DL replacing Nikon 1 appears illogical.

The launch of the Nikon DL series of cameras has caused a significant amount of angst among many Nikon 1 owners. Many internet chat rooms seem to be brimming with opinions on why the Nikon DL product line will replace the Nikon 1 system. Many of these viewpoints are expressed from a photographer’s perspective in terms of specific camera features and potential image quality. Putting all of that aside, if we look at recent CIPA statistics and market segmentation, the idea that the Nikon DL series will replace the Nikon 1 system appears illogical.

To put this article in context it is important to note that there is only so much that can be done with statistics that are available to the  general public. No doubt the various camera companies have a wealth of proprietary consumer research that they use in their strategic planning…but let’s at least look at what the CIPA information that is accessible can tell us.

The first issue is that built-in lens cameras are defined by camera manufacturers through CIPA as a completely different product category from Nikon 1 which is an interchangeable lens camera system. These definitions are likely based on customer segmentation research done by various camera manufacturers and some concurrence among them that these are different market segments with discernible attributes. In fact, CIPA has 4 different sub-categories in the built-in lens camera market segment:

  • less than 6X zoom
  • 6X to 10X zoom
  • 10X to 20X zoom
  • more than 20X zoom

With many competitors like Panasonic, Sony and others already marketing higher end cameras in the built-in lens camera segment one could justifiably view the Nikon DL series as the company’s response to those competitors.

Nikon’s initial pricing on the DL series appears to be about $50 to $200 below similar competitive built-in lens camera models. This looks like penetration pricing targeted at a specific market segment where Nikon was not well represented in the past… i.e. the built-in lens camera market.

NOTE: Click on graphics to enlarge.

built-in camera average shipment value

When we look at the average unit shipment value of built-in lens cameras we see a significant per unit rise in value starting in 2012. This coincides with the introduction of higher end cameras into this segment by Sony, Panasonic and others. Logically it makes more sense to judge Nikon’s launch of the DL as the company’s foray into the premium end of the built-in lens market, than as a replacement for Nikon 1.

In some recent interviews with Nikon executives by the camera press, they have stated that the DL series is targeted at DSLR owners. This makes sense when we look at the compatibility DL cameras have with Nikon Speedlights, and the fast f/1.8-2.8 zoom lenses integrated into the DL18-50 and DL24-85. The use of standard SD cards also supports this targeting.

I know that many Nikon 1 owners take their photography seriously and have been clamouring for more 1 Nikon fast prime lenses and the kind of flash compatibility now offered by DL models. I received some of these types of recommendations from readers when I solicited their views some months ago. We need to remember that enthusiasts, semi-pro and pro shooters represent only a small portion of the entire camera market and the needs of these specific photographer niches are often very different from broader consumer markets.

Let’s have a look at the composition of the 35mm (full frame) and smaller sensor lens markets with some CIPA data for 2015.

lens market composition

As we can see from the above graphic, the actual use of prime lenses by owners of smaller sensor cameras (i.e. smaller than 35mm format) is quite minimal at only 6% of units. This compares to 36% prime lens penetration with users of 35mm (full frame) format cameras.

The chart above clearly shows that owners of smaller sensor cameras prefer zoom lenses by a very wide margin. In fact, 57% of smaller sensor lenses fall into the ‘standard zoom’ category…basically kit zoom lenses.

Based on worldwide camera industry statistics it is perfectly understandable why Nikon only has a limited number of prime lenses available for the Nikon 1 system. The buyers in the small sensor camera segment exhibit very different buying preferences than folks who own 35mm (full frame) format cameras.

I appreciate that many readers may be thinking that cropped sensor camera owners could be buying full frame prime lenses and using them on their cropped sensor bodies. So, let’s look at the entire lens market and how it splits up between prime lenses and zoom lenses with CIPA data.

prime vs zoom lenses

Once again we see that when it comes to the purchase of interchangeable lenses the market for zoom lenses dwarfs that of prime lenses by a ratio of about 5.6:1. Roughly 85% of the entire, worldwide interchangeable lens market is comprised of zoom lenses.

The thought that introducing a plethora of fast, prime lenses will somehow help the sale of Nikon 1 cameras does not have any statistical foundation.

Buyers in the smaller sensor camera category act differently than those in the 35mm (full frame) market. They prefer zoom lenses 93% of the time. Pushing prime lenses on this market is basically trying to force-fit a full frame buyer’s mentality onto a completely different market segment.

It would be far more logical for Nikon to give their full frame owners a DL product that provides them with the flash compatibility and the prime-like fast glass they want, than it would be to waste R&D dollars producing more primes for Nikon 1. Especially when one considers that the small sensor camera market buys zoom lenses 93% of the time.

We all know that the digital camera market has been in a significant decline since 2012 in terms of overall unit volumes.

volume built-in vs. ilc

Let’s think about the chart above for a moment. We can see a precipitous drop in the built-in lens camera market and a much more stable unit sales curve for the interchangeable lens market.

How logical is it that Nikon would deliberately launch the DL into a declining market segment (built-in lens cameras) with the express intent on cannibalizing Nikon 1 sales in the reasonably stable interchangeable lens camera segment?

Let’s look at the camera market a bit closer.

units by camera type

We can see that the non-SLR (mirror-less) segment has more than doubled since 2012 in terms of a percentage of total unit sales, ending 2015 at 9.5% penetration.  Now let’s look at shipment value.

value by camera type

The chart above shows that the non-SLR (mirror-less) camera segment represents almost 17% of shipment value and has been steadily growing.

Again, is it logical that Nikon would abandon an existing product line that is positioned in a growing market segment? Would it be logical for Nikon to then deliberately try to migrate those customers into the declining built-in lens camera segment? Especially when that declining segment is also shrinking in terms of its relative share of shipment value?

Let’s now consider cross selling opportunities.

product segment value

The past decade has seen a very dramatic shift in the composition of the digital camera market. Where the built-in lens camera market used to comprise the lion’s share of shipment value (almost 73% in 2006) it collapsed to only 23% by 2015. Interchangeable lens cameras are now over 43% of shipment value and interchangeable lenses are at almost 34%.

Would you kill a product line like Nikon 1 that is in a segment that is growing its share of available revenue (i.e. interchangeable lens cameras) and also provides you with cross selling opportunities in the interchangeable lens market? Especially if you don’t have any other product currently available in that segment?

Or, would it be more logical to enhance the Nikon 1 product, improve marketing, and try to better capitalize on the opportunities in two market segments that are growing in terms of shipment value importance?

Ultimately only time will tell us which way Nikon is going.

Much will depend on the unit volumes they can achieve, and ultimately if they can make money selling Nikon 1 products…or DL products for that matter.

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59 thoughts on “DL replacing Nikon 1 appears illogical.”

  1. Hi Tom
    I somehow missed this discussion. What a pleasure, for once to “see” Thom Hogan outside his closed castle and actually engaging in a discussion! Should happen more often.
    I certainly have no idea what Nikon is up to. Pursuing science of economics through my professional life I learned among others, that everybody works with crystal balls. Some are lucky to stumble upon the right one, some not. Today I dropped economics and do only things I have direct impact on (Travel Destination, Aperture, ISO, etc.).
    I use both formats; FF and CX (rarely DX too) and plan to use them further. I bought a V3 with EVF cheaply and use it despite mentioned quirks gladly along my both J5. A new J5 with EVF would be certainly something I would buy instantly.
    So let’s hope and many thanks for your article in which you certainly did not follow the mainstream!

    1. Hi Robert,

      I’m glad you enjoyed the article – thanks for your comment! I’ve been ‘marching to my own drummer’ from a very early age which has helped create a most interesting life so far!

