We have two breaking news stories today that concern Nikon. The first, about likely Sony DSLR sales improvement at the expense of Canon and Nikon appeared in this morning's USAToday. The second is ElcomSoft's revelation that they've broken Nikon's Image Authentication System.
USAToday speculates that the shortage of Canon and Nikon cameras caused by the Japanese earthquake and tsunami will benefit Sony's DSLR market share. Maybe, but not for any of the reasons USAToday suggests. First, Canon has already announced that it doesn't expect any drop in DSLR sales, so USAToday would essentially be saying the Sony share increases would come at the expense of Nikon. That's probably true, but it isn't really the earthquake and tsunami that is the root cause here.
I've been harping on Nikon's tight inventory for some time. There's a belief that single-provider supply chains and inventory kept very close to the vest is a good thing in business. I've never been convinced of that, as I've seen disruptions of both things cause major grief for tech companies for decades now. While I'm sure someone will write me to disagree, it's possible to be too conservative. (I'm sure that part of that person's complaint will be that I'm too liberal ;~).
Nikon has been running so conservatively tight in terms of production and inventory that it impacted customers long before the earthquake. Nikon's already given up market share because of that.
But what USAToday doesn't quite get is that disruption of inventory is essentially going to render NikonUSA's whole marketing and sales strategy dead-in-the-water. For some time, the core of strength in Nikon's US sales has been the reliance upon coop advertising with instant rebates as the driver. Nikon has consistently been the only camera company in the US that is driving customers to stores. The problem, of course, is that NikonUSA now doesn't have enough inventory to continue pushing that program. Some coop flyers for this spring have now been cancelled, and the rebates had already gotten smaller and on fewer items (or with more restrictions). In their place? Nothing. So of course Nikon sales will go down in the US. This is a critical buying season, with Mother's Day, Father's Day, and graduation all coming up. All would have been targeted by Nikon with extended coop advertising programs.
Ironically, Sony's inventory problems had been somewhat the opposite of Nikon's: most items have been in plentiful stock, partly because they're not as efficient as Nikon in getting a customer in a store asking for something. So, yes, USAToday's basic premise is correct: if sales shift away from Nikon, Sony should gain.
Meanwhile, the other breaking story, that of Nikon's image validation program being broken, revolves around a different issue. I've long had a problem with Nikon's Image Authentication System (IAS): as far as I or anyone else can tell, Nikon has done nothing to get it certified by a court. Because of that, when asked, I've given a "not recommended" categorization to that product.
Nikon targets IAS at law enforcement. But to date I know of no successful use of it in a court of law. That's because, in order for a court to uphold that an image verified by IAS is indeed valid, the IAS system itself has to withstand court challenge at least once. Most experts in encryption I've talked to claim that it would only take one or two key questions for them to get a court to deny the use of IAS. Why? Because Nikon doesn't seem to want to talk about how the authentication is done and submit it to expert challenge and test. "It's a secret" doesn't impress a US court (well, except when the Federal Government makes that claim regarding something connected with terrorism ;~).
As it turns out, ElcomSoft has demonstrated that the 1024-bit private key can be extracted from the camera, and once that's done, it's easy enough to create fake values for the two EXIF MakerNote tags that are used by IAS to authenticate an image. This is doubly disturbing for a simple reason: Nikon hasn't done anything to get IAS authenticated by a court, and now there's clear evidence that it can never be authenticated.
I've been on record as not recommending Nikon Image Authentication System. I'm not sure how I can increase my "not recommended" ranking, but it feels like I should. Short of Nikon both addressing the private key weakness and providing the necessary support to get a court to accept the program's authentication, you are wasting your money buying IAS. Wasting your money. Of course, the ones that are buying it seem to be government agencies. So here's one thing we can all agree on that should be cut from government budgets: any spending on Nikon's IAS. That won't dent the deficit much, but it's a start.