Orphan Camera System Risks

From time to time I receive emails or phone calls at the office, or comments on this website, in which readers express some concerns about their camera system being discontinued. Orphan camera system risks exist, and they are the subject of this article. I’d like to thank one of our readers, Allan Crook, for a recent comment which was a bit of a creative spark for this article.

I suppose when many people think about a camera system that they think may be discontinued, Nikon 1 is often one that comes to mind. Rather than go there right away, let’s have a look at some other potential ‘orphan camera systems’ first.

Panasonic is an interesting one to consider. In March, the company announced a major restructuring and rumours immediately surfaced that the camera division was being ‘disbanded’. As could be expected, Panasonic immediately tried to squash any rumour that the camera business was being dismantled. Instead, Panasonic confirmed that all consumer electronics were being put under one division. The company would not comment on whether any head-count reduction was in the cards for the camera division.

It is interesting to note that Bloomberg/Gadfly reported that Panasonic now makes more money from auto parts than home appliances. Apparently if broken out on its own, Panasonic’s auto parts business would be a ‘Top 10’ car parts supplier.

Having a look at Panasonic’s Fiscal 2018 Management Policy document seems to confirm quite a bit of emphasis on the auto parts business. While there is no specific mention of Panasonic’s camera business, the consumer electronics division appears to be classified as a ‘stable-growth business’. White goods (i.e. appliances) are mentioned prominently when the company discusses the consumer electronics business so it really is unclear how much emphasis Panasonic intends to place on the camera business. Since ‘low-profitable business’ was cited as having a need for ‘improvement of management structure’, one could deduce that cameras were already classified as low profit, hence its consolidation under the consumer electronics division.

It is quite clear from the Panasonic document that capital investments will be flowing into the company’s auto parts division, “From now on, our investment will be focused mainly on automotive battery as a capital expenditure”.

Everyone can make their own assessment what all of this means for Panasonic’s camera business. It certainly doesn’t sound like a ringing endorsement that Panasonic’s camera business will be continuing for a long time into the future to me. But, that’s just my take on it. I think there is a reasonable possibility that Panasonic owners could have an ‘orphan camera system’ in the foreseeable future.

Olympus is another interesting brand to consider. In its 2016 Annual Report, Olympus had its overview of its imaging division at the end of the report covered in only 2 pages in the 50 page report.

The 2017 forecast shows the Imaging Division with another operating loss. A turnaround is targeted in the 2021/3 time frame…quite a few years away. The 2017 loss follows a loss in 2016. On a positive note the 2016 loss was reduced from the loss of 11,710 million Yen incurred in 2015.

An interesting quote from the Imaging Business section, “…we will advance the selection and concentration of target regions for sales in response to the contraction in the market in order to transition to a cost structure that supports ongoing income generation”. Hmm…that sounds like potentially transitioning from being a player in the global camera market, to focusing on regions instead.

Mirror-less cameras are seeing volume growth thus far in 2017, mainly due to an expansion of the market in Asia. It is difficult to assess the longer term commitment of Olympus to its camera business. Perhaps it will survive and be focused on larger, growing markets such as Asia. Could Olympus exit the North American market and leave its current users owning an orphan camera system? I suppose that is possible.

The big feeling that I got from the Olympus Annual Report was that it is fundamentally a Medical Business company, showing both revenue and profit growth coming from that main business area. Over 77% of Olympus sales are from its Medical Business, compared with 9.9% from the Imaging Business.

The lion’s share of Olympus profits also come from the Medical Business with 140,220 million Yen, compared to 8,482 million Yen for the Scientific Solutions Business, and a loss of 2,064 million Yen for the Imaging Business.

Again, you can look at the 2016 Annual Report for yourself and come to your own conclusion. Could owners of Olympus camera gear end up with an ‘orphan camera system’? Possibly, especially if you are located in the Americas where the mirror-less camera market is relatively small compared to Asia and Europe.

What about Pentax? Another interesting brand to ponder. Its parent company, Ricoh, is primarily in the printer/copier business…not cameras. The new CEO has indicated that the company will focus on growth areas of its printing business, and expand into segments such as thermal in-line printing, 3D printing and bio printing. Apparently Ricoh is looking to expand its printing technology beyond commercial and industrial markets.