      I’ve never followed other photography writers other than being a reader of Photography Life. I don’t really know anything about Thom Hogan – but it was fun to exchange some thoughts with him nonetheless.

      Tom

    1. Hi Moshe,
      Yes there are a number of lens patents that Nikon has filed for lenses suitable for a 1″ CX sensor. Some have appeared in the DL series, others are still outstanding. It is unclear what Nikon will do with some of those lenses. The company has filed patents in the past but never followed through with actual lens production. Time will tell…
      Tom

  2. Hello I have the V1 and use the most of the time the 10 and 18.5mm prime’s because its best for my style of photography(street). I believe that if Nikon give us a DL style body into 1 series with standard viewfinder and of course sd cards(no micro sd like mobile phones), it will be the best.
    Greetings from Greece
    Angelos
    https://www.flickr.com/photos/angeloskoulouris

  3. Thom one more thing i alsp realized about the points presented- the article makes thw case about the consimer wanting zoom lenses over primes. of thata the case I dont see jpw that doesnt bolster the idea (in the context we have been talkong anout with other data points) abput DL replacing pr possibly replacing the 1- because those cameras are exactly that.

    More than that- they are quipped with better zooms while being overall more
    portable. Zooms the Nikon 1 never had.

      1. Tom, I want to apologize to you and readers of my post. I was typing on a mobile device and I didn’t throughly proofread what I wrote- hence all these grammatic/spelling mistakes (and I still have to deal with the fact my first language isn’t English 🙁 ).

        Thanks for reading and correcting in your mind for better spelling. I read my own post and I cringed.

  4. 1″ sensors are now considered to be “compact camera sensors”. I suspect that most people who want an ILC, want a bigger sensor.

    1. Hi John,
      I agree, most people likely do…and others (like me) actually prefer the 2.7X crop factor combined with interchangeable lens flexibility. Different strokes for different folks…
      Tom

  5. “Again, is it logical that Nikon would abandon an existing product line that is positioned in a growing market segment?”

    No, but it is not logical that Nikon would continue the mirrorless foray with the Nikon 1 when such line is not selling well. There’s a lot of rumors about Nikon mirrorless APS-C floating around. Looking at the market, I would say it would be quite illogical for Nikon to ignore this and keep pushing the Nikon 1 system.

    But we will all know by the Summer’s end. If no Nikon 1 camera has been announced by then, I think that’s it.

    1. Thanks for adding to the discussion Ricardo! As you noted a big question is when Nikon will launch other larger sensor products into the mirror-less market. The window of opportunity is closing and if Nikon doesn’t make a move fairly soon (my guess is by the end of next year) they could compound their pain considerably.
      Tom

  6. Another thing is forgetting AW1 line. Here Nikon has an unique line of interchangeable underwater system which no other firm has and nothing, big silence. Seems that beside prof D line everything else is the domaine of bookkeepers and shareholders expertise.

    1. Hi Stanis,
      Yup…the Nikon 1 AW is a unique concept that no other manufacturer has tried to replicate. Unfortunately there have been reports that some owners have been experiencing some water infiltration problems with the AW. I think Nikon has some work to do on this product.
      Tom

  7. Thanks for the article Tom. I use the J5 to do action shots while mountain biking, climbing and skiing. The small size is key and the extremely fast AF and good continuous AF make it really good for this application. However, I do feel though that Nikon crippled the camera by omitting such useful features as minimum shutter speed in Aperture mode, auto iso in manual (and better auto iso implementation in general), exposure lock (J series) and the ability to change AF box size. These are very important features for one of the usage types where the camera excess due to it’s AF – sports. There seems to be a significant number of advanced users with this camera and those features would definitely help sell it. BTW I happen to be one of the unconventional users that exclusively uses primes with my mirrorless cameras – because I value size and low light performance.
    Clive

    1. Hi Clive,

      Thanks for adding your thoughts to the discussion! When it comes to an individual photographers choice of camera and/or lenses I think this is a very personal choice. There is no ‘right’ or ‘wrong’ approach. Whatever works best for an individual is what they should absolutely use. I own all of the Nikon 1 primes but almost always only use them for my client video work. I much prefer zoom lenses for still photography. As you point out Nikon 1 cameras do not provide as full a shooting experience as DSLRs. As is often said everything photographic comes with some sort of trade-off.

      Tom

  8. Great analysis Thomas.

    I wonder if Nikon actually realise how good the Nikon 1 system is….or even how much better it could be.

    No need for Nikon to chase after APSC or FF mirrorless, they should just work harder to improve and market the 1 system.

    1. Thanks Ian – I’m glad you enjoyed the article! Some of the positive changes that were incorporated into the Nikon 1 J5 in terms of the 20.8MP BSI sensor and improved ergonomics contribute to my optimism that we will see a future V-series camera…but who knows for sure!

      The more that I’ve thought about a possible V4/V5 the more opportunities I see for some real innovation. Unlike some folks I don’t think that the Nikon 1 system is being held back because of its lack of prime lenses. The 6.7-13mm, 10-100mm non-PD and the CX 70-300 give owners a wide range of shooting potential. If Nikon used something like a 16MP BSI sensor with better low light performance, dynamic range and colour depth a lot of people wouldn’t need anything else. Throw in a weatherproof Nikon 1 200-500mm and make a V-series with a global shutter and weatherproofing many owners would be over the moon in terms of a wildlife camera for stills and video.

      Tom

  9. Since I was mentioned in the comments, I’ll point out that I’ll have a somewhat different interpretation of the same CIPA data posted tomorrow.

    Moreover, as much as I like your writing, Tom, I’m not following your logic here.

    The better thing to look at is the Canikon disruption. It is ending. My conclusion from the CIPA data is this: Canon and Nikon must have viable mirrorless systems in place by the end of 2016 or risk losing significant market share in a declining market. It’s already clear from leaks that Canon EOS M is getting a lot of attention for late this year.

    The real question is what Nikon will do. And I don’t think that expanding or fixing CX will be their answer. Why? Because those cameras can’t replace the loss of DSLR volume, they just won’t be in the same class as EOS M. My bet is that we’ll see consumer DX or consumer FX (or both) mirrorless from Nikon and virtually nothing in CX.

    So follow my reasoning:
    A. Mirrorless is slightly growing, DSLRs are declining. This is squeezing Canikon’s market dominant shares in a declining market, making them smaller.
    B. Canon is clearly going with APS-C mirrorless expansion, likely targeted at Photokina.
    C. Pricing of CX mirrorless is now essentially bracketing the DL models, but at worse specifications.
    D. The bulk of APS-C/m4/3 mirrorless will end up at or near that same price point.
    E. You can’t sell CX at the same price as DL or as EOS M. Simply doesn’t work. Didn’t work selling it at the same price as DX entry.
    F. So CX has to move down in price or disappear.

    I’d love to be proved wrong, but I predicted this when I met with Nikon executives in Tokyo in 2010 and I see nothing that’s happened since changes anything: the squeeze on Nikon happens at both ends, and the answer has to come in the middle. CX is not the middle.

    1. Hi Thom,

      Thanks for adding to the discussion and sharing your perspectives…more viewpoints are always a benefit for readers! Looking at statistics is always an interesting experience and differences in interpretation are certainly expected and welcomed.

      We have some differences in how we see the market and the future of various formats…and we also have some areas of agreement.

      I agree with you that Canon and Nikon are being pressured in the marketplace. I see them both hanging on to DSLR technology as long as they can as they have a strong vested interest in doing so.

