11.10.2016

A strange inflection point for the camera industry. Nikon starts the layoffs.

cup more than half empty?


We've been hearing this week that Nikon will layoff ten percent of their workforce in the next two to three years, through attrition and early retirement. The cause is the collapse of the camera market and their concentration of resources in two shrinking industry sectors. Why is this happening? What did Nikon get so wrong? And who's next?

First some predications: Nikon will not go out of business. Sales are down but they are no where near the point of hemorrhaging money like some dot com start up delivering cupcakes via Fedex. They still earn a profit. No one is rushing to buy Nikon (the company). Samsung put a hard stop on that kind of thinking when they wisely exited the camera market after studying the numbers. Photography is changing faster than most camera companies can imagine but most will catch up in one way or another. Finally, Nikon will likely continue to diversify just as (working) photographers have been doing over the last decade.

All camera sales are dropping even though there are bright spots chocked through the market. Nikon's drop seems the most dramatic, in part because they are one of the "big two" in terms of market share. So, what are they doing more wrong than everyone else? From my point of view (having surfed through most of the major systems on the market since the dawn of digital imaging) their biggest sin is a rigid clutching to their own recent history of making cameras. In the early years of digital just having a camera that worked reliably and also felt familiar (DSLR-like) to consumers was enough to allow a company to ride a heady wave of ever increasing sales, happening in ever shortening product cycles. Nikon strived to make cameras that looked and worked like decades of previous Nikon film cameras with the only change being a transition from film to ever improving image sensors.

This worked so well for so long that they now
have too much fear to make big bets on big changes.

Here are some of the major things that are hampering their success:

1. They need a mirrorless strategy and they need it now. While many feel the strength of mirrorless is in the ability to make smaller cameras this thinking misses the boat entirely. The main strength of the mirrorless cameras lies in their electronic viewfinders and the smaller distance between the lens flange and sensor. Many discounted EVFs when the finders were in their adolescence, suggesting that they were vastly inferior to the view through an OVF and that missed the point entirely. The magic is in being able to see exactly what the final image the camera system will generate before you even push the shutter button. I've often called it "pre-chimping" but what it really is is total immersion in the process of image making. It's why legions of consumers buy Nikon and Canon cameras and NEVER look through the OVF but stand with the cameras at arm's length, looking at the big LCD screen on the back. They use their DSLRs in continuous live view. I watch younger photographers everywhere, it's as if the finders don't exist and this is because the live view on their cameras gives them something they want = live previewing of the images. The new adherents to photography, the ones who have upgraded from their phones use the same protocols they learning in Phone-Ography and the primary method is to look to the continuous preview.

Nikon, if they want to ultimately generate income from ANYONE under 50 years old will have to implement EVFs into the finders of all their consumer cameras. From the D3400 all the way through to offering EVFs as an option on their top line cameras. As a side note, when I owned the Nikon D810 I was always pleased by the image quality but almost always less pleased by the AF and metering of the camera. I found myself always double checking stuff in the live view when shooting anything important. What a pain in the ass. I switched to the Sony A7rii just because I lost patience with the foibles of the D810 and the clumsy implementation of live view in that system.

So, massive upgrade on Nikons to EVFs. Now. People over 50 might grouse but I think even in the "stuck in my ways" cohort the acceptance of EVFs is now overwhelming. Nothing like the resistance I saw four or five years ago when I wrote about EVFs being the next wave and I got incredible amounts of pushback which amounted to, basically, everyone saying, "You'll pry my OVF out of my hands when I am cold and dead." Or something like that. Now? Not so much.

But Nikon will have to make sure that they have the AF down pat. Just as Panasonic did with their GH4 and Fz1000 cameras. Nikon can always keep a "premium" model around with a prism and sell it at a wild premium price to those who feel they just have to have silvered glass in front of their eye.

Of course that then brings us to lens mount. I don't think they should change the venerable "F" mount on their APS-C and full frame cameras because they have such a huge legacy of lenses in the world. And this gives them the excuse of finally getting one hundred percent behind a smaller mirrorless format with a much higher level of support. I like the original Nikon 1 cameras. I thought the V1 was a great start. Nikon should ditch all the silly point and shoot cameras with tiny sensors and standardize on a small and well rationalized line of one inch sensor cameras to augment the traditional APS-C and Full Frame cameras. They got a good start and they needn't start over from scratch but they need to embrace the 20 megapixel sensor tech and offer a well thought out, three step product offering. From entry level to prosumer. All with EVFs. Never again should a Nikon camera not have an eye level viewfinder. Leave the stripped cameras to someone with less of a reputation for good camera design.

