« on: April 21, 2011, 06:07:40 PM »
We all like to see the system that we have invested a wad of our cash in is doing well, but we should taper some of our wildest rejoicing with the understanding that this all boils down to long term profitablity. Just because Nikon has a lower share of the overall market doesn't necessarily mean that they are doing badly. I agree with a lot of the previous posters that point out Nikon's strength in the mid to high end of the market; I would be willing to bet that here the split is not nearly so great.
Nikon have traditionally concentrated on the mid to high end over the entry level range, but Canon's 'entry level' market share is increasingly being targeted by them; the much improved specs of the D3100 and D5100 over their predecessors (albeit following Canon's lead) and the (mis-)announcement of the AF-S 50mm f/1.8G demonstrate this growing commitment. "Rebel" buyers are the mass market for DSLRs and success here is great for Canon, but profit margins are lower on these cameras. On top of this, I speculate that a higher proportion of these users don't go on to buy a great deal of other camera kit, either because they're happy with what a basic camera kit provides, or because they don't take up photography as a pastime (or profession). So aggressively marketing to the low end doesn't necessarily generate high profitability.
Profitable companies have the resources to spend the large amounts of money on R&D that it takes to stay at the leading edge of the pack and just look at some of the companies that are struggling to see what happens if you don't (Olympus, Pentax, Fuji). The danger for Canon in my mind is the lack of any kind of market leading innovation (you know, like the all electronic camera, EF mount, in-lens motors, USM motors, IS etc.) -and don't anyone mention video because Nikon got there first with the D90!
This is where the danger from Sony comes in; they are a much bigger company that Canon and can divert resources from elsewhere if they decide to invest in gaining camera market share. Sony have the money to throw mud at the wall to see what sticks, Canon probably don't, but at the moment they seem incapable of taking any risks. OK, you can argue that it is easier to take risks when you're behind rather than the market leader, but capitalist theory teaches us that profit is the reward for taking risks and holding back can lose you first mover advantage.
I believe that Canon (and Nikon) are in a dangerous position, they have products that are still attractive and a large installed user base, but this is a mature market and DSLR sales are now a cash cow. Things may be looking quite rosey at the moment, but I'm worried that they are not well placed psychologically for any disruptive technological breakthrough.