      To some of the points you raised…

      I don’t think that smaller sensor cameras need to replace DSLR volume with similar image performance. Demographics are shifting and as populations age smaller, lighter gear will be more readily accepted. In short, I think smaller and lighter will trump overall image quality for many camera buyers in the future. We are already seeing folks leaving DSLR’s and moving to M4/3 in spite of better DSLR sensor performance. And, that includes some professional shooters. Having said that I think there will be a market for high performance, professional DSLR gear for a some time to come and that market niche may extend the life of DSLRs.

      I don’t see CX interchangeable lens cameras like Nikon 1 going away. As small sensor performance continues to improve these types of cameras will be more than adequate for the photography needs for the majority of photographers. While cameras like the DL series may have similar sensors, a built-in lens camera does not provide the same level of customization as does an interchangeable lens format. I think that the built-in lens market will definitely move to higher content, more capable cameras…but I see that as a necessary strategic move by camera manufacturers to differentiate their products from Smartphones. In essence these types of built-in lens cameras can do a good job pushing the image quality envelope to keep ahead of Smartphones.

      Eventually I think Canon and Nikon will both move to APS-C and FX format mirrorless cameras. That likely will happen when the DSLR market reaches its tipping point for each of those competitors.

      My perspective is that the pricing on DL cameras and the specifications they offer have a lot more to do with taking on direct competitive models from Sony and Panasonic in the built-in lens camera market than they do with Nikon 1. Sure, there may be some folks who would rather have the specifications offered by a DL series camera…but the same could be said about that identical buyer moving to a built-in lens camera from Sony or Panasonic anyway. The size, system flexibility and performance of Nikon 1 system constitutes its own selling proposition in the marketplace. For people who are not interested in a built-in lens camera like a DL series, or a Sony, or a Panasonic…the specifications and pricing of those models is a moot point.

      Price parity between APC-S and M4/3 is already in the marketplace. Some M4/3 bodies and lenses are already more expensive than some APS-C DSLRs. One could make the case that a Nikon APC-S DSLR offers much better image quality than some pricey M4/3 bodies…but folks are still moving away from DSLRs and buying them anyway. Obviously they are seeing value in what the M4/3 system offers.

      I think a CX camera can be sold at a higher price than a DL…it will depend on the needs of an individual buyer and the overall value proposition that can be created for the Nikon 1 system. A few years ago many folks didn’t think that a M4/3 camera body would sell at the same price, or higher, than an APS-C DSLR. The argument back then was all about sensor size. And yet today we see that happening all the time. Is a D7200 a better camera than a Fuji X-T1 or an Olympus PEN-F? They all sell for about the same price and folks are buying them all. Is a Panasonic GH4 or Fuji X-Pro2 worth more than a D7200? They are to some folks. Again, it all comes down to the individual needs of a photographer and what camera or system best meets their needs.

      We’re likely in agreement that Nikon has done a poor job marketing the Nikon 1 product line in the past, and some of their design choices have been questionable to say the least. The Nikon 1 J5 is what a non-EV mirrorless camera should have been when Nikon initially introduced the product line. Unfortunately it took Nikon 5 attempts to get there. In my view the Nikon 1 V3 was a somewhat strange, poorly designed product that was far too expensive because of some of the quirky design choices Nikon made. As much as I love shooting with Nikon 1 I took a pass on the V3 because of its quirky design and price. Whether Nikon introduces an updated V-series or not is still up in the air. I suspect you may feel that the V-series has ended with the V3. I’m more optimistic and feel that there will be a V4…or perhaps they’ll call it a V5 to fit in with the D5/D500 branding. Hopefully Nikon will get the V-series right with their next iteration.

      I would love to have in-depth consumer research in key interchangeable lens camera markets like Asia and Europe as they are larger than the market in the Americas. For camera companies the needs of consumers in those markets are more important in the big picture than what we think in North America. As you know from CIPA data we’re a bit dinosaur-like in North America with the smallest uptake of mirror-less cameras when compared to Asia, Japan or Europe. As a consequence we tend to hold on to our beliefs about DSLR superiority. And, we often wring our hands about lens availability, thinking that all systems need to offer the full compliment of DSLR lenses to which we’ve become accustomed. Although I have no empirical data to support my perspective, I suspect that once we get below the enthusiast level of photographer most interchangeable lens camera buyers would be more than happy with a decent camera body and two or three zoom lenses…and variable aperture lenses to boot. They likely couldn’t care less about using primes or having fast, constant aperture zooms.

      Anyway, thanks for adding to the discussion and sharing your perspectives!

      Tom

      1. Tom,

        If Nikon wanted to keep the Nikon 1 system because it is competing in a rapidly growing market segment–as you state in the article–why did Nikon do absolutely NOTHING for the 1 system for more than a year?

        Strategically that makes no sense, as strategy would dictate that you should lead the momentum into a growing market segment, not abandon it, which is exactly what Nikon has done.

        Even if they were to re-enter the mirrorless segment with a DX mirrorless mount as Thom as predicted above, given they tossed aside Nikon 1 like garbage, how are prosumers supposed to know they will not do the same for a DX mirrorless mount as well? 5 years from now, maybe they throw that one away as well and go FX mirrorless mount.

        1. Hi manhattanboy,

          Why Nikon was late into the mirrorless market and has stumbled around in it for a few years is anyone’s guess. As far as not launching anything since the Nikon 1 J5 one can only assume that the company had other priorities…perhaps filling the hole it had in the premium built-in camera market with the DL series of cameras. Thanks for sharing your perspectives.

          Tom

          1. The Nikon 1 was already competing with the premium built-in camera market. The main reason folks would have bought a camera with built in lens is cost. Size is probably second, with its importance varying by regional preferences. You can’t put the 24-500 DL in a pocket, right?

            If the Nikon 1 with interchangeable lenses was similar in size and cost, why would anyone prefer a fixed model where the lens would not be reusable when the sensor tech improved? Nikon folding the 1 line into the DL line will cause folks like me to jump to another mirrorless ILC brand.

            While you note Nikon has limited resources and has to focus its priorities, shying away from the mirrorless ILC segment while that is the only ILC segment that is growing seems foolish. I myself am looking at the 4/3rds cameras as a replacement for the Nikon 1 series, but will keep an eye on the Canon mirrorless leaks as Photokina approaches. I have a lot invested in Nikon gear, but without any clear direction on their mirrorless front, I cannot wait forever for them to update.

            1. Hi manhattanboy,
              It is disconcerting for many Nikon 1 owners not to have any clear idea from Nikon on its vision for the future of the product line. I can certainly understand how that would lead to many folks looking at M4/3 and potential Canon products. Nikon’s marketing, or lack thereof, has not been beneficial to the Nikon 1 system.
              Tom

      2. Debate is good. So I’ll try to continue that here with some comments about your comments.

        > I don’t think that smaller sensor cameras need to replace DSLR volume with similar image performance.

        Then what happens is that smartphones gobble up those cameras, as they have the low end compacts. All the R&D money is in the billion camera smartphone market now. And the next generation of upward ability is about to hit (mostly dual sensor combos that allow zooming and improve image quality considerably).

        The problem always is this when we have convergence of individual tools into a single tool (e.g. cameras into smartphones): the individual tools HAVE to stay considerably and demonstrably better in order to stay alive.

        The reason why all the camera companies have moved to 1″ sensors for anything other than the throw away compacts is that the smartphones are moving upwards in capability. Remember, I wrote “considerably and demonstrably better.”

        Only problem is, we already have 1″ sensors in smartphones (Panasonic) and smartphone accessories (DxO). So the 1″ platforms are already struggling with “considerably and demonstrably better,” which is why we’re getting the super zoom and fast lens approaches. And those all basically took those cameras right smack into Nikon 1 territory.