Thom Hogan repeatedly takes Nikon to task for "workflow." To summarize his position he seems to think that the main issues holding Nikon back are a paucity of APS-C lenses (side issue) and the inability to push one button on the back of a Nikon camera and instantly send images directly the social media or other sharing applications. I'm too old school to appreciate this point of view and disregard it just as I disregard GPS on cameras. Since this tech doesn't require much in additional hardware costs I'm all for its inclusion but... I think a much more important impediment to Nikon's success, even with existing cameras, is their foot dragging approach to video.

The exclusion of state of the art video would be one thing IF Nikon was trying to protect market share of a line of dedicated video cameras but they aren't. They desperately need to get their stuff together in video. The D810 and D750 were steps in the right direction but their implementations of 4K video in the newest D5 and D500 cameras looks so much like an afterthought; a check box checked, but not with enthusiasm.

The D900 (upgrade to the D810) and all subsequent prosumer cameras (it goes without saying that the pro cameras should include this) should have full on video that works well and not just in ultra-cropped sizes. Just as with the Sony A7rii I should be able to shoot full frame video to take advantage of full frame lenses and depth of field control. I should be able to shoot a super high quality APS-C format of 4K video as well. The cameras are big enough to include full size or mini (but NOT micro) HDMI connectors for video output and the codec should include a 10 bit 4:2:2 option via HDMI. They should also spend whatever additional money it might take to make sure that audio right out of the camera is superb. The video in the one inch line of cameras should be equally superb.

But let's not stop there. Nikon used to make incredibly good, Super8 movie cameras. Absolutely superb! The R10 was my favorite example. They should consider making one dedicated video camera. Not a line of cameras but one great, prosumer video camera. The Nikon FM of 4K video cameras.

It should have a solid body, a full frame sensor, a full complement of professional inputs and outputs, a killer codec licensed from a company that makes state of the art codecs, and an open lens mount with adapters for Nikon, Canon, Sony and anyone else who makes great full frame lenses.

This camera should be like the line of Nikon F cameras in that you make ONE perfect model per generation. When the technology dictates you discontinue the old model and produce one perfect model again. No video line extensions. No weakening of the brand.

Finally, Nikon needs to vastly simplify their product line. One flagship FF camera (you get to order configurations: memory slot types, OVF or EVF, etc.). One flagship APS-C camera. And then in the remaining line go with an Apple-like Good, Better, Best offering instead of trying to fill every market gap. I actually think consumers want fewer (but better) choices.

Nikon will survive. The question is whether they will struggle or thrive. It is time for them to make a break with their past, conservative designs and blossom. No guarantee that the camera market as a whole will ever completely recover but with incomes rising globally they could position themselves much better by discontinuing the idea that everyone wants to use the same kind of cameras their grandparents used and to embrace the modern conveniences that nearly all consumers want.

The downside to taking this advice? You'll do well as a company but I won't get paid for it....

Thom Hogan may be right about image sharing from the cameras but I think that's like choosing the icing for the cake. Let's get the cake right first. Wi-fi and bluetooth integration should be plug and play at this point. They just need to license a better package.

Nikon makes great lenses. They just need to get clear on what to put behind those lenses!

So, how is this an "inflection point" for the camera industry? Well, Nikon is the most visible of the camera companies struggling with change but all makers who hold onto a traditional interpretation of the camera with mirrors and OVFs are on the fast track to pain. Nikon is just the one leading with their chin this quarter. Pentax will need to move to a mirrorless design as will Canon. It's not enough anymore just to "feature pack" there has to be underlying engineering changes to correlate camera design and use with consumer preference. If Nikon can make successful transition as Olympus and Fuji have done they will show the way for the stragglers. Yes, I know Canon has the biggest current market share. Just as Kodak had the biggest market share of ... film. Times change, products change and consumers drive a hard bargain.

End of Kirk's free advice to Nikon.





17 comments:

Ashley Karyl said...

I agree with so much of what you write about cameras and photography in general. Nikon and Canon are too wedded to the old systems and it won't be long before they need to adopt a radical new direction.

I very much like the look of the new Hasselblad X1D, but needless to say the cost will be too high for most photographers. It cannot be beyond the scope of a company like Sony, Pentax or Olympus to produce something similar to the A7RII, but with 645 full frame sensor proportions at a price that is more affordable. Personally, I've never liked 35mm, because I find it too elongated and it's a pain for cropping.

The file quality on any of these cameras is more than adequate, but I think Hasselblad is pointing the way to a very interesting direction. Will the other manufacturers see the light?

George Beinhorn said...

