DSLR vs Mirrorless : Will Canon and Nikon survive?

Have you considered buying a new camera? The debate between choosing either a DSLR vs Mirrorless isn’t a new one, and we insist that you consider the current stagnancy of major DSLR players like Canon and Nikon and why brands like Sony and their A7 camera ought to be considered in the light of the evidence presented.

Winston Churchill mentioned that those who don’t learn from history will fail. In the past twelve to twenty-four months, the camera industry has seen dramatic changes, and will continue to see even more dramatic changes, not less. The emergence of the mirrorless systems has been a boon to companies propagating them like Fuji, Olympus and Sony, while half-baked attempts by Canon and Nikon on their take of the mirrorless system camera has been flawed and considered as a failure.

What does this mean? It means that just like systems of old which are gradually being superseded by newer systems. However, the guards of old will usually keep holding on to whatever they believe in, just as Nikon has released smaller versions of its DSLR. Smaller DSLRs still does not compete in size with mirrorless cameras, or do they?

Sony Mirrorless vs Nikon D800. Same sensor, but look at the difference in sizes and also, the price difference of $1000.
Sony Mirrorless vs Nikon D800. Same sensor, but look at the difference in sizes and also, the price difference of $1000.

The big question however, would be why would big companies like Canon and Nikon be worried about companies like Fuji, Olympus and Sony? After all, can Canon and Nikon lose to mirrorless systems, ever? Would companies as established like Canon and Nikon, who hold most of the marketshare in terms of interchangeable lens cameras and majority share in terms of professional photographers, like sports and wedding photographers, need to be worried about the emergence of mirrorless cameras?

DSLR vs Mirrorless: Rapid changes in the Photography Industry

If you have noticed the last few years, there has been a rapid shift in the camera industry. First and foremost, our prediction that the smart phone will overtake the average point and shoot camera as the convergence in devices happen and as sensors on the latest iPhone and Samsung Galaxy S smart phones keep improving, has been proven correct. Some of our friends, camera shops that used to sell up to RM 5 million (about USD 1.7 million) worth of cameras monthly, have seen sales drop by more than 80 to 90% within a year that we made that prediction. Add to the already low margins and increasing rental in Klang Valley, plus long-term contracts, we wonder how many of them could actually generate enough revenue to survive, what more to have a profit?

And with iPhone 6 coming in September, the latest iPhone might just be even better than the 30D or as good as the 5D Mark I (most probably it would be around the image quality of the 40D or at best, 60D.) After all, the Nokia Lumia 1020 already resolved as good as the D800 under daylight, as DPReview tested a series of smart phones, including the iPhone5s, Lumia 1020 and others against the last few generations of DSLR cameras.

Read more on our in-depth article about our early 2014 take of the Smart Phones vs DSLR and cameras, and the dramatic increase in terms of performance and quality of photographs on smartphones.

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Camera Malaysia : Why Aren't You Shooting?
iphone 4s improvements
you can see the dramatic improvements on the iPhone4s itself

Below are a series of shots from the website Evan the Electrical Engineer, as he compares the Nokia Lumia 1020 with the Nikon D800 with a 28mm lens.

Photo1_600_1020
Lumia 1020: 27mm f2.2 1/310 sec ISO 100
Photo1_600_D800
Nikon D800: 28mm f4.0 1/100 sec ISO 100

DSLR vs Mirrorless : Mirrorless gaining market share

While all these is going on, what is Canon and Nikon doing? While smart phones are snapping up the market for point and shoot cameras, mirrorless cameras such as the Sony A7R and Olympus OM-D EM-1 keeps pushing the boundaries and winning over professional photographers with their size, image quality and handling. Yes, perhaps they don’t shoot as many frames per second as the latest Canon 1D, but does that feature matter for majority of photographers?

OMDEM1-1240lens
The latest by Olympus this early 2014, the OM-D E-M1

The problem is, both Canon and Nikon failed to respond, save as mentioned earlier, trying to shrink the size of their DSLR. And yes, while they still hold 80% of all interchangeable lens camera sales, does that mean they are able to withstand the onslaught of the mirrorless cameras as they continue to take more market share in a depressed interchangeable lens market? Dramatic changes have happened overnight in many industries, including our beloved camera industry. After all, why are there so many kedai pemprosesan filem (film processing shops) with huge Fuji or Kodak logos, who end us photostating, selling watches, clothes and all else, except stick to what they were doing previously?

With Nikon shares dropping by 33% by 2013, operating profits dropping by 48.2% (Reuters) and total sales of DSLR dropping by 10.9% (or more, depending on who you are reading from. Nikon’s website posted a 15% drop in terms of DSLR sales.) All these while mirrorless cameras shipped a total of 20% of total camera sales worldwide and it is increasing.

mirrorless marketshare

The issue is, Canon and Nikon have not really put in enough effort on the mirrorless market front. Perhaps they are worried that having a strong mirrorless camera will cannibalise their existing marketshare. Perhaps they have been too comfortable and don’t see the threats as of yet.

Canon launched their mirrorless system, the EOS M, four years after Olympus started the bandwagon rolling. When the EOS M didn’t sell too well (why should it, with such a weak offering?), Canon cut back on it’s promotion and the new EOS M2 isn’t available outside of Japan right now as of writing.

