stop by?...

You might think I'd want more, but this is the dillema the Japanese companies now face: from a photographic standpoint, many of us are reasonably satisfied with most of what we have as tools. Getting us to invest in new ones is going to get tougher and tougher.

And, yes, this list is almost the same as it was last year. Alert readers will note that I've removed my APS Coolpix request. That's because I'm finding that m4/3 does everything I need in a smaller camera. Nikon will have to do better in order to win that business back from me.


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