Kirk, I don't give a hoot what negative things people say about Ken Rockwell - when it comes to his comparison of Nikon and Canon's present state, he's right - and his views exactly mirror yours. A little over a year ago I upgraded from a Nikon D7000 to the mirrorless Nikon V1 which was being sold at a tremendous discount because it was supposedly a very disappointing camera. But the thing is, just like the Nikon D3, it did EVERYTHING that matters very well - phenomenally accurate, consistent, dead-on focus, incredibly accurate metering, a wonderful, wonderful STABILIZED 18-35mm equivalent lens that suits my need to work in social groups and school classrooms, and on and on. It's just darn fun to use, because I can forget about the basics and just take pictures knowing that they will look fine. The D7000, on the other hand, was a complete pain in the butt. Why in the hell couldn't Nikon make a camera that could focus with all of its lenses without ridiculously difficult and iffy micro-focus adjustments? Canon certainly could, as can Fuji with its XT-1 and XT-10. I've thought about cameras that might give me a better option for low-light shooting; namely, full-frame or APS-C. Say, a D700 for a great price. Lovely camera. But then I see the low prices of some of Canon's excellent ultrawide and 70-300 stabilized zooms, and wow, I think, they're doing something right. Except that they don't have a SINGLE camera with a silent electronic shutter, a feature I've come to consider absolutely essential for my work. So, that leaves Fuji, Olympus, or $ony, all of which have their drawbacks. You know what? I'm sticking with Nikon for now - the new DL series promise to have the same wonderful coverage of the basics as the V1, with more pixels and a built-in 24-500 that I can shoot at very low shutter speeds in poor light. And the DL 24-500/V1 focusing system absolutely trumps (sorry Kirk) Sony's RX100 Mark III for accurate, fast focusing in low light. So there you go. Canon/Sony/Fuji let me down, but Nikon mirrorless doesn't. A very odd result; but it tells me that of the big camera companies, only Nikon, Olympus, and to a certain extent Fuji and Sony, are really paying attention. Fuji and Sony have their little deal-killer quibbles (always); e.g., the Fuji XT-10's inability to capture RAW above ISO 6400. And Olympus requires a larger investment than I'm prepared to make. But I digress.

Phil Service said...

Kirk, I've been using Nikon cameras for 50 years. But, I finally decided to leave Nikon and move to Sony. I've got an A6500 on pre-order, and have sold off most of my Nikon SLR gear -- at least the stuff that's worth much. Ironically, it was the Nikon V1 that got me started on this path -- bought, I might add, partly because of favorable things you wrote about it. For me, the V1 was a revelation -- totally silent electronic shutter, zero vibration, fast on-sensor PDAF, and, yes, the EVF, although the one on the V1 wasn't so great. I knew instantly that the SLR's days were numbered. I now have a V2. But I also have complaints about the Nikon 1 cameras, particularly the ergonomics/controls and relatively low resolution. I want better ergonomics and a larger sensor -- hence the A6500.

I think if Nikon had made the Nikon 1 line as an APS-C format system, they would be in a much better position today. They could have introduced a new mount at the same time, but also provided an adapter for F-mount lenses. After all, the Nikon 1 was a new mount, and they do make an adapter for F-mount lenses. Perhaps at the time an APS-C sensor with PDAF and electronic shutter was not technologically feasible. I don't know. Certainly Sony's implementation on the A6300 is not as snappy as that of the V2, which is several years old.

Phil

Eric Rose said...

Kirk your comments exactly mirror the reasons why I never moved beyond the D700. The only thing that would motivate me to buy a new Nikon DSLR would be to have full frame professional video. A great, not just good, EVF is a must. I also want to be able to control the camera from my smartphone or tablet. I'm in my 60's so it's not just the under 50's that want this stuff.

jlemile salvignol said...

I 1000% agree with George about the Nikon V1: The Leica M of the 21st century. With the 20 MP Sensor, an up-to-date EVF and some minor adjustments, it is - potentially - an ideal tool,precise, faithful, silent, loyal. Strange, a loyal camera? Why?

Bassman said...

Sorry, but I agree with Thom - the communications capability of every dedicated camera is shockingly inadequate. Companies prosper by selling solutions to problems. My problem is that I want to capture an image and share it with someone, somehow (that someone might even be me). Right now, my phone solves that problem as long as the image fits in the shooting envelop of the situation, and the end destination is not paper. Not one of my cameras solves that problem ever, unless I want to show them the back of my camera. The technology isn't that hard (I made my living as an IT guy before retiring), but not one camera maker is close to a good solution or even appears to recognise the problem.

David Lobato said...

