The Empire Strikes Back - How 5Ds fits Canon's plan for a DSLR turnaround

[Maiaibing]

Canon is finally acting on their deep DSLR sales troubles and have initiated a declared turn around by looking more at what buyers want. The high megapix cameras are the first steps in regaining Canon's lost ground. Equally exciting is the promise to "comprehensively" improve image quality.

But there is more. Because for once Canon has actually said a lot about how they see their market position, what's hurting their DSLR sales and what they intend to do about it (once again they have to note a double digit collapse y/y - this year by a staggering 17%).

This has naturally lead Canon Camera division to make some heavy soul searching - also trying to explain to owners and board what they intend to do about this.

So here is the story as Canon sees it:

The problem:

2014 DSLR sales down 17% after they originally announced the ambition to have flat sales through 2013/2014.

___

The analysis:

Factors entry users considered important at the time of purchase (Based on a survey conducted by a third party firm)

Top Priority Factors
•High image quality/High resolution

Factors Increasing in Priority
•Improvement in auto focus, speed, etc.
•Usability
•Size and weight
•Wireless communication

___

The turn around:

Products
•Launch new DSLR and Mirrorless cameras
•Enhance lineup of interchangeable-lenses
•Strengthen network affinity (Ex. Connect Station)

Marketing
•Expand photography workshops
•New users
•Users looking to upgrade to next level
•Rollout tailored marketing strategies that effectively reach targeted customers

*) Note: hope Canon does not think Connect Station is the networking we want to see...

___

The details:

"Demand for interchangeable-lens digital cameras continued to face harsh conditions due to the economic slowdown."

"...although sales volume of interchangeable-lens digital cameras declined owing to the shrinking market—in Japan as a result of the reaction following the rush in demand prior to the consumption tax increase, and in Europe and other markets due to worsening economic conditions—the advanced-amateur-model EOS 7D Mark II achieved healthy growth, enabling Canon to maintain the market’s top share."

"demand for interchangeable-lens digital cameras is expected to recover gradually"

"For cameras, efforts will be made to comprehensively raise aspects such as image-quality, visual expression, and operability. At the same time, Canon will work to further strengthen the network capabilities of these products."

___

My notes from the conference call:

Plan to introduce more DSLR camera models than previous years to stimulate additional demand in this segment.

Contributing factors to the double digit sales drop aside from weak market:

1. Heavy camera inventory stock in beginning of 2014. Difficult to reduce because of severe price competition. Have tried to keep prices up in spite of this.
2. Also last year Canon only introduced one new DSLR model which was not enough to stimulate demand.
3. Technological innovation was driven by pixel count competition. User needs have at the same time diversified.

These factors account for our double digit decline in units sales.

Still some bright spots such as healthy 7DII sales. Giving Canon confidence that innovative products can stimulate demand.
___


Interesting times ahead!

 

[Eagle Eye]

This sounds like a real cracker jack conference call where no one from Canon was actually involved. Introduce more cameras than last year? Let's see, they introduced two cameras last year and two SLRs are about to be announced, so it's a little late for that discussion. Obviously a Rebel is going to arrive. Addressing factors that contributed to lower sales, apart from the market? Umm... there were no factors. Canon maintained its hegemony in dSLRs even as sales across the board constricted.

 

[DarkKnightNine]

Really Canon?
You needed to hire a third party research firm to discover all of that.
Hell, you could just read this forum for free to find out that and much more. SMH :

 

[Maiaibing]

This sounds like a real cracker jack conference call where no one from Canon was actually involved. (...)?

Umm... there were no factors. Canon maintained its hegemony in dSLRs even as sales across the board constricted.

You must have missed what I wrote.

Every single word above was said and presented by Canon's top executive during the last earnings call. And believe me: Every word he said during the conference has been very, very carefully vetted by managers, accountants and laywers to be 100% acurate

I suggest that in stead of believing what you would like to be true visit Canon's home page to look at and listen to the presentation. Its obvious that he during the call recognises that the difficult market is only one of several factors leading to the dramatic drop in their DSLR sales. In fact he does not focus on the market situation during the call itself talking more about what Canon needs to do to strike back - esspecially when it comes to offering a high pixel count camera.

 

[gsealy]

It's very interesting to get a glimpse of marketing strategy especially in view of challenging conditions. Canon is a big time company and they are not stupid. It seems to me that the new products that are coming out are targeted at specific market segments and are specialized tools for specific applications. This falls into their strategy of offering more products as mentioned in the original post.