Some old news and rumours courtesy of the Nikkei Asian Review indicated that Ricoh may walk away from the camera market, putting the future of the Pentax brand in question. As seen with initial Panasonic rumours, Ricoh has denied that it is intending to leave the camera market. It was a bit odd that all Ricoh stated in a recent press release in April, was that the article saying that Ricoh was considering to shrink its camera business and withdraw from consumer products, was “not based on RICOH’s official announcement“. Depending on how you choose to interpret that statement, it could potentially mean that Pentax could go…but its not just official yet.

So, what is the future of Pentax? I don’t think anyone really knows for sure. What is known is that Ricoh purchased Pentax from Hoya in 2011 for a reported $124 million. I doubt that Ricoh could simply walk away from the camera market and write off that level of investment without a serious attempt at making Pentax profitable. Could owners of Pentax camera gear end up with an orphan camera system if Ricoh can’t generate a profit with Pentax? It is possible, especially since Ricoh is fundamentally a copier and printer company.

That brings us to the brand that so many people seem to love to hate, Nikon 1. Is Nikon 1 going to be discontinued? Only Nikon executives know the answer to that question for sure.

Unlike Ricoh, Olympus and Panasonic, Nikon is fundamentally a camera company so its focus is different than the three competitors mentioned.

What we do know from CIPA statistics is that the interchangeable lens camera market has been more resilient than the fixed lens camera market. We also know that the shipments of mirror-less cameras in terms of actual unit volumes has shown an increase thus far in 2017, and that the shipments of interchangeable lenses are also showing some signs of a potential increase in units this year. So, strategically it doesn’t make much sense for Nikon to cancel a product line like Nikon 1 that is in a stable and/or growing product segments.

We all heard the rampant rumours (assumptions?) that the Nikon DL Series of cameras would replace Nikon 1. I felt a bit like a voice in the wilderness when I wrote an article expressing my opinion that the rumour/assumption didn’t make any sense to me from a strategic perspective. Well…the DLs never saw the light of day, and Nikon 1 is still standing…at least right now.

No doubt Nikon is having financial challenges. As a result it announced a corporate restructuring and a shift in its overall strategy to one based on increased profitability in a shrinking market. That was indicated to be focusing more on higher value products and additional differentiation. We are beginning to see what that means on the DSLR side of the product line with the D7500. Great camera specs, but some ‘takeaways’ in terms of features (single card slot for example). A few readers have told me that the overall build of the D7500 is more like a D5XXX Series camera. In Canada a D7500 is going for $1,700 compared to $1,330 for a D7200.

Significant price increases on new camera models is not restricted to Nikon of course. Panasonic and Olympus have taken similar decisions with their pricing on new camera bodies.

I think the future of Nikon 1 really boils down to two simple words: contribution margin.

If Nikon can sell its various Nikon 1 camera bodies and lenses and generate enough revenue to more than cover its variable cost of manufacture, then Nikon 1 will be around for many years to come. As long as the product line can generate a positive contribution margin it will help offset some of Nikon’s fixed costs. In that context, Nikon 1 would make a positive financial contribution to Nikon. At the end of the day, that is fundamentally why any company creates, builds and markets products…to make money.

For many typical Nikon 1 buyers Nikon would not need to spend much R&D money on developing new lenses, other than perhaps a dedicated macro. A couple of Nikon 1 zoom lenses would meet the needs of the majority of casual photographers. Bodies would only need to be updated every couple of years or so. So, the majority of cost for the Nikon 1 product line has already been incurred. Why wouldn’t Nikon keep it around, as long as it generates positive contribution margin?

Let’s assume that the worst actually does happen and Nikon 1 goes away, as does Panasonic, Olympus and Pentax. Will the world stop? Of course not. All of those people who own those cameras will still be able to create images for quite likely many years to come.

Sure, some folks will panic and dump their Nikon 1, Panasonic, Olympus and Pentax gear. That just creates an opportunity for owners of those brands to buy an additional body or two, and some lenses, to extend the life of their camera system at bargain basement prices.

If we take the emotion out of potentially owning an orphan camera system…there really isn’t much to actually worry about. Especially if you pick up some additional gear at fire sale prices.