All these while Panasonic is releasing it’s umpteenth camera, the Panasonic GH4 that offers features not available in DSLRs, including 4k video and others. While it’s true that Olympus and Panasonic have lost money on mirrorless systems and only Sony been doing well, nevertheless, with Olympus, Fuji and Panasonic all heading towards the more premium and higher margin camera models, they might start going back to black and take more market share from the already ailing DSLR market.

While many naysayers are saying that having an 80% marketshare and a tight grip on the professional lens line up would mean continued dominance for Canon and Nikon, we here at TechGarage beg to differ. After all, disruptor technologies have always taken the market off established technologies.

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The Fall Of The Digital SLR Camera

After all, how many would have predicted that digital cameras would have caused film cameras, film drop off sites, mini labs and kiosks to be all but dead? Read a snippet here from New York Times back in 2007 about the trends. “With the prevalence of digital cameras, to continue to do film processing where demand has continued to decline just wasn’t feasible,” said Robert Keane, a spokesman for Stop & Shop, which discontinued film processing services at all 300 of its stores throughout the Northeast on Sept. 15.

Many film rolls.
Many film rolls.

 

DSLR vs Mirrorless : Another Kodak in the making?

And we’re sure many of us have heard of the once iconic Kodak Eastman brand. Once one of the most widely used film in cameras, Kodak Eastman ignored the warning flags for years until they finally lost it. But it didn’t begin in a day. It was a long process, and hugely ignored by Kodak, who was convinced that the American consumers will never abandon it’s brand though Fuji entered the American market with lower-priced film and supplies (Wikipedia, The Economist)

And reading Wikipedia, you can find certain shocking hints about Kodak’s arrogance and pride. Here’s another one. Kodak passed on the opportunity to become the official film of the 1984 Los Angeles Olympics; Fuji won these sponsorship rights, which gave them a permanent foothold in the marketplace.

Fuji gained a marketshare of film rolls in the United States that grew from 10% to 17% in 1997 in a matter of years. And Kodak’s financial results for the year ending December 1997 showed that company’s revenues dropped from $15.97 billion in 1996 to $14.36 billion in 1997, a fall of more than 10%; their net earnings went from $1.29 billion to just $5 million for the same period. 

Bear in mind that in 1997, digital cameras haven’t made its mark on the photography world. (The Nikon D1 was only launched in 1999, had 2.7 megapixels and cost $5,500.00) But Kodak’s profit had dropped all the way to only $5 million only. But did Kodak worry? No, not really. They dithered on strategies, while hoping that their dominance in film would pay off.  The Economist wrote it well in their 2012 article on why Kodak failed while Fuji thrived. 

Fujifilm, too, saw omens of digital doom as early as the 1980s. It developed a three-pronged strategy: to squeeze as much money out of the film business as possible, to prepare for the switch to digital and to develop new business lines.

Both firms realised that digital photography itself would not be very profitable. “Wise businesspeople concluded that it was best not to hurry to switch from making 70 cents on the dollar on film to maybe five cents at most in digital,” says Mr Matteson. But both firms had to adapt; Kodak was slower.

And while Kodak had developed a digital camera in 1975, they never sought to focus much on it, partly due to the higher margins of film rolls and the fear of damaging their own market, but also discounting that digital cameras would one day be mainstream and not being able to diversify to something different, unlike Fuji.

READ
Five Reasons The Camera Lost Its Mojo

all four brands

Does the scenario sound familiar to whatever Canon and Nikon is facing? While mirrorless cameras and smart phones continue gaining marketshare, and Nikon continue to revise their sales targets due to not meeting them and overall DSLR sales continue to tumble. In our opinion, Canon and Nikon need to revise their product line up and strategies.

If they continue to ignore smart phones and mirrorless cameras, they would do so to their peril, and might just end up the way of Kodak. After all, the average consumer isn’t asking for a faster AF or a wider lens, but easy integration with Facebook and Twitter, of a lighter but easy to carry camera that helps them capture the moment. In this case, looking and thinking the way Steve Jobs did might just save them and help them generate relevant products.

After all, it’s not about being the first, but fulfilling the needs of the consumer. Just like how the iPod wasn’t the first MP3 player, nor was the iPhone the first smart phone, but they went about revolutionising the entire industry. We have written our thoughts on what Canon and Nikon could learn from Apple here, some time back.

DSLR vs Mirrorless : The Conclusion

We like how LensRentals.com have summed it up and therefore will add their conclusion below

History suggests two things pretty strongly. The first is that when change comes, people invested in the status quo (that would be us photographers when discussing the photography market) have a strong desire to deny it. Things have never been better. There is no need for change. And this is a stupid change that nobody would ever want. Well, nobody who is serious about photography would want it.

The second thing history suggests is that there’s no correct way to guess which companies are going to thrive and which will fail during a time of disruption. If being first were a huge advantage, we’d all be shooting Minolta digital SLRs. If being the biggest or most profitable were a huge advantage, we’d all be shooting Kodak or Polaroid. Sometimes biggest is really a disadvantage. As they say, it takes a long time to turn a battleship.

While Canon and Nikon have a customer lock-in effect due to their selection of lenses, don’t expect it to continue unabatedly. As competition gains ground, the oligopoly of camera industry by Canon and Nikon could and would continue being eroded. We definitely want to see the DSLR industry come out of its slump due to our background, but if it could not, don’t say we haven’t sounded the warning bells.

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