Get Ready for Less Selection and Higher Prices

For the first nine months last year the camera market was showing some signs of modest growth. This led to some optimism that the worst was over and that the camera makers could begin to move forward with some market stability on the horizon. Over the past 5 months this trend has stalled and now some signs of camera market erosion are once again evident. Should this negative trend continue it appears prudent that we should prepare ourselves for less selection and higher prices when it comes to camera gear.

Rather than inundate readers with charts and graphs about the camera market I thought I’d provide you with some links to statistics prepared by the Camera & Imaging Products Association. In my mind, to make better buying decisions, each of needs to have relevant information readily available.

Here is a link to statistics pertaining to fixed lens and interchangeable lens cameras. Those of you who would like to see information on interchangeable lenses can use this link.

Many of you will decide to use the links provided and take a look at the CIPA reports. When you do what you’ll discover are some interesting trends. For example, the shipments of fixed lens cameras have taken a serious hit for the first couple of months in 2018 i.e. down approximately 35% (January) and 45% (February) month-over-month when compared to 2017. This follows a trend of declining shipments of fixed lens cameras that began in October 2017. The cancellation of the DL series of cameras appears to have been a prudent decision by Nikon.

The interchangeable lens camera market is in comparatively better shape with more modest declines of 19.4% in January and a 5.4% decline in February. Shipments of interchangeable lenses were down 9.5% in January, then rebounded slightly with a 2% increase in February.

As the camera market continues to erode, it makes logical sense that camera manufacturers will need to make some tough decisions about their product portfolios. They will need to be focused on profitable models to ensure that they can generate contribution margin on everything that they sell. Marketing will need to become more efficient, as will inventory management. In the future it will be suicidal for a manufacturer to pump units out into the market, book initial profits, then have to blow out inventory at fire sale prices later on.

All of this could very well lead to models being quietly allowed to fade away without a newer generation replacement, or being cancelled outright. For example, we have seen the Nikon 1 AW model quietly disappear and the V3 now noted as discontinued with no replacement announced to date. In an article 18 months ago, Potential Price Shocks Ahead, I suggested the AW series would disappear and I put a question mark on the future of the V3.

Given the continued volume erosion of the camera market we will likely see more cost pressures on camera and lens manufacturers as their unit volumes contract. Quite simply they will need to sell each unit at a higher contribution margin in order to reach their break-even points on specific models as they sell fewer units. This will mean higher consumer prices and a potential reduction in the number of camera models offered by manufacturers.

In that article 18 months ago I made a prediction that, due to eroding market demand, camera manufacturers would need to raise their prices in order to generate sufficient contribution margin to remain profitable. We have seen some early examples of those price hikes with cameras like the Panasonic GH4 going from about $1,600 to $2,000 with the GH5 and the Olympus OM-D E-M1 going from $1,400 to $2,000 with its newer version. I see no logical reason why we should not expect this trend to continue with many manufacturers, and potentially accelerate moving forward.

Some manufacturers have announced initiatives to cut their fixed costs by closing manufacturing facilities. For example Nikon is closing a factory in China. This makes sense given camera market conditions and we may see additional consolidation by various manufacturers in the future.

We may also see more manufacturers try to more fully integrate their supply chains in an attempt to cut or reduce their reliance on components made by competitors.

The camera market press is also reporting on the prospects of both Nikon and Canon introducing new full frame mirrorless cameras, possibly as early as the back half of 2018. As these manufacturers make the move into more mirrorless products it will put added cost pressure on other existing products in their portfolios as some cannibalization of those existing unit volumes is likely.

All of these factors are weighing heavily on many photographers who are not sure what to do in terms of upgrading some of their gear or expanding their kit.

They are asking themselves all kinds of important questions: If I go full frame mirrorless with Nikon or Canon will I be able to use any of my existing lenses in some fashion? What will my existing gear be worth once those new cameras come out? Is it time to switch my system over to a different manufacturer and/or format? Should I stick with the camera system that I have now and ‘future proof’ it as best I can with some additional components? Should I look for good quality used gear to augment my system?

There is no right or wrong answer, as each photographer must evaluate their personal situation. I did that about 3 years ago when I decided to shoot exclusively with the Nikon 1 system, add some additional bodies/lenses to my Nikon 1 kit, and sell all of my full frame DSLR gear. What I currently have should keep me operating for the next 3-5 years. After that I’ll need to re-evaluate.

The only certainty that I see for the immediate future is that new camera gear will be getting more expensive. I also think it is very likely that we will see fewer camera models in the future. Like the famous scene in Indiana Jones and the Last Crusade, all each of us can try to do is “Choose wisely.”