I have a Nikon 1 J5 with the 20MP Sony sensor. It punches way above its weight class. With the set of lenses I have for the V1 I'm a happy Nikon 1 user. The CX lenses are excellent, and the primes are wonderful. Now where are those DL series cameras we were promised?

Richard Jones said...

Good morning!

Regarding the photograph of the woman with coffee cup: I'm curious as to why you chose to have her hand out of focus.

Thanks,

Richard

Kirk Tuck said...

My Pictrol over my enlarging lens just wanted to see it that way. I was in a good mood so I thought I would play along...

John Camp said...

I suspect that the problem with Nikon is more apparent than real. For a long time, the camera industry was quite a sleepy little manufacturing niche, with new cameras coming out every eight years or so, and even then, pro photographers were not always in a big hurry to adopt a new camera. The action actually was in the lenses and to some extent, the film. When the digital damn broke, I knew photographers who bought of eight or ten high-end (for then) cameras over the course of fifteen years. Remember all the excitement around Luminous Landscape, with Mike Reichmann trying to demonstrate that digital was now as good as film? Now, things are stabilizing. I have a Nikon D800, skipped the 810, and will probably skip the next one, because I can't think of what I'd want a camera to do that's better than the D800. So, I think what's happening is that the camera industry may be slipping back into its former sleepy niche, with upgrades every few years, instead of every year or two. That means fewer jobs, lower revenue, etc.

Peter Wright said...

I think you're right in saying the mirrorless advantage goes well beyond size and weight, but it also goes beyond the EVF advantages as well. Look at what Olympus are now apparently achieving because they use a relatively small (i.e. small mass) sensor that can be moved in precise and rapid steps: I have seen claims of 10 second hand held exposures using IBIS. We are seeing advances in high resolution via sensor dithering, and in-camera focus stacking/bracketing. Not to mention very high burst rates for action with fast and accurate focus. Developments in electronics favour cameras that use electronics more than mirrors and mechanics.

When I got my first Micro 4/3 camera in 2008 (a G1) I thought it could not be long before Nikon had their offering out, and I could consider it as an upgrade. I'm still waiting of course. Although, after I buy the next Olympus I won't have much spare cash anyway. (Perhaps that explains the high price of the new Oly!)

Nice portrait by the way!

Goff said...

I bought the Nikon F when it first came out. Marvellous. I stayed with Nikon SLRs to the D3, then switched to Nikon 1, now using the V3. That little camera GREAT! The long zoom is the best nature lens around. It is so good that I no longer need a macro for filming butterflies. Nikon has a great future if they pursue the Nikon 1 philosophy. Goff

ZetiX said...

Here's my 3p about Nikon 1 cameras. I had V1, now I have V2 and I looked at V3. Why do they insist of shooting themselves in a foot by annoying Nikon camera users? I bought V1 as a lightweight companion to my D610 and a first look into mirrorless world. What I liked about it was that it used the same EN-EL15 battery as D610, ergonomics less so - especially the rotating dial under the thumb, in-menu mode changes and small size (that I improved by buying third-party metal grip). I had a lot of fun with it so I upgraded to V2 - this one has improved on the grip and dials but they decided to dump EN-EL15 for EN-EL21. And when I look at V3: no built-in grip, no viewfinder - optional ones like someone thought "let's make money on the accessories too" and EN-EL20 battery... No consistency at all - no respect for the consumer too it seems. I'm not going to switch to V3 for sure and if they (ever) release V4 I may be long gone from that camp.
I hear you praise Sony in the battery compatibility department and think "what were the people at Nikon thinking???"

Ron White said...

Photographing public figures in "Press Conferences" etc.
As I watched President Obama and President Elect Trump speaking and being video taped in the Whitehouse I once again noticed how loud the clacking of mirrors is in those circumstances. I think the Whitehouse should "suggest" that the media photographers use mirrorless cameras. Thanks Kirk.

Kurt Friis Hansen said...

Both of you - Tom Hogan and you - are right in my opinion.

Let me supply a few figures:

1. I can connect my camera via USB (not even full speed USB2) to any of my computers. I can do the same with my smartphone. The latter has a transfer speed (USB 3.1) 8 to 10 times higher, than my camera. If I need to move a 1-2GB 4k video, which device do I prefer?

2. I can "connect" my camera wirelessly with a theoretical WiFi speed of up to 150 megabit/sec (actual speed much, much lower - on a good day around 40% peak or around 6MB/sec). I can connect my smartphone wirelessly with a theoretical WiFi speed of up to 866 megabit/sec (actual speed also much lower - around 35MB/sec). Again... if I have to move a few to some tens of gigabyte, which device will deliver?