        > Demographics are shifting and as populations age smaller, lighter gear will be more readily accepted.

        Yes and no. This is a somewhat biased viewpoint. World population is growing, just not in the US (or Europe or Japan or China). IIRC, the US gets about a 3% population growth per annum mostly due to immigration (yeah, that contested subject: we have some, but it is limited). But where the population is growing they don’t have computers, they don’t buy dedicated cameras, they buy a smartphone for both those things. So they don’t need a Nikon 1 to take photos that they download to their computer, which they don’t have, and then store on their hard drives, which they also don’t have. In other words, the opportunity in the emerging world for cameras was taken right out from under the camera makers. It’s not likely coming back.

        > I think there will be a market for high performance, professional DSLR gear for a some time to come and that market niche may extend the life of DSLRs.

        Yes, if photos are important, having pro gear that can optimize data capture is also important. But just like you don’t need the kind of broadcast camera used by the TV networks to do video, most don’t need a D810 or higher to do their photos.

        > I don’t see CX interchangeable lens cameras like Nikon 1 going away.

        To a large degree, they already have. Nikon has consistently scaled back production of each newer model. It’s getting to the point where keeping the factory doing Nikon 1 models is a marginal effort at best. Nikon’s looking for two things right now: places to cut cost (close the factory), and places to grow new sales (okay, use the factory to make DLs instead).

        > As small sensor performance continues to improve these types of cameras will be more than adequate for the photography needs for the majority of photographers.

        Unfortunately, same applies to smartphones.

        > Eventually I think Canon and Nikon will both move to APS-C and FX format mirrorless cameras. That likely will happen when the DSLR market reaches its tipping point for each of those competitors.

        Agreed, and that tipping point may be this year. At a 2:1 DSLR to mirrorless ratio with Sony/Olympus/Panasonic having most of the mirrorless market, this has huge implications on Canon/Nikon market shares, and enough so that it will hurt their corporate valuation (already has for Nikon).

        > My perspective is that the pricing on DL cameras and the specifications they offer have a lot more to do with taking on direct competitive models from Sony and Panasonic in the built-in lens camera market than they do with Nikon 1.

        But that’s the problem. The Nikon 1 doesn’t live without competition. Despite the price differential, the RX100 is one reason why the J5 didn’t succeed. Smaller camera, better specs, built-in EVF. Even at half the price the J5 didn’t attract the serious shooter, and at the price point it’s at it’s too high for Joe Average consumer, too.

        > Price parity between APC-S and M4/3 is already in the marketplace. Some M4/3 bodies and lenses are already more expensive than some APS-C DSLRs.

        This dates back to 4/3, and it’s endemic to Olympus’ small visibility and market share. They’re trying to get by on a total volume of 500k units a year when Nikon has been 10x that. You can’t be the price leader with that low of volume.

        > I think a CX camera can be sold at a higher price than a DL…

        Well, it already is. It’s called the V3. And it’s not selling.

        > And yet today we see that happening all the time. Is a D7200 a better camera than a Fuji X-T1 or an Olympus PEN-F? They all sell for about the same price and folks are buying them all.

        Not in the same quantities ;~). Not even close. But that’s the problem for Nikon: if those sales do take much more of Nikon’s DSLR sales away, Nikon has to respond in kind, not with a Nikon 1 update. And that’s exactly what’s going to happen, and what is already happening at Canon (just wait until Photokina).

        > We’re likely in agreement that Nikon has done a poor job marketing the Nikon 1 product line in the past, and some of their design choices have been questionable to say the least.

        Absolutely. Which makes the problem of “fixing” Nikon 1 actually more difficult than just replacing the D3300 with a new mirrorless DX model.

        > I suspect you may feel that the V-series has ended with the V3.

        I believe the V series ended with the 3, and the J series ended with the 5. The AW series seems to have ended at the 1, and the S series at the 2. That’s actually one of the things that tell me I’m right: Nikon has had 11 Nikon 1 models and has produced declining success, and what success they’ve had has only come when they put the models on fire sale.

        > I would love to have in-depth consumer research in key interchangeable lens camera markets like Asia and Europe as they are larger than the market in the Americas.

        Both tend to prefer smaller cameras. But Europe as a market is tough right now. Both the currency fluctuations and the economies in Europe make selling there very difficult at the moment.

        > For camera companies the needs of consumers in those markets are more important in the big picture than what we think in North America.

        I made this point before: the camera companies never really did what the Japanese auto companies did: there are no design facilities overseas, nothing more than basic sales/distribution entities. What that means is that we never got the cameras we really wanted, nor did Europe, nor did anyone. The big shift in the US came out of Silicon Valley. Images no longer are things that you print. They’re shared as bits, and instantly. That makes all our established photography workflows dinosaurs. No wonder there’s declining sales.

        > As you know from CIPA data we’re a bit dinosaur-like in North America with the smallest uptake of mirror-less cameras when compared to Asia, Japan or Europe.

        And yet we produce more photos than other markets ;~). See previous point.

        > I suspect that once we get below the enthusiast level of photographer most interchangeable lens camera buyers would be more than happy with a decent camera body and two or three zoom lenses…and variable aperture lenses to boot.

        Read the CIPA data more carefully: 1.7 lenses per camera sold. Mostly kit lenses and telephoto/superzoom lenses. No need to suspect. Those things have been true dating back into the late 1980’s. But what happens when those smartphones suddenly are 28-85mm capable? Happening starting this year and definitely snowballing next year.

        Personally, I wish I could have confidence that the Nikon 1 would continue and that its plethora of problems addressed. But everything I hear out of Tokyo seems to indicate that Nikon will move from the Nikon 1 problem to the overall mirrorless problem.

        1. Hi Thom,

          Always interesting to continue dialogue…
          I think your latest posting contains 16 points so I will do my best to answer them in order.

          1) I’m not sure how Smartphones entered into this particular thread when we were originally discussing image quality between different camera formats. Anyway…I’m not sure if I have interpreted your comment properly. It appears to be that once Smartphones have the same sensor in them as Nikon 1, or other smaller sensor cameras, then that camera segment dies. If that is your point then I suppose following that logic to its ultimate conclusion would mean that as soon as Smartphones have full frame sensors in them then cameras will disappear completely, just like buggy whips. Could happen.

          2) Since all viewpoints are only opinions, all are biased. Not sure how this thread moved over into a discussion about emerging markets from where it started. As you know CIPA tracks ‘Other’ markets and their latest statistics show those combined camera markets are about 2%-3% of global sales. This strikes me as a gnat on the back of a flea and from what I could see from CIPA data those markets have also been in unit volume decline.

          The only age-related data I saw in the CIPA presentation was on the Japanese market. It showed that the percentage of sales of built-in lens cameras by buyers over 60 years old had increased from 15% in 2005 to 31% in 2015. growth was pretty consistent throughout that period. The sale of interchangeable lens cameras with this same age group was at 22% penetration in 2015 compared to 20% in 2005 so not much to go on there. If we assume that built-in lens cameras are smaller and lighter there is some statistical basis to support the notion that older people prefer smaller/lighter cameras. The data is only for one market so it is never wise to extrapolate that into a ‘global trend’.

          3) I think we have concurrence on this point.

          4) Most camera companies have been scaling back production as overall demand in the camera market has continued to fall so Nikon’s cutbacks are a market reality for everyone. I have no empirical data on Nikon’s production by model so I am unable to comment further.

          5) Agreed. Images captured with Smartphones will continue to improve. Consumers will ultimately decide whether to ditch cameras completely or not.

          6) Looks like we have concurrence on this point.