 

[bmpress]

There is another factor here, and that is the cameras in the hands of amateurs and professionals are...good enough. We are at the point where only incremental benefits may be achieved. So at this time, nobody really needs to upgrade anything. This is indeed a mature market in the strict sense, and sales will continue to go down, and down. Life is tough. The glory days are over.

On the other hand, if some company could figure out how to make an equivalent DSLR that weighs less than a half pound, including L lenses...tada! sales will really go up.

 

[ChristopherMarkPerez]

I think you're correct. I would add that mobile phones/selfies/social-media have had a HUGE impact on traditional camera manufacturing, as had the shift from making images for images sake to sharing images as a personal experience. I'm thinking of the billions of low-quality images that are shared every day around the planet.

To me, the first one to figure out how to network a small light high quality imaging system will be around a few years more to continue to sell their products. This, after ALL the pro-photogs have been set out by the curb by the big media houses and there's no one with deep deep pockets left to buy up all that great pro-level super-heavy brick-sized DSLR gear.

Hmmm.... hold on... I think Sony and Samsung may well have done just that.

May we live in interesting times.

There is another factor here, and that is the cameras in the hands of amateurs and professionals are...good enough. We are at the point where only incremental benefits may be achieved. So at this time, nobody really needs to upgrade anything. This is indeed a mature market in the strict sense, and sales will continue to go down, and down. Life is tough. The glory days are over.

On the other hand, if some company could figure out how to make an equivalent DSLR that weighs less than a half pound, including L lenses...tada! sales will really go up.

 

[Maiaibing]

...the shift from making images for images sake to sharing images as a personal experience. I'm thinking of the billions of low-quality images that are shared every day around the planet.

Good point. Being a more proficient blogger would certainly do more for my 10 mio.+/Y viewer count than trying to increase my picture iq - not that there's any room for improvement here... ;D

 

[agierke]

i wont challenge the points being offered up through the conference call but i will contest the notion that introducing new higher megapixel cameras will do anything but be a temporary salve in a declining market.

how will a mega resolution camera which essentially fulfills only small niche needs and likely come at a high end price thus being out of reach to a majority do anything to change the nature of today's market? canon might experience a relatively brief reprieve in declining sales but will end up in exactly the same place it stands today...which is a position it shares with all camera companies.

the market is simply oversaturated and expendable income is still becoming increasingly difficult to find for your average consumer. i expect that we are seeing a natural return to consumption models closer to what they might of been in the film days where investment in gear wasnt a 2-3 year turnover but rather several more years over that.

on a personal level, i simply have no interest upgrading every 2-3 years for anything. not my cameras, not my lenses, not my computer, or my software, or even my phone. i'm sick of all of it to be honest....i'm upgrade fatigued. i have a few spots that i still feel will significantly benefit from an upgrade but after i take care of those i intend to stretch that investment well past the 5+ year mark for cameras, phone and computer and 10+ years for lenses.

this will be the challenge camera makers will face. the past 15 years was an anomaly brought on by a radical change in how we did things. digital grew fast and we all raced to keep up. i welcome the maturation of digital and with it a much slower product cycle.

in no way what so ever will the introduction of these 2 cameras or anything else canon (or any other camera company) introduces the rest of the year will change the nature of what the market is now.

 

[Loswr]

i wont challenge the points being offered up through the conference call but i will contest the notion that introducing new higher megapixel cameras will do anything but be a temporary salve in a declining market.

Canon's idea of a high megapixel camera isn't much higher than the 41 MP cell phone camera that came out two years ago.....

 

[Bruce Photography]

Really Canon?
You needed to hire a third party research firm to discover all of that.
Hell, you could just read this forum for free to find out that and much more. SMH :

+1. I like it.

 

[zim]

on a personal level, i simply have no interest upgrading every 2-3 years for anything. not my cameras, not my lenses, not my computer, or my software, or even my phone. i'm sick of all of it to be honest....i'm upgrade fatigued. i have a few spots that i still feel will significantly benefit from an upgrade but after i take care of those i intend to stretch that investment well past the 5+ year mark for cameras, phone and computer and 10+ years for lenses.

You and me both! especially phones the upgrade cycle on these things are simply ridiculous. Remember the 10 year F1 promise? DSLR tech has got to that point, shareholders haven't.

 

[crashpc]

i wont challenge the points being offered up through the conference call but i will contest the notion that introducing new higher megapixel cameras will do anything but be a temporary salve in a declining market.

Canon's idea of a high megapixel camera isn't much higher than the 41 MP cell phone camera that came out two years ago.....

Well, it would have higher resolution even at 41Mpx compared to 41Mpx Nokia phone, not to say about AF speed, general speed, burst speed and duration, and so on...