My camera is a Panasonic, so transferring RAW files via the Panasonic App directly to the smartphone is not possible at all. Panasonic has decided, that I - as a user - am not capable to decide for myself, what kind of images or video quality, I want or need to transfer (if transfer via WiFi would be a viable solution at all).

3. Whether I place my 64GB or 128GB uSDXC card (Class 10, U3, 95 MB/sec read and 90 MB/sec write - peak performance) in my smartphone or my computer leads to the same transfer speed.

4. Whether I send data from my computer or smartphone, transfer speeds are similar when using WiFi, and if I use my smartphone as LTE hotspot, there isn't that much difference (direct transfer from smartphone is a bit faster).

So... if I'm a non-professional user, I have to decide if the extra hassle involved in "schlepping" my camera and external recorder around is really worth the effort, cost and bother?

I personally use a computer with Lightroom (Surface Pro 4) to pre-judge and sort, tag etc. my images, that I have to transfer via the old "horses-of-the-apostles-ambulance" using (u)SD cards - just as in the good old IBM PC days 35 years ago, when I used floppies. Only the capacity and transfer speed has changed somewhat over the years; but so has the data involved too.

Whether you use Canon, Nikon, Sony, Olympus, Fuji, Panasonic or... or... you still have to move data 1981 style, if you want to get the job done, and you have a decent amount of "walkabout" material involved (5, 10 or more GB).

In short, using todays cameras, involves the same "workflow" for moving data as in the good ol' non-networked PC days, when PC DOS was king of the hill. The media differs, but the method is even more than 40 years old. I can remember, when I used Hollerith cards - only difference was, when you dropped an iron drawer with 5.000 cards, you had a hell of time sorting the mess out afterwards - and many drawers were of a size, that they hit you on a very sensitive part of your shinbone, when dropped - talk about memory dump - eh ;-)

So, yes. Viewfinder has importance in daily use. So has camera design in general. But when it comes to workflow, there's something drastically wrong, when the most efficient method is mimicking an approach, that was a PITA even with PC-DOS in 1981 or thereabout - 35 years ago, and still counting, because the camera manufacturers haven't solved a basic workflow problem.

But otherwise, I agree... smile!

Thom said...

Since you said Beetlejuice out loud, guess who arrived? ;~)

While I've been harping on workflow issues a lot lately, that's not the only thing holding back the camera industry (not just Nikon), but as I do more and more research in this area, it certainly is one of them.

The issue isn't really DSLR versus mirrorless, per se. Mirrorless has mostly been a proxy for other trends happening, and that need to eventually happen at Nikon: parts reduction, use of mass produced rather than hand assembled parts, manufacturing simplification, smaller and lighter product. The Seven Dwarfs couldn't break the Canikon duopoly, so had nothing to lose in just going to mirrorless to get those gains.

Nikon's problem is fundamental, and at a management level, not design. To a large degree in the 00's and early teens Coolpix and consumer DSLR were their cash cows. The Imaging group completely turned the company upside down in the run-up to peak of the digital camera era. It's the loss of the cow that's Nikon's fundamental problem, not DSLR versus mirrorless.

What didn't happen at Nikon is a brand-wide definition. At one end (Coolpix), Nikon allowed the brand reputation to get diluted with crud, and buyers of a Coolpix aren't particularly bought into Nikon if they need a new camera. There's really no "we're the best choice no matter what you decide you need in a camera" type of strategy going on at Nikon.

At this point, the Japanese camera companies no longer control what's happening with images. And that's the thing that will hurt them more than anything else. The old DCF standard (and all the related ones, such as EXIF), helped define interoperability in a narrow, Japanese-centric CES world. The fact that pretty much every camera out of Japan has a grand total of 9999 photo names it can use speaks to a world that doesn't use very many images. A world now passed us by. Heck, at the frame rate of a D500, you'll use up all those names in 16.7 minutes ;~).

Simply put, cameras don't live in the modern world very well, whether they're mirrorless or DSLR. That's the reason why I've been writing so much about workflow lately.

Does Nikon need a mirrorless strategy? Sure. It can be: (1) here's how DSLRs can stay relevant and dominant; (2) here's how we slowly transition DSLRs to mirrorless (the Canon strategy); or (3) here's how we build lines of both mirrorless and DSLR cameras that allow you to choose what you need. Pick one. Announce it. Commit to it. Build and sell to it.

Kirk Tuck said...

Thom, Thanks for stopping by and sharing. I love it. I'm delighted to have your commentary here. (I am an avid reader of www.ByThom.com and VSL readers should be too, Thom is one of the very few voices on the web I implicitly trust for great cameras reviews).

Also: Sansmirror.com

Nice to have some cross talk.