My intent is to keep this photography blog advertising free. If you enjoyed this article and/or my website and would like to make a modest $10 donation through PayPal to support my work it would be most appreciated. You can use the Donate button below. Larger donations can be made to tom@tomstirr.com through PayPal.

You can also support my efforts when you purchase anything from B&H by using the Thomas Stirr affiliate link. Even the smallest purchases will help support this web site. You can use the link provided to check out the weekly deals at B&H.

As a reminder to our Canadian readers, you can get a special 5% discount when ordering Tamron or Rokinon lenses and other products directly from the Amplis Store by using promotion code AMPLIS52018TS.

Article Copyright 2017 Thomas Stirr. All rights reserved. No use, duplication or adaptation of any kind is allowed without written consent. While we do allow some pre-authorized links to our site from folks like Nikon Canada and Mirrorlessons.com, if you see this article reproduced anywhere else it is an unauthorized and illegal use. Posting comments on offending web sites and calling out individuals who steal intellectual property is always appreciated!

17 thoughts on “Orphan Camera System Risks”

  1. I’m also waiting for a new Nikon 1 body. If it not come and it shows that it’s abandon,do you think all investment I have done in the system will become worthless? I have bought the J5 with lens kit, 18 1.8, 70-300, 10 2.8 30-110 an the 6.7-13. all my photo interested friends say that I should buy the Sony a5100 that has much better iso as by dxomark and is on sale in Sweden for on 3500 sell w lens kit. What do you think, is it a good decision and try to sell all N1 gear and go for Sony instead?

    1. Hi Anders,

      Whether you decide to switch systems or not is really a personal choice. You’ll need to assess your equipment needs, then determine if moving over to Sony will give you more capability than your current gear. It is possible that that selling your Nikon 1 while it is still a ‘current’ system may result in getting a bit more money for it. You have some nice lenses that other Nikon 1 owners would likely have a good level of interest in.

      I don’t think that the Nikon 1 system will be discontinued in the near future…but that is only my opinion. If it does disappear I have no intention to switch to another manufacturer’s system. My Nikon 1 gear is simply the best suited to my specific needs, and I’ll just keep on shooting with it for quite a few more years to come. I’ve ‘future proofed’ my system to a certain extent by adding bodies to extend its overall usable life.

      Before moving over to another brand like Sony, I’d suggest you borrow gear from one of your friends and actually shoot with it for a while to give it a good test. Then, spend some time processing some RAW files. It’s one thing to look at specs and listen to the opinion of friends, and quite another to use some camera gear to learn if you actually like using it. I bought a Panasonic GH4 and a couple of ‘pro’ Panasonic zooms – mainly based on rave reviews I had read. Within a couple of weeks it became obvious that I had made a mistake and returned all of the gear for a small restocking charge. I simply didn’t like using it and found the RAW files somewhat erratic. I also missed the speed and accuracy of the Nikon 1 auto-focus system. If I would have borrowed or rented the Panasonic gear initially, I would have never made the purchase.

      There’s no doubt that the larger sensor in the Sony A5100 will outperform the 1″ BSI sensor in the J5. If you shoot a lot in low light this may be really important to you and switching may make sense. Whether the Sony system will give you the same available focal length lenses as Nikon 1 is something to consider. As is the cost of replacing all of your Nikon 1 glass.

      At the end of the day the only camera that becomes ‘worthless’ is the one that we no longer use.

      Tom

  2. I bought my J5 a bit more than half a year ago, aware that Nikon might discontinue it. I was worried (and still am) that if discontinued, I might have trouble in the future repairing it if faulty, or getting a new lens. However it was the perfect camera for me, and I must say I have enjoyed it a lot. I wanted a fun camera (And for me “fun” is fiddling with manual controls, different lenses, extension tubes, taking very different pictures from nature, to fireworks or street photography, and carry my camera everywhere), and this blog reassured me that it has more than enough quality to take stunning pictures. I just think about the film camera of my father, which was usually loaded with a ISO100 film and took nice pictures with it, and now I have in my hands a camera that goes easily to 3200 (and even 12800 if needed). Obviously there is more than ISO, but you get my point.

