Nikon DL dead in the water?

Many people have been wondering what’s happening with the Nikon DL product line. After being announced in February of 2016 the DLs have been rumoured to have run into some kind of quality or production issue, which has postponed their availability. This issue has been dragging on for a while now. Looking at recent CIPA data (October 2016) has me beginning to wonder if the Nikon DL line may be dead in the water due to changes in market conditions.

Let’s have a quick look at some recent CIPA statistics.

The chart above shows the relative sizes of the fixed lens and interchangeable lens (ILC) camera markets as a percentage of the entire market. As you can see the fixed lens camera market was about 70% of the total market until the end of 2014, then it began to show some softening. This modest erosion continued to the end of 2015, then has accelerated during 2016. This appears to coincide with the additional emphasis that Smartphone manufacturers have been putting on photo quality during the past 18 months or so with their new products.

For the past 6 months in 2016 the fixed lens camera market has been 50% or less of the total market. This accelerated rate of decline of the fixed lens camera market has me wondering if Nikon is re-thinking the viability of the DL product line, or at least portions of it.

Let’s have a look at unit volumes by camera type to examine this a bit closer.

The blue bars in the chart above represent the number of fixed lens cameras shipped each month as compared to ILC cameras which are represented by the red bars. You can see a very dramatic and clear erosion in fixed lens unit volume over the past few years. On the right hand side of the chart you will see that the ILC market has actually been larger in terms of unit sales than the fixed lens market for the latter part of 2016.

The question in my mind is whether it still makes sense for Nikon to launch three fixed lens, premium cameras in a market segment that seems to be eroding very quickly for the past couple of years with no signs of a turnaround.

I have no idea how long it takes Nikon to develop a product but if we assume that 18 to 24 months is a reasonable amount of time it would appear that the DL line could have been given the green light to proceed in early 2014 when the fixed lens camera market volumes were considerably higher than they are today. If it takes Nikon longer than 18-24 months the fixed lens camera market would have looked even more attractive in 2013 or 2012.

By the time the DLs were announced to the public in February 2016 the fixed lens camera market was already in a free fall.

Nikon, like any manufacturer, would have made predictions on the size of the target market, their anticipated unit sales, per unit contribution margin, as well as their market share objectives in its product planning.

A critical consideration in all of this would have been the company’s anticipated break-even point in terms of how many cameras they would need to sell to cover their fixed costs, let alone make any profit.

With the huge decrease in the size of the fixed lens camera market during the past two and a half years it is quite conceivable that Nikon may be facing a very tough decision about whether to continue with the DL series or not. With the fixed lens camera market unit volume now less than half of what it was was only 2 1/2 years ago the viability of the DL product line, or at least portions of it, may be in jeopardy.

Who knows…perhaps the relative stability of the ILC market is one of the reasons that the Nikon 1 product line is continuing.

All of this is pure speculation on my part of course. For all I know the DLs may be relaunched in February or later on in 2017. It does seem odd to me that Nikon would have missed the important 2016 holiday season sales. Making the cameras available in October 2016 as was announced would have allowed the company to capture some of those holiday season sales. It also seems odd to to me that a company with Nikon’s engineering expertise would take so long to fix a technical issue with the DLs. Perhaps all of this stalling is simply Nikon’s way of buying some time to assess the fixed lens camera market.

All any of us can do is wait to see what happens. For my part I wouldn’t be the least bit surprised if the 18-50 and 24-85 models quietly disappear and only the 24-500 actually makes it to market in 2017. But, that’s just my two cents worth.

Given the drop off of the fixed lens camera market, if Nikon does follow through and actually bring all three DL models to market it will demonstrate some aggressiveness on their part.

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9 thoughts on “Nikon DL dead in the water?”

  1. It seems to me that mirrorless cameras like the N1 last longer, which may contribute to the decline in sales. Recently I looked at an auction site for Canon 5d and was shocked how many defect bodies were offered. Even an intact 5d with 70,000 clicks on it would cost considerably less than a new body. In the N1 world, such worries are less relevant. Few defect N1 cameras appear on the auction sites. Good for consumers, but Nikon may suffer.

    1. Hi Stefan,
      I’m not sure whether mirrorless camera bodies last longer or not. When I was in New Zealand one of beloved V2 bodies died. I’m taking it in to Nikon Canada today to see if it can be repaired. The Nikon 1 product line would be considered as a part of the interchangeable lens camera market whereas the DLs would be in the fixed lens camera market segment. Sales volume in the fixed lens market has been eroding quite rapidly the past couple of years while that of the interchangeable lens camera market have been more stable.
      Tom

  2. Hi Tom,

    interesting Article, thanks for it. I was waiting for the DL 24-500 since i read the announcement then, in the meantime
    i purchased the Sony RX10 III, why Sony is able to bring such Fixed Lens Cams to Market? I’m still wait for the DL 18-50mm but I dont believe it will make it to market soon. Sadly because i really like to have a “Ultrawide” in my Pocket. Lets see what 2017 brings.

    Michael

    1. Hi Michael,
      I’m wondering whether Nikon ‘can’t’ bring the DLs to market from a technical standpoint or if they are holding off waiting to see what happens to the fixed lens camera market in terms of continued volume erosion. As the CIPA data indicates unit volumes in this segment are down by more than half over the past few years. Makes me wonder if Nikon is unsure whether they can sell a sufficient number of units to cover their fixed costs on the DLs.
      Tom

    1. Hi Joni,
      Yes, things do change! I’m sure large companies like Nikon, Canon, Sony etc. do a lot of market research to try to determine consumer buying trends and plan their strategies accordingly.
      Tom

  3. Tom,
    Are you sure the Nikon 1 product line is continuing? I’ve my doubts. That question aside, it would be interesting to see the sales figures for ILCs with one inch sensors, micro 4/3rd sensors, APS-C sensors, and full-frame? Where is the growth in ILC sensor categories? Is there growth in any of these categories? Has there been a significant drop off in any one of them?
    Bill Johnston, Jr.

    1. Hi Bill,

      All I can go on are a number of comments given by Nikon executives this fall pertaining to the Nikon 1 product line and the consistent indications that they have made that Nikon 1 is continuing. Apparently sales of the J5 have been going quite well and the J-series is now viewed as the main Nikon 1 model. Whether we’ll see an updated V-series remains to be seen. Unfortunately the CIPA data I found does not separate cameras based on sensor size so I cannot tell which segments are growing/shrinking within the ILC market.

      The market for ILC units is also declining in 2016 albeit at a much slower rate than that of fixed lens cameras, so the importance of the ILC market is increasing as a result. I’m hoping to take a look at year-end 2016 CIPA data early next year and potentially write an article to follow up on earlier ones that I have posted.

      Tom

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