During the week there was a long interview held with the presidents of Nikon with the website dpreview.com. During the interview there was questions asked about what the company are worried about and what they see happening in different markets in the future. Interestingly, the company admitted that they needed to address the growing interest in image sharing between cameras and mobile devices like smart phones to remain competitive at the lower end of the market.
“Smart phones are an opportunity. We used to think they were a threat when they first emerged but now we think that having good affinity with smart phones is a great opportunity, hence our latest camera having features such as built in wi-fi.”
Nikon are a huge brand with high market shares in almost all camera segments. For a big brand to suggest there needs to be innovation to align cameras with smart phone in some way, you can bet you're bottom dollar that there is a team sitting in the back room of Nikons R&D working away furiously at new concepts for this segment. If Nikon are seen to make a big push towards developing an affinity with smart phones, it would be a big game changer in the market and would push other manufacturers to respond similarity or risk losing business.
At the time of writing, a fairly big rumor has swept across the industry suggesting that Canon has internally been looking at closing the doors on it's low end CSC (compact system camera) development. In Japanese business reports and newspapers, it has bee revealed that people inside Canon are activly discussing the decision, with plans suggesting that an exit from the sub $200 end of the market would be compensated for by investing more into super zoom units and DSLRs. Nikkan Kogyo quoted employees from Canon saying the internal development of these cameras is already slowing down and will eventually stop, with emphasis being placed instead on products which have a greater differentiation from smart phone.
This is big news regardless of its validity or not. Even if Canon don't exit the market, the mere fact that business insiders are considering it speaks volumes about their confidence in combating the smart phone market as it eats into compact camera sales. With drawal from the low end CSC market would be a dramatic move from Canon. To me, withdrawal comes across as a last resort option, thus suggesting that their R&D teams aren't confident they can come up with a radical enough solution that can buy back the market.
Finally, a big bit of news which was revealed during CP+ was that the CSC segment of the market has suffered 30% drop in sales... in a single year. It's a colossal drop. No wonder Canon and Nikon are so worried! Forecasts aren't set to improve either, as it looks like the tide is irretrievably turning on the compact camera market. Continued development in camera modules within smart phones are stealing the low end users, while previous potential compact buyers now believe they need to invest in a DSLR to see a noticeable improvement their smart phone (a completely wrong assumption, but something that has been caused by marketing. For example the Nokia phone with a 40 mega pixel sensor makes other compact cameras look terrible on paper, but in reality, the size of the sensors and the pixel pitch mean the 40mpx phone sensor would probably be out-resolved by a modest 14mpx compact sensor).
The above chart is from Olympus showing a very dull outlook for the low end market. Assuming most companies have similar predictions, the rumours from Canon suddenly look very legitimate. A business staring at these forecasts would want to move their money from compacts and into DSLRs for sure. This is all proof that at the low end of the market, if businesses want to stay successful, they need a radical change of thinking and a new approach to dealing with smart phones.
