Well, that struck a nerve. While I was off at B&H all day meeting with management, having a nice birthday lunch (thank you Zoltan), and giving my seminar at their Event Space, my In Box was filling up with responses to "Something's Gotta Give" (now in the 2009 archive). Many of the responses were from dealers. But virtually all of the responses were of the "you hit the nail on the head" type.
Just to be clear, it's not that I like driving nails (otherwise I'd be a carpenter). With any popular product we get a long cycle that drives it towards commodity--commoditization happens to all popular products. There are two types of winners when that happens: (1) the two or three companies that establish the economies of scale and branding to win the category; and (2) the companies that take the opportunity to splinter off and create new, highly profitable niches.
In the case of Nikon, they're taking on three of the leading consumer electronics companies, which have massive experience at commodity products AND vertical integration (Panasonic, Sony, and Samsung). Plus they're taking on another company that has much more mass than them that extends into areas of imaging that Nikon currently can't reach (printing--the company is Canon). Actually, I'm impressed that Nikon has done as well as it has. Still, past success does not imply or necessarily forecast future success. My current view of the world for DSLRs is much like last year's auto industry collapse. A number of factors reduced new US auto sales from 16m units a year to more like 10m, which not only changed the game, but eventually changed the players. It may be different factors that pummel the camera business, but the same thing is likely with DSLRs in 2009 and 2010: significantly lower unit volume. As the headline said: something's gotta give. As one person wrote me: if one loses, everyone loses. Thus, the loss of more camera dealers isn't good news for anyone, including high volume camera makers or even one-time-purchase customers.
A few folk have decided from both my most recent article as well as a few other recent ones that I must be anti-local dealer. I'm not, actually. But it's been clear to me for a long time that camera dealers have to change more and faster than they have so far in order to survive. If the Big Box stores are selling boxes, you have to sell something other than just a box, because you can't win the game of price matching (or even inventory matching sometimes). My local dealer, Dan's, is a good example of one that has tried to push forward and ahead of the curve. They are very proactive in marketing, and they're very strong on education and support, both before and after the sale. And I'm still not sure that's enough to keep them going, as the camera market gets trickier and trickier every year.
Which brings me to another point that hasn't been written about very often yet: we're in the middle of another disruption, this time in the compact market. Apple is pushing cameras into iPods, and cameras are already ubiquitous in phones. The sub 10mp camera market is now almost entirely cameras in another device. What happens when we've got 6mp+ cameras in our phones and iPods and that's well integrated into our Web-based world? Realistically, does 90% of the world need more than that? Apple understands that these built-in cameras aren't used for photographing for National Geographic, but rather things like Facebook and Flickr. And as iPhoto, iTunes, and the iPhone have proved, Apple understands that it takes more than a camera to satisfy this audience. How does a Coolpix compete with that? Nikon has tried repeatedly to be a one-stop player with Nikon PictureTown, but there's no Apple-like customer clarity there, and proprietary solutions at the content end are not what the customer wants. Indeed, all the Japanese companies need a more global view of how hardware and software integration really should work. How much you want to bet that an Apple camera at the Coolpix level will get it right?
Instead of innovation and serving real customer needs, what we're getting is mostly variations on decades-old designs that are renewed by looking at what the other players are doing and iterating sensors. We've got design incest going on and not much else. That, coupled with the things I wrote about in the Something's Gotta Give article, don't bode well for the camera makers' future.
And no, I'm not suggesting that all the camera makers will go out of business. Even lopping off one-third of the auto sales couldn't kill Chrysler, after all. It's difficult to kill a company. But it's not difficult to get it into perpetual trouble with little prospects for growth. That's where the Japanese camera makers are headed right now. And it's their own fault, not the recession's.