          7) I have no access to camera buying criteria research, nor do I have access to any data that provides details on whether camera buyers consider various cameras formats and configurations for their needs. I do not have access to any statistics or research that would indicate that potential buyers of Nikon 1 J5 specifically think of the RX100 as a direct competitor and purchased that model over the J5 or not. All I can do is let your opinion stand.

          8) Price leaders with small market share can survive depending on how well they coordinate their marketing and operations strategies. All we have to do is look at luxury car brands like Porche, Mercedes-Benz etc. to see real-life evidence of that phenomenon. I guess in the camera market companies like Leica and Zeiss would be examples. It all comes down to a company’s fixed costs and if the selling price of a specific product is able to generate positive unit contribution margin.

          9) The V3 was a very poorly designed and marketed camera so there is nothing to debate there. I have no access to empirical data to assess how the V3 or J5 have done. Should a V4/V5 be introduced it will be interesting to see how it is spec’d and priced by Nikon and what kind of value proposition it offers consumers.

          10) Quantity sold is a separate issue from buyers seeing value in the selling price of any particular camera model. At this point in the marketplace DSLR’s will outsell any mirror-less competitor. I have no access to empirical data that compares the sales of individual models or their per unit profitability, or lack thereof. If one agrees with the assumption that all DSLR’s are superior to mirror-less competitors then the natural conclusion of that assumption is that mirror-less cameras should not be selling at all. Another possible assumption is that mirror-less cameras provide consumers with better value which is why the D7200 needs to be priced under mirror-less competitors to sell. I have no specific research on camera price/value trade-off analysis so I can’t comment further.

          11) We have a divergence of opinion on this one. I think a 16MP BSI sensor with 13EV+ of dynamic range, 23-bits+ of colour depth, and a low light rating of about 1,200 ISO would be a sufficient improvement for Nikon 1 to gain much higher market acceptability (at least in the near term). Include a built-in EVF and grip, improved ergonomics, a return to SD card(s), a common battery with Nikon DSLR’s, a global shutter for video shooters, and weather sealing and a V4/V5 body would meet the wishes of many folks looking for a small format camera. Add weather sealing to the existing CX 70-300 and launch a Nikon 1 CX 200-500mm super telephoto and a V4/V5 could be a very successful niche market camera that could command a price premium. This comment is only opinion of course as I have no access to product concept research.

          12) Agreed that Nikon has fumbled around considerably since it launched the Nikon 1 product line. I suppose the core issues is whether Nikon is prepared to ‘fix’ the line by offering better value for consumers, or damage the company’s reputation further by walking away. *shrugs* Who knows for sure…only Nikon senior execs I suppose. It may come down to company ego over profitability.

          13) Yup…both prefer smaller cameras as the mirror-less uptake rate is much higher than in North America.

          14) The future of the camera market certainly is a question mark. There doesn’t seem to be an accurate crystal ball available on-line to purchase…

          15) It certainly would be fascinating to compare the shutter counts of cameras around the world. I suppose as long as we buy cameras the manufacturers really don’t care how much we actually use them.

          16) Smartphones with effective zooms will likely take another bite out of the camera market. I’m also hopeful of Nikon addressing the issues associated with the Nikon 1 product line. I’m not 100% confident and I bought some additional V2 bodies (my favourite Nikon 1 model) to see me through the next 3 years or so. After that I may stop doing client video work and I’ll have to reconsider my photography needs at that time anyway.

          Been a pleasure, Thom!

          Tom

          1. > 1) I’m not sure how Smartphones entered into this particular thread

            They enter the thread because since 2009 I’ve been writing about what’s actually going to and now has happened and will continue to happen: as smartphones get progressively better in capability, they squeeze the low end of the market. Originally, that was mostly just the very bottom of the compact market. But we’re now at the stage where they squeeze out virtually all compacts with I suppose following that logic to its ultimate conclusion would mean that as soon as Smartphones have full frame sensors in them then cameras will disappear completely, just like buggy whips.

            No, not my point at all, and not what’s going to happen. What WILL happen is that we’re going to see smartphones with 2, 4, and maybe more sensors. In essence, this breaks them through two barriers: the randomness of photons and the use of only fixed lenses. I can’t really write much about what I see in labs, but trust me, smartphones are going to be wickedly good cameras soon. Remember, I spent most of my Silicon Valley career in positions trying to understand what the 5-10 year future looked like and then getting my companies there first. I’m still well connected to the R&D that is defining that.

            > The only age-related data I saw in the CIPA presentation was on the Japanese market.

            Very true, and emblematic of one of the camera companies’ weaknesses: the designers see their own market mostly. Any information they get from other markets comes mostly after the fact (things that sold versus things that didn’t).

            Is there such a thing as a “global camera” design or are their regional variances that should be taken into account as happens with autos? I believe the latter, but have no proof.

            > 4) Most camera companies have been scaling back production as overall demand in the camera market has continued to fall so Nikon’s cutbacks are a market reality for everyone.

            Actually, all those cutbacks generally are post mortem. The product didn’t sell like they thought, so next round they lower their expectations a bit and produce somewhat less. As I noted in my article, CIPA forecasts are self-fulfilling for the most part. The 3.5m mirrorless units being projected for 2016 are almost certainly already in the pipeline. They have to be for the Japanese companies to meet their future estimates of sales/revenue. That’s particularly true for Nikon, who is both exposed as a mostly camera company and the most shorted stock on the Nikkei. Any miss of their “estimates” will hurt them very, very badly. That’s one reason why we get so much material dumped into the gray market from them: to meet their estimates. Classic dumping.

            > I have no empirical data on Nikon’s production by model so I am unable to comment further.

            I have some, and it appears that in most of the world Nikon really cut back on Nikon 1. So much so that there isn’t a huge backlog of unsold product. Moreover, it appears that the factory that was making most of the Nikon 1 stuff has transitioned to other products now. This is classic phaseout.

            > 8) Price leaders with small market share can survive depending on how well they coordinate their marketing and operations strategies.

            “Survive” is different than “thrive.”

            > All we have to do is look at luxury car brands like Porche,

            Since you mention Porsche, there was a time not too long ago that they were marginal as a player in the auto industry. Rebranding the VW Toureg pretty much saved them. Indeed, the whole intertwining with VW is why they’re still around at all.

            Also, be careful with this metaphor. Many of those luxury brands are sub-components of the larger corporation (e.g. Lexus from Toyota). I actually wrote 10 years ago that I believe that Nikon needed to do the same thing: brand their pro gear differently than their mass market gear. Now it may be too late. The Nikon 1 fiasco shows that they couldn’t make a Scion work (and ironically, neither could Toyota as it turns out).

            > 10) Quantity sold is a separate issue from buyers seeing value in the selling price of any particular camera model.

            True. But quantity sold almost certainly is a primary parameter Nikon measures and looks at to see if they are doing the right product.

            > At this point in the marketplace DSLR’s will outsell any mirror-less competitor.

            Less so every year, unfortunately. The question is at what point do Canikon have to respond fully? I believe that point is when it hits 2:1 (2 DSLRs to every 1 mirrorless sold). The CIPA numbers for Jan/Feb hit that number.

            Why 2:1? Because at 3:1 Canikon’s 95%+ market share of the 3 overwhelms what anyone is doing in the 1. At 2:1 we get to the point where Sony is now half the size of Canon’s market share, which would be a historic high in the digital age, and continuing that trend of loss would be really bad for the #1 player. Nikon simply has to follow what Canon does or get passed by Sony. Getting passed by Sony would be really bad news for everything Nikon.