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

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.

Article Copyright 2018 Thomas Stirr. All rights reserved. No use, duplication or adaptation of any kind is allowed without written consent. 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!

6 thoughts on “Get Ready for Less Selection and Higher Prices”

  1. Hello Tom
    Interesting reading. It is always refreshing to be able to read more than “we need new cameras with more and better features for less from companies which continuously grow” in times of such fundamental changes as the camera industry has found itself in.
    I think too, that there will be less, but better and more expensive cameras in future. I do not think that it is a new trend. It is only a returning move from one extreme to other, as usual. It is not so long, that a top digital Nikon was 8’500 (Swiss Francs), now it is “only” approx. 6’500. D850 is a bit more than D800e was, so yes, we are already on the move back to higher prices. On the other hand, I remember times, when Nikon F (or Hasselblad, Canon, Minolta, etc.) cost a hand and a half and that was normal. Recent (one should think more/longer than only two years) move of Nikon, Canon et al. to spheres of cheap cameras is rather new for me. In old film days really cheap cameras were mostly made by other companies. I do not know their names anymore, but I think to rmember Casio for instance. It would not surprise me, if specialist companies would stay only in the markets for high quality and specs products.
    What will be interesting to see, is what replaces cheap fixed lens cameras of old. Think of Brown Boxes. Will it really be smartphone? At the moment, this seems to be most probable, but I do not really know. I am no modern technician and have no idea as to where technology is heading.
    From this point of view I never was waiting, that “the worst” gets over, for me it was not “the worst”, just a momentary situation in times when it was not clear, where markets and technology are heading. In the end, Nikon, Canon, Olympus, etc. have a name and cannot be everywhere: In the pro market, in the mass market, in the photo industry, in printers, in electronics etc. They have to nurture their resources and funds. Just think of the increased need to produce new lenses every few years, because of IR, higher resolution, new formats etc. In the mentioned film days one had his lenses for a lifetime…
    So no bad times ahead: As soon as markets get clearer, Canikons can produce better cameras for customers, because they can see who the customers are and what they want.
    Your commentary on Nikon being prudent not to introduce the DL series shows very well the fault of those pundits (most of them), for whom it was a failure, yet another one. As the Zen Master says: “We shall see”.
    Take care, I am doing it right now in Tuscany with my V3 for “sketches” and my D850 for “serious work” 😉 Oh, how gladly I would have bought one or two DLs 😉

    1. Hello Robert,

      Thanks for taking the time to add your detailed comment to the discussion!

      Like you, I am not a ‘modern technician’ and I don’t know where camera technology is going. I don’t spend any time contemplating such things. It is sufficient for me to own and use gear that meets my specific needs right now and for the next few years into the future.

      Through all of the camera market’s ups and downs basic business fundamentals remain. Each of the manufacturers need to sell a specific volume of cameras, with a specific average contribution margin per unit to reach their break even point on a specific model. After that they can begin to be profitable. If they can’t achieve those sales volumes within those parameters, models disappear, and sometimes companies.

      As consumers we’ve been spoiled during the days of rampant growth in the digital camera market as manufacturers were able to take advantage of significant economies of scale to offer more and more models, with more and more features, for attractive prices. Those days ended in 2012 or so when the market began to turn.

      It will be interesting to see which camera brands survive over the few years. Lots of interesting questions are in my mind. Will Panasonic stay in the camera business at all given that they are putting almost all of their R&D funding into their biggest business segment which is auto parts. Will Olympus stay in the camera business when its primary business is medical technology. Will Pentax still be around when its parent company is primarily a printer/copier company which appears to focusing in on 3D printers and such.

      As your comment points out, “We shall see”.


      1. Hello Tom
        Sorry for being so detailed… But here in Italy I feel really well and when it gets dark I am sitting in our camper and have no other duties, only a glass of wine and time to spend.
        Asahi Pentax Spotmatic F: As a little boy, I regularly went to the shop to take a look at it. It cost then about three months pay of my father, so I had to take a job distibuting daily papers in the morning and at last to buy a russian slr. Very sturdy, one could drive nails into wood with it 😉 But it made pictures nevertheless.
        Bye, Robert

        1. Hi Robert,
          The is no reason whatsoever for you to apologize for the length of your comment and the details contained in it – we appreciate you taking the time to share your thoughts and experiences!

  2. “The only certainty that I see for the immediate future is that new camera gear will be getting more expensive. I also think it is very likely that we will see fewer camera models in the future.”…so apparently the camera market is becoming Leica? (just kidding)

Leave a Reply

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