 

[old-pr-pix]

At their peak, SLR shipments hit 4.4 million/yr. They grew to that volume due to introduction of electronics over a several year period (sometimes led by Canon)--intelligent metering, autofocus, "Program" mode, etc. Each evolution made cameras easier for the common person to use and get good results. Plus mini-labs on every corner made seeing those results more efficient and rapid. Then digital hit the scene with the advantage of near zero operating cost - no film, no processing, no printing - and further steps in ease of use. Growth was fantastic as those who were hooked bought each progressively more sophisticated generation - faster auto-focus, more MP, better metering, instant "chimping" results. Now the market is more mature, Many users struggle to understand how added features make upgrading worthwhile. Plus, they realize that smartphones are often good enough and even faster to distribute their results -- write off any low end P/S sales. Average viewing times for photographs must be about 2 seconds. Hard to justify expensive gear for 2 second viewing.

Add to the mix the superzooms and users don't really need several lenses to cover a huge FL range. CIPA data shows the average user has 1.6 lenses. (Probably not a CR Forum member!)

Look for stable shipment levels to drop from 14-15 million in 2014 (DSLR + MILC) to more like 10-12 million in the next couple years. Fixed lens, superzoom cameras may cut that even more. MILC shipments have been fairly stable, it's the DSLR's that are taking most of the hit.

At some point smartphones will hit a similar scenario. The technology S-curve and market maturity are very predictable.

 

[Maiaibing]

Really Canon?
You needed to hire a third party research firm to discover all of that.
Hell, you could just read this forum for free to find out that and much more. SMH :

The reason they use a study is that Canon does not want to take any responsibility for this research being "true". Its an investor call - everything needs to be 100% accurate or they may suffer financially.

 

[jeffa4444]

The long-term SLR / DSLR sales average per annum is 8.8M globally. The market peaked in 2011 at 16.8M. If factors like global population growth, global wealth are taken into consideration the average moves to somewhere between 10 - 12M but certainly not over 16M. Worst still high end / high value cameras account for a small percentage of overall sales (the ratio of Rebels to non-Rebel) although this number is more stable.

The iPhone generation represent an "opportunity" but they need to be convinced that there is life after uploading to Facebook, Snapchat or Flickr.

 

[mkabi]

My thoughts:
As per the "Analysis" which is looking at "Factors entry users considered..."
The keyword being entry users, not longtime users, enthusiasts, prosumers and/or professionals.

-High image quality/High resolution
From what perspective? From our colored perspective? i.e. anything better than the usual 18/20MP and 11 stops of DR. But from entry level perspective... anything better than their cell phones and/or P&S.
A rebel with a fast prime should be more than sufficient to do that...

-Auto Focus, speed, etc.
From what perspective? From our colored perspective? i.e. anything better than 11/19 AF pts and 8fps?
Do entry level people even know what that even means, coming from a cell phone/P&S camera background?
May be those that are well informed, did their research and/or those that know an enthusiast, prosumer and/or a professional photog... else...

Now, I will whole-heartedly agree that most people look at usabilty, size, weight and connectivity...
But see how they ignore "price" in a period of "economic slowdown."

Forgot to add that no matter what, the market is saturated even amongst the entry level peeps. If only 3% of DSLR owners buy something other than the kit lens, chances are they don't find the need to have something better than their current DSLR. So no matter what new camera they pump out there... the other 97% of DSLR owners is not going to upgrade either.

 

[Maiaibing]

Now the market is more mature, Many users struggle to understand how added features make upgrading worthwhile. Plus, they realize that smartphones are often good enough and even faster to distribute their results -- write off any low end P/S sales. Average viewing times for photographs must be about 2 seconds. Hard to justify expensive gear for 2 second viewing.
(...)
At some point smartphones will hit a similar scenario. The technology S-curve and market maturity are very predictable.

Lots of challenges for sure.

However. DSLRs are already and will remain a very niche market. 14 mio. units for X billions of people is not a lot.

That niche can grow if the camera companies understand to nurture it. One thing I know they are looking at is new high-end buyers from emerging market countries as income levels grow. Especially China (like everyone else these days).

This is also where Canon's marketing strategy may come in e.g. their idea to have active user groups etc. Make it an "experience" to own a DSLR. You go to Hawaii with your 5Ds and Canon will offer you a select nature shot adventure tour with a pro.

They should think Apple and find new ways to tie in their customers. Propriety lenses was one way to do that and it works. But it will not change anything as its already used. And as we know a glorified picture site will not work. (You do all remember Canon recently launched a dedicated picture site for all of us - uhh no?? Sorry I forgot the name. Maybe you can google it?).