            > 11) We have a divergence of opinion on this one. I think a 16MP BSI sensor with 13EV+ of dynamic range, 23-bits+ of colour depth, and a low light rating of about 1,200 ISO would be a sufficient improvement for Nikon 1 to gain much higher market acceptability (at least in the near term).

            Yes and no on the divergence of opinion. I already posited that the only real way of moving forward with Nikon 1 would be to lower the pixel count and push the sensor tech forward. So we are in agreement with that. But we’re in disagreement about whether it will now work. And again, the problem is those darned DLs and RXs and Zs: whatever you do with a Nikon 1 sensor you can do with a DL/RX/Z sensor. Indeed, Sony has already done some of that with the latest RX.

            Thus, the problem revolves around one and only one thing: is it worth making an interchangeable lens camera with the same sensor(s) as the high-end compacts? The answer right now is no for Nikon, because once again (like DX), they did not fill out a full and useful lens lineup before they truly needed it.

            So in the corporate headquarters the conversation goes like this:
            “Can we save Nikon 1?”
            “Sure, push faster on the sensor, make more and better lenses.”
            “How much will that cost?”
            “A lot. And it might take resources off of other projects.”
            “Is it guaranteed to work?”
            “No.”

            QED. It’ s going to be incredibly difficult to ask for additional resources at a time when the company’s number one priority is cost cutting.

            I think that above conversation has already taken place and the part that comes after the “no” was “well, let’s quietly extract ourselves out of Nikon 1, then.”

            > Include a built-in EVF and grip, improved ergonomics, a return to SD card(s), a common battery with Nikon DSLR’s, a global shutter for video shooters, and weather sealing and a V4/V5 body would meet the wishes of many folks looking for a small format camera.

            Again, I don’t disagree with what the design has to be. The operative questions are: what would this camera cost, and how many people would pay that? I can only speculate on that, but given where Nikon’s been going, the answers seem to be >US$1000 and few.

            > 12) Agreed that Nikon has fumbled around considerably since it launched the Nikon 1 product line. I suppose the core issues is whether Nikon is prepared to ‘fix’ the line by offering better value for consumers, or damage the company’s reputation further by walking away.

            That is the core issue. But “fix” costs money that Nikon doesn’t have. And I doubt that Nikon seems walking away as damaging their reputation (or more accurately, they’ll self deny that it damages them in the way that Japanese generally don’t admit to failure).

            > 14) The future of the camera market certainly is a question mark. There doesn’t seem to be an accurate crystal ball available on-line to purchase…

            Actually, I’d tend to disagree. After all, this was exactly the focus of my PhD work. Within a reasonable error margin, it is absolutely possible to predict how new technologies get adopted and when they’ll peak. Indeed, within most tech companies you’ll find a group that not only is trying to predict those peaks, but try to figure out ways to micromanage more growth past the peak or less decline after the peak.

            I wrote in 2003 that the demand for DSLRs would peak sometime in 2011. I was off by a year at most (depends upon how you define “demand”; the Japanese used pricing to try to push the peak further out). How did I come up with that number? Household penetration numbers, basically, with a dose of historical data from film and some comparisons against other tech introductions.

            In 2010 I was in Tokyo warning about what was about to happen. About half the dozen Nikon executives that day were on my side, the other half in strong disagreement. It was clear to me that Nikon internally was debating the issues I was presenting. Indeed, I believe that was why they finally decided to let me do a full presentation to such a big group.

            Now, before people say I have a big ego (I do) and am just trumpeting my own horn, let me point out that I have been wrong in the past on some things I’ve done similar analysis for. But I’ve been right more often than not, and I know some others who do similar analysis and are right more often than me. Is the crystal ball absolutely accurate? No. As I noted: “within a margin of error.” But pretty much what I and others predicted would happen happened as we described.

            Ironically, I believe that there is still (very little) time to turn the camera decline around. But it involves a total rethink of the problem being solved. It’s not “capture the best possible image.” It’s “make the workflow simple and productive.” The real reason why smartphones stole the digital camera market is similar to the reason why Polaroid dramatically dented the film market: simplicity and directness. People ultimately want to share photos.

            > 15) It certainly would be fascinating to compare the shutter counts of cameras around the world. I suppose as long as we buy cameras the manufacturers really don’t care how much we actually use them.

            True, and that’s part of the problem. I’m pretty sure Apple cares how we use the iPhone. But the camera makers are still in the “sell another box” mentality for the most part.

            1. Hi Thom,

              I certainly have enjoyed the exchange of ideas over the past few days! My comments were made from data limited to recent CIPA statistics. Since you have additional information sources not available to me viewpoints will differ as a result. What Nikon decides to ultimately do will become clear in the next little while. Regardless of that decision my existing Nikon 1 gear will serve me well for a number of years to come. Thank you for taking the time to add to the discussion here. I’m sure readers have enjoyed being able to see additional perspectives! We may have also created some entertainment for them…

              Tom

              PS: My comment about ‘crystal ball’ was a small attempt at humour. Obviously there are all kinds of models that companies and various industry groups use to help predict the size of specific markets

          2. “I’m not sure how Smartphones entered into this particular thread ” – the elephant in the room!

            Unfortunately I think that the Nikon 1 line will go away. Nikon has been to erratic lately and I think they are in panic mode. A financially non-performing product line with few users will be just collateral dammage. There goes a sizable investment I made into the system (V3, J5, 70-300mm, 6.7 – 13mm, 32mm, 18.5mm, 30-110mm, 10-30mm, GPS, viewfinder, batteries – in all about 5k CAD). While probably I will hopefully still use the equipment for 2-3 more years, it is still a big hit for someone who does not make money out of it. It comes down to about 1k CAD/year “rent”.

            This may as well be the last straw for my move away from Nikon to Sony.

            1. Hi Dan,

              My initial article in my CIPA series brought cellphones ‘into the room’…so the elephant was already discussed but in a different article.

              I certainly understand your feelings about the investment you made in the Nikon 1 product line should Nikon pull the plug on it. After the V3 was introduced I had some concerns about Nikon’s design decisions so I decided to buy a couple of additional V2’s to backstop my entire system purchase. Like you, I’ve invested quite a bit in Nikon 1 gear for my business…3 V2’s, J4, WP-N3 waterproof housing, 3 10-30mm non-PD, 10-30mm PD, 10-100 PD, 10-100 non-PD, 6.7-13mm, 30-110mm, CX 70-300, 10mm, 18.5mm, 32mm, GPS, extra V2 batteries, ME-1 mic, multi-prt adapter, FT-1 adapter, ME-W1 wireless mic and Vello remote. Whether Nikon pulls the plug on the system or not will not impact my ability to service clients for probably the next 3 years or so.

              These are definitely interesting times in the camera market and as unit volumes keep softening there is no guarantee that anything we buy today from any manufacturer will be around in the future. This can cause us a lot of stress if we think about the downside too much, rather than just using and enjoying the gear we have!

              Tom

      3. There is one big problem here- what exactly does CX Nikon offer over m4/3rds? I say this because m43rds is much more supported, more richer in lens choice, better sensor performance and most importantly- there’s currently a *huge* overlap of “about same size” in lenses in a wide range of focal lengths between m43rds and Nikon 1.

        That “sweet standard zoom” so many want? There’s a complete equivalents in m43rds land at the same sizes.

        It’s not until you get to the 70-300 type lens that the Nikon 1 cx still keeps a size/range advantage. At that point how big is that market? And you are using a slow 70-300 lens which means the Nikon 1 sensor is pushed a bit hard once the sun starts to set.

        The buffer advantage is not what it used to be, with m43rds edging upwards in Fps and Panasonic pushing stills from video.

        It doesn’t seem logical to me at all that Nikon would push a system that is simply not selling well, with what the competitors are doing.