    Mirrorless cameras have some advantages over DSLRs such as they can be more compact, are better for video and have an EVF (which some people like better than OVF). And there is certain demand for a FX-mount mirrorless to take advantage of the lenses people already have on video, but such camera will be as big as usual DSLRs. However, Nikon 1 is the perfect system to take advantage of the compactness of mirrorless cameras. From my point of view, Nikon should keep its 1 system, as it is in a very different market segment than the rest of their cameras (P&S or DSLRs), and they already have a very good product on their hands.

    My perception is that most of the hate for the Nikon 1 system stems from the bitterness that Nikon did not make the camera that some other people wanted; and it will disappear once Nikon introduces a mirrorless full frame (Which probably they should do, no matter what they do with Nikon 1).

    If the system is discontinued, I will keep using it for the years to come, and enjoy my camera while it lasts. I simply preferred to go for the camera I wanted to use, rather than worry about something which will only have consequences in the future when I hope to have gotten more from the camera than my money’s worth.

    1. Hi Antonio,
      I’m glad to hear that you are having fun with your J5 and that the camera is meeting your expectations! I used to shoot my client video work with APS-C and then full frame Nikon DSLRs. I switched over to the Nikon 1 system for my video work and I couldn’t be happier, as it allows me to be about 30% more efficient when on-site with a client.
      Tom

  3. Tom, I think that very few people can work as well with the Nikon 1 system as you do. You seem to have perfected a “magic” way of processing your files to create stunning images.

    Almost all tech will eventually be orphaned. Remember when portable phones first started (bag phones)? Now look at current cell phones. I still use a flip phone (I personally prefer them to the iPhone style), but I also understand that eventually it may be impossible to get flip phones anymore. I will stay with that style of tech till they pry it from my cold dead hands (or it becomes no longer available) because it simply works for me.

    More examples could be mentioned, but I will instead quote an old favorite of mine: “If it ain’t broke, don’t fix it.” Meaning, in this case, as long as the tech you are using works for you, don’t panic, and continue to enjoy it. Like Tom does with his Nikon 1s; go and make some images that you can enjoy and share with others.

    1. Hi William,
      Thanks for adding to the discussion and reminding us that “almost all tech will eventually be orphaned”. That’s an important point that puts things into a broader perspective.
      Tom

  4. Hi Tom
    As Joni said, interesting article. With all that craze over internet with Nikon bashing and singing endless praise over mirrorless, mostly Olympus and Fuji, I too got GASed a bit and started to look at those. But it was very short look. Prices of bodies only are too high, much higher than e.g. D3xxx or D5xxx and I don’t think they are better cameras, let alone systems.
    What Nikon does and does not is not always stupid, as some internet gurus would like to make us believe. Why should Nikon do every (photo) submarket? Leica, Hasselblad, Porsche, etc. do not try it.
    Why should Nikon try to become as big as Canon? Sometimes it seems, the relative smallness is beeing used as a proof, that Nikon makes silly mistakes. Every man, every company makes a mistake occasionally (or more often), so what. They can be corrected. The new aim to concentrate on profits seems perfectly OK to me.
    Why should their D3xxx- or D5xxx-cameras have nearly all the features of D7xxxx or Dxxx or Dx and still cost less? The “public” outcry about the missing second slot in D7500 (and a couple of other features) seem petty and a bit greedy, at least to me. Added features are being taken for granted.
    It seems to me further, that to bash Nikon is somehow fashionable these days. I do not see that much negative stories about e.g. Canon and others. Even Thom Hogan has seen it fit to write two “Stop complaining” articles…
    It is true, as a Nikon1 user I was interested in an DL camera with normal zoom too, but “only” as an “always with me camera”. This way my Nikon1 gear would stay complete in its dedicated shoulder bag. No problem, V3 with 10-30 can do it too (I was lucky to get an additional body on eBay 🙂 )
    I hope, your “prophecies” come true and think that your calm, knowledgable and insightful voice is an asset in internet.
    Keep up your work and site!
    Robert

    1. Hi Robert,

      Thanks for adding to the discussion with your comment! You raised a very good point about how brands like Leica can be successful with a focused differentiation strategy. Bigger isn’t necessarily better, and there’s no need for camera companies to try to be all things to all people. While I originally stumbled on the Nikon 1 system, over time I’ve come to appreciate its unique characteristics. In many ways I think Nikon was quite brilliant in coming up with the Nikon 1 concept. Some folks get too caught up in sensor size and as a result just ‘don’t get it’ when it comes to Nikon 1 advantages. I’ve shot with full frame and APS-C Nikon gear in the past, and even had a brief flirtation using M4/3. Nothing meets my specific needs as well as Nikon 1 and I have no interest in going back to one of those other formats.