 

[c.d.embrey]

Canon may get more DSLR sales from emerging markets, but it won't be enough to overcome the decline in their present markets. Non-phone camera sales will continue to decline. And camera phones will continue to get better.

 

[Stu_bert]

Canon may get more DSLR sales from emerging markets, but it won't be enough to overcome the decline in their present markets. Non-phone camera sales will continue to decline. And camera phones will continue to get better.

but I think as has been said that they're different markets. The P&S users, which did bring a lot of revenue to the camera makers have now gone to smartphones. I'm sure most people on this forum use theirs similarly, and only when they want to do more, will they turn to more capable devices.

And to follow up on a point made earlier, I still have a iphone 4 and changed from the ipad 2 to the mini retina because the size is more convenient. There's nothing compelling to make me change until either of them breaks.

Tom Hogan (bythom.com) believes that much of the problem is the lack of understanding around the workflow. I think this is some of the story, but only part. I concur that for many people, the quality of their phones exceeds their criteria. It captures the moment, does it well, and is always with them.

I can understand that the Canon are focusing on what the enthusiasts and above want, and targeting specific sectors with specific bodies, although they need to be careful as forcing people to have too multiple bodies may backfire. On the one hand, I think a modular system would be good, allowing you to make incremental upgrades for less cash, but on the other I think what would be the cost of the "body" and what part of it would stay static enough ie does modular not work as you have to replace almost everything except for the lcd, batteries and the lens mount?

The differentiators which attracts me to a mirrorless or dslr will i think separate the smartphone users from the camera users, and I dont think there is huge opportunity to change that - maybe I'm not being innovative enough, but I cant see anything which compels the average user to want to carry a second device, just to capture a snap of a moment.

I think Canon should focus on those that want to do more with photography - I think the step change from a smartphone to a mirrorless or dslr is too great, both cost & complexity and if they want to capture these users, they have to focus their efforts better

- Ease of use - there is an order of magnitude difference. The smartphone user doesnt want to understand AV/TV/Camera shake, aperture. To attract them we need to change the terminology and way of selecting it. What they want is a system that guides them, and allows them to take better pictures. Auto ISO should be beefed up based on the lens, the light, and what they're shooting for instance. They should be shown styles of photos and the camera sets it based on this (and Im thinking better than the simple picture modes). We love learning that stuff, I'm not sure they do. Make it easier so they can take some better shots and I think it would help.

- workflow as Tom says, is indeed part of that. Break them gradually into getting their pictures into a format which they can share. Dont force them to have to buy lightroom to get the best. But I dont think the workflow needs to be for the Pros ie with sophisticated "batch features". Time saving is important, but I dont think the workflow will be complex, it just needs to work reliably and simply.

- lighter. If they're gonna use it, with either a built in lens or an add-on lens, then it's gotta be not much larger / cumbersome than the 5" smartphones. Given what a smartphone can do in the size it is, how much would it be to come out with a device of a similar dimension (perhaps not such a big screen), but with features like a zoom lens, image stabilisation, a better flash and better controls?

Bottom line, I dont think it has to be an order of magnitude better than a smartphone, i think if it could do the more (ie it is tailored for photography, with a decent AF), can integrate with their phone for workflow then they might stand a chance. Smartphone manufacturers will add these features in future, camera makers I think could beat them to the punch.

In parallel, they need to focus on what would indeed make photographers happier. It would be interesting to know what would make people upgrade their bodies, change their lenses. And if there's not enough in that, then maybe Canon needs an SW ecosystem which offers another revenue stream, so you can do more with your current body until you're prepared to upgrade or it dies. Again, I think they need to be careful that for the users with only "1.6 lenses", as they're more likely to swap brands when it comes around to replacing their body than those more invested in lenses. Maybe that ecosystem could be the stickiness, and it doesnt just have to be Canon doing it, other ISVs would help.

Finally, I think they need to listen to both Pro's and Consumers. I think having something in the camera which helps monitor what you're doing and how you're doing it would help provide feedback. I think more surveys and more dialogue on what they find would be useful, but only if they did something with the information. Of course there's a risk that people would not be balanced with their feedback and then get disillusioned even if they were completely unreasonable.

I think they do need to show more what cameras can do, and how it can be as easy in the camera as it is with the software on their smartphone. But don't compete in the facebook pic space, smartphones have won that. Compete where they cant and get that message out there. Show the comparisons, show what smartphones cant do. I think reducing ignorance and having something to offer akin to a "smartphone" size device but with more features might slow down the rot. Especially if costs less than the smartphones do

Just my 2c