        1. Hi Ricardo,

          The 20.8MP BSI sensor in the J5 does close the image quality gap somewhat with M4/3. As far as lens selection goes, if that is the main purchase criteria for people then M4/3 wins hands down.

          *smiles* Business would certainly be easier if consumers all made decisions based on pure logic. Emotions do enter into purchase decisions a great deal and for some Nikon 1 owners they just enjoy shooting with the system and are willing to ‘shoot around’ its various challenges. I happen to be one of those folks and I’d be the first to admit that it may not be a ‘logical’ choice…although using Nikon 1 gear over my D800 and FX glass has made my client video work much more efficient. I do have a unique speciality in that I mainly produce industrial safety videos in often cramped quarters so my camera needs would certainly not be the norm.

          For some Nikon 1 owners it is simply an affinity for the system and how much they enjoy photography when they use it. For some of us the system has simply brought us back the joy of photography…

          Tom

          1. Hi again Tom, some comments-

            “The 20.8MP BSI sensor in the J5 does close the image quality gap somewhat with M4/3.”

            It closes it to what it should have been, but there’s still the sensor size gap. At that point, if the overall system size of both is pretty much the same in a wide range of focal lengths (the point I brought forward), why bother? Keep in mind also the new 20 MP m43rds sensor expands the gap again (though not by much).

            ” As far as lens selection goes, if that is the main purchase criteria for people then M4/3 wins hands down.”

            Well, isn’t this a key criteria of an ILC camera system? 🙂 Because if it isn’t, then why bother with an ILC camera system in the first place 🙂 Keep in mind I am willing to discard the multiple copies or not so great lenses of the m43rds lenses and keep the good ones. It’s still quite a wide support.

            As for system affinity and likes- certainly, if you like a system, go with it. That’s a very different point from market viability. If you are going to say that you and some group loves the Nikon 1 and want to shoot with it, that’s one thing and you get no argument from me on that (disclosure: I do own a J4 and J5 myself along with 4 Nikon 1 lenses- not sure if you remember).

            Every photographer should pick up whatever camera/camera system makes them want to shoot and/or satisfies their needs- again, no argument from me on that.

            But if the discussion is to talk about market viability of the system, continuation of it, that’s an entirely different point. And some logic enters there- at least the business logic.

            These are two different points.

            1. Hi Ricardo,

              Consumers developing an affinity for a product does contribute to its market viability, brand strength and directly impacts buying decisions…this is the emotional part of a sale. The impact of product affinity can be quantified through specifically targeted research.

              Market segmentation can be done along various product features, performance characteristics, usage rates, demographics and such…all of which are very traditional approaches.

              Market segmentation and related marketing can also be done using attitudinal leanings and emotions felt towards a product, or along personality traits, personal values, lifestyles etc. This approach is typically called psychographic segmentation and if done well can be much more powerful than using traditional approaches as it better enables a company to form an emotional bond with its customers.

              There are some standard psychographic segments originally developed by Young & Rubican called Cross Cultural Consumer Characterization that have been used by a range of companies typically engaged in consumer marketing. In addition, custom psychographic segments can be created by individual companies in any market by conducting proprietary research. For example, we used custom psychographic segmentation to grow very profitable market share in the commercial truck business taking the Freightliner brand in Canada from about 16% to over 27% in a 5 year period.

              Tom

              1. All of that is fine if theres a viable market, sizAble market of users for the Nikon 1 system that fisplays such characteristics.

                Does that sizable, big enough, profitBle market exists for the Nikon 1?

                No.

                Moreover- everything you said can. e used to explain movement out of the Nikon 1 system into Sony, Fuji, m43rds- or why the Nikon 1 doesnt seem to attract those customers.

                In a world of competent compelling options by the competiton affinity for that larticular system whose key advantages hVe been eroded significantly can only get you so far.

                1. Hi Ricardo,

                  No doubt Nikon did not do a good job with the marketing of the Nikon 1 system which certainly did not help things. We have differences of opinion on other issues…c’est la vie!

                  Tom

  10. Since sales of built-in lens cameras has been declining, it would be interesting to see the decline by type of such camera, the:

    •less than 6X zoom
    •6X to 10X zoom
    •10X to 20X zoom
    •more than 20X zoom

    mentioned near the beginning of this article.

    As a guess, the lower zoom range has declined more than the longer zoom range; and I would not be surprised to see an actual increase in the longer zoom range sales.

    WEJ

    1. Hi William,
      CIPA actually changed all of the zoom ranges for the built-in lens camera category from ‘up to 4X’, ‘4X to 10X’, ’10X or higher’ in 2013 to better align their reports with the realities of the market. I agree with you that we’ll see more longer zoom range built-in lens cameras.
      Tom

    2. Good analysis. Far from the hysteria offered by most other writers.

      One more insight here. The 35mm/small sensor composition graph may also be explained by purchase behavior between the more mature 35mm market and the emerging smaller-sensor market.

      In the emerging markets consumers begin with simple kits consisting of the standard medium zoom, then the long zoom, then followed by a fast standard-perspective prime. In the more established 35mm market many of the core lenses are already in the bag, so that consumer is more likely to expand their kit into more specialty lenses, including those primes.

      This is not to say the analysis is invalid. The market is there now. However in the future we may see more primes appear as small-sensor ILC owners expand their lens collections.

      I, too, had a long, successful career in the marketing arena. I’m liking the way you think here.

      Rick

      1. Hi Rick,

        Thanks for adding to the discussion. I agree that in many cases smaller sensor cameras from APC-S DLSR’s on down are often sold in kits…and that kit typically has an inexpensive zoom lens or two as part of the deal. That certainly would contribute to the higher incidence of zooms in the ‘under 35mm’ camera market.

        Unfortunately I don’t have access to any of the proprietary consumer research that the camera companies use for their product planning. I would love to better understand buying criteria by market segment and how companies segment the market.

        Tom

  11. Great article Tom a lot to chew on for sure. I wish that I could be a fly on the wall as we say, in Nikon HDQ, to see what the think through as they define the product roadmap.

    I have been vastly surprised by their actions in the past, the D500 decision blew me away, while I think a very smart move for them I just didn’t see that coming.

    The N1/DL thing is baffling for me as well. It will be interesting to see if they can bring success to the 1″ sensor line they wanted with the N1.

    It will be interesting to see what happens next.

    Mike

    1. Hi Mike,

      I would also love to be a fly on the wall at Nikon HQ!

      Formulating strategy has always been something that has fascinated me throughout the years, both on the corporate side of things when I used to contribute to the decision making process, as well as an an outside observer. At the end of the day market forces combined with internal capabilities are always the primary drivers for strategic decisions. It will be interesting to see what road Nikon takes on a lot of issues.

      The launch of the D500 didn’t surprise me at all. I actually stuck my neck out in one of my articles in 2015 and predicted that would happen in 2016. The tip off for me was the launch of a high priced DX-format zoom lens. Strategically that product move made no sense to me at all unless a pro-level DX camera was going to be released along with it.

      Tom

  12. Very interesting and well researched article. Personally I’m a DSLR user looking to downsize but keep with Nikon and retain maximum compatibility (i.e. flashes/menus etc) as opposed to what I guess is the majority on this forum (i.e. existing Nikon 1 users).

    For me the exciting part is that I see what is effectively a system of cameras that I can use for many varied occasions in the DL line whilst hanging onto (if I choose) my current DSLR. What Nikon seem to be missing is the fact that if I am happy with the output from a CX sensor I could well be in the market to expand to a “proper” ILC – that is a Nikon 1 camera with specialist lenses for specialist use.