      I often feel that if people spent more time actually using their camera gear, rather than bash brands incessantly (or each other for that matter) they would rediscover how much fun they can have actually creating images!

      Tom

      1. Hi Tom
        Food for thought: Who knows? Maybe we (Nikon et.al. included) are going to a situation similar to sixties/seventies in the old film days: From big to really small: Canon, Nikon, Minolta, Asahi (Pentax), Fuji, Olympus, etc. Market positions fairly stable with Nikon in the lead with regard to professionals (sport-/reporters). Then comes the first disturbance (=autofocus): Nikon stays with their F-mount despite technical difficulties, Canon changes the mount and wins the race for sports. Lesser names stay where they are. Growth is modest, film cameras are beiing made for lifetime, innovations (e.g. said autofocus) dont’t happen often.
        With digital and “new philosophy” two big disturbances arrive at the same time: Fast pace of technology and worldwide strive for growth. Camera makers produce new cameras e.g. every two years, customers buy them, because every two years the cameras get really much better. Suddenly, there is much higher turnover in bodies than ever before, accompanied with the belief it is normal and has to stay that way forever (growth has to be sustained at all costs, otherwise the company is judged as failed). Reaching today’s level of sensor quality, naturally markets approach saturation and the sales have to come down. So perhaps those high numbers in sales were only a temporary “disturbance”? Nikon’s goal to concentrate on high(er) endproducts (why fight smartphones if you can’t win?) could be the first step on our way to the state before digital (photo)revolution began. If so, they did quite well, because they more or less have kept their rank. Of course, next Problem (disturbance) is already here: Nikon and mirrorless…
        I hope my english is understandable enough 🙂
        Robert

        1. Hi Robert,
          I don’t think Nikon will be able to ignore larger sensor mirrorless camera development. At some point the shift in market preference will force Nikon’s hand. We’ll all just have to wait and see what Nikon does.
          Tom

      2. Hello Tom, I see my comment (wherever they are on your site has caused a ‘stirr’ :)-. you did not mention samsung that junked the nx series , which has I believe a 1″ sensor.

        I now the big korean S has been preoccupied with the galaxy phone debacle, but reall, it looks to methat camera world is in a crisis. if Samsung does not think its nx category line is sustainable – profitable, no-one else is likely to either.

        fewer brands, mean less competition, maybe less innovation.
        if consumer choice is limited to brands which make their own image sensors(due to development $ investment needed), it would be sad. a really good V4/5, along the lines you suggest, would make the Nikon 1 category shine, imo.I recently took some images of lake maggiore during the evening ‘golden hour’, the nikon colour fidelity won through, recording the subtle pink sky perfectly. the matrix metering when used withe sb.n5 flash is great too, handling complex mixed ambient light – fill flash admirably. thngs like this , exceptional qualities in a compact camera make mewant to do more photography, keep my N1 equipment.Allan.

        1. Hi Allan,
          Thanks for adding to the discussion! It’s difficult to find any information on Samsung on the web these days, and since the brand seems to have quietly (and unofficially?) left the camera business I didn’t bother to mention the brand in my article.
          Tom

  5. The idea of making cameras and lenses in different color schemes is odd to me. Sales and marketing types probably know best.

    I like my Nikon 1 J5 in silver well enough and better than the other colors but really would prefer something more discrete.

    1. Hi Paul,
      I suppose some marketing folks somewhere came up with the idea that different colour schemes may appeal to various demographic segments…perhaps they had some consumer research to back up that decision. Black or silver works fine for me. Both of my J5s are silver.
      Tom

    1. Thanks for your comment Joni! Companies do change over time and attempting to anticipate what they may do strategically is always an interesting exercise. One of the things that I found of particular interest when writing this article was learning about Panasonic’s planned investments in automotive battery technology. It says a lot about how quickly the shift away from internal combustion engines in automobiles may happen.
      Tom

Leave a Reply

Your email address will not be published. Required fields are marked *