    But for me to be interested in such, any new 1 camera would need to be compatible with both my DSLR and any new DL camera that I might purchase. And that, I think, is where Nikon went wrong with the 1 system. Adopting the 1 system as it is (for me) would have meant for all practical purposes losing the potential to have a proper CLS flash system which, with such a small sensor, is vital for low light work. The DLs seem to overcome this which is why I find their introduction a step (only one step mind you) in the right direction.

    But despite logical analyses such as this the future of CX will be determined by sales and Nikon’s interpretation of such. My best guess (only a guess) is that Nikon will drop the 1 series, go with DLs for CX and go for a DX mirrorless solution over the next few years keeping “proper” DSLRs for the full frame market.

    Interesting times,

    Regards, John.

    1. Hi John,

      Interesting times indeed!

      The more that I’ve been thinking about the DL series, the more I see it as a good solution for Nikon DSLR shooters. It allows them to use existing flashes etc. while providing pretty good image quality in a small format. Revamping the Nikon 1 line to use standard Speedlights would have caused other issues for Nikon in terms of making orphans of their existing Nikon 1 flashes and GPS unit. Strategically the DL series allows Nikon to meet the needs of DSLR users while freeing them up to do different things with the Nikon 1 product line in terms of the cross selling of more accessories. I think the FT-1 adapter was a ‘stop gap’ solution in an attempt to win over some existing DSLR users. I doubt that we’ll ever see an updated FT-1 as in many ways the DL series of cameras provides a different, and potentially better solution for DSLR owners.

      What Nikon ends up doing is anyone’s guess at this point. Based on comments that I’ve been reading from Nikon executives lately they do seem to realize that the Nikon 1 series has some strengths, especially with lenses like the CX 70-300 f/4.5-5.6. Strategically it would make sense to me if Nikon improved the Nikon 1 V-series with a lower megapixel BSI sensor…perhaps something in the 16MP range…with weather-sealing on the body. This should improve overall image quality in terms of dynamic range, colour depth and low light performance. If that sensor had about 13EV dynamic range, 23-bits or higher colour depth and a low light rating of 1200+ ISO it would hit a sweet spot for a lot of people. Then, if Nikon created a CX 200-500mm f/4.5-5.6 super telephoto lens with weather sealing they would really shake up part of the nature photography market.

      I agree that sales and profitability are always the ultimate decision-making factors when it comes to the life of any product line. It will be interesting to see how this all plays out.

      Tom

      1. What would have made sense in 2012 was to capitalize on the video strengths baked into the V1 (full sensor down sampled 1080, 10-100PD lens, nearly full resolution stills while capturing video, 1 second 4K RAW, etc), with clean 4K HDMI 1.4 out on the V2 and beat the GH4 to market by years, then maybe in camera 4K on the V3.

        A large portion of the high ASP/high margin mirrorless ILC video market captured by Panasonic and Sony would have gone to Nikon 1 instead.

        It’s not even terribly late for a video focused V4 if it could do 20+ mins of 4K RAW for around $2.5K. That would price it below the URSA Mini giving Nikon a strong entrant into the ILC video market.

        1. Hi Nigel,
          I agree that there is potential for a future V4/V5 to have much stronger video focus…especially if Nikon changed to a global shutter on a future V-series camera.
          Tom

  13. A very interesting and rational analysis. The big problem seems to me whether Nikon are similarly sensible – past evidence is not encouraging. 1in sensor seems to be growing in capability and popularity. Arguably it is now in the same (or better!) position in terms of capability that microfourthirds was 3 or 4 years ago – a smaller and lighter package (not only cameras, but lenses too), and IQ which is more than adequate for most purposes. Unfortunately Nikon have deliberately not exploited the potential as they seem to believe in cutting off their nose to spite their face (i.e., not compete with other models which have larger sensors). So what we need is a V4 with proper flash compatibility, fully articulated screen, built-in grip like the V2, sensible battery size (but PLEASE not yet another size!), 2 control wheels, and of course a proper EVF (I might have missed some of the features they seem to have DELIBERATELY left off previous models!). Surely most V3 owners use the add-on EVF and grip, and if only those had been part of the original design the camera would have been smaller, lighter and cheaper than it is with those ‘accessories’ added?

    Yes, the lens situation is a bit disappointing too (though read Thom Hogan’s thoughts on the Nikon APS lens range!), perhaps some primes would be useful too, though reasonable zoom lenses, just 3 covering a huge range is not to be sneezed at. Personally really I just wish we had the macro – I’m using the adapter and other lenses to fill the gap, but when travelling light this isn’t so good.

    Nikon were before their time with the 1 system, as were Olympus with the four thirds system, but Nikon could really have exploited this as an order winner (sorry for the use of terminology I used to use when I was a lecturer) as the technology has advanced, and they haven’t. Some people seem to be obsessed with FF or APS format, there are a substantial number of serious and rated photographers have have moved to microfourthirds, and Nikon could (have?) been the leader with the next leader with the 1 range.

    1. Hi Mike,

      I agree 100% with you that Nikon really made a lot of design mistakes with the V3 model. That combination of rather quirky design decisions ended up with me buying more V2’s for my business as I chose to skip the V3.

      Based on market data I think we will continue to see the majority of DSLR lens development in the full frame format – as long as those lenses can also be used by cropped sensor cameras. As the overall volumes in the camera market continue to contract I don’t think it would make economic sense for companies to produce a lot of primes for cropped sensor cameras. From a cost/benefit perspective focusing on lower cost FX glass gives companies like Nikon the best bang for their R&D dollars as they can meet the needs of their full frame customers while still giving cropped sensor owners some options. I think Nikon’s new line-up of full frame f/1.8 primes is a good example of that thinking.

      From the perspective of my own business if I wasn’t primarily doing video work I wouldn’t own any Nikon 1 primes at all. I guess that makes me a typical ‘less than 35mm’ customer!

      Tom

  14. If Nikon makes coming V4 a bit more video friendly ( what about global shutter) they will have a product with universal appeal for, say nature photo-filmers. It would be sad if Nikon fazed out 1.
    1 inch sensor is very good solution for both film and stills and there`s definitely place for camera with interchangeable lenses, especially the ones easy adaptable for film use.

    1. Hi Stanislaw,
      A global shutter would certainly be a great feature and I agree it would take the Nikon 1 system into very different territory indeed…especially if a future V-series had a lower MP BSI sensor with much better low light performance. Making the move to a global shutter with the Nikon 1 line would be a very strong move by Nikon.
      Tom

  15. Essentially agreeing with your conclusion, I’m not sure if it is a question of killing the line, more a question of whether people have faith Nikon will continue to support it in a meaningful way.

    It would help if Nikon started producing road maps for their lines as part of an improved marketing package. It can’t be that difficult, surely?

    1. Hi Mark,

      I think Nikon has made a number of strategic stumbles with the Nikon 1 product line. Any success that it has enjoyed has been more to do with users liking the system rather than effective Nikon marketing. Like you, I hope we soon see an updated strategic road map for the Nikon 1 product line. I think the only lens that has not yet been produced from the original road map is the dedicated macro. The future will be interesting…

      Tom

      1. Thank you for the detailed and informative analysis of these categories of cameras. As a Nikon 1 user, I was spared anxiety about this topic since I had not read the rumors, and am waiting for Nikon to market an updated camera body for the Nikon 1 series with a viewfinder. In your opinion, what is the likelihood of that happening soon?

        1. Hi Pam,
          Glad you enjoyed the article! I suppose I’m one of a minority of folks who believe that there will be an updated V-series camera. The earliest I think we’ll see this would be the fall of 2016.
          Tom

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