Is Nikon Going Out of Business?
There have always been those who claim the sky is falling. But there's no denying the camera industry has been undergoing a lot of change over the past few years, and Nikon has seen its share of financial difficulties. What should we make of all this?
Upon their introduction, 35mm single-lens reflex cameras became popular with photographers for their combination of quality and convenience. By half a century later, the modern smartphone established itself as a serious rival. While not yet able to match the image quality of the SLR, what could be more convenient than a camera we carry in our pockets? The shift started with Apple's introduction of the iPhone in 2008, and the trend only accelerated once Google's Android operating system began to take off. Many potential camera users find they no longer need a bulky SLR to photograph the events and things in their lives. Sales reports from Nikon, Canon, and others tell the tale. It hasn't been smooth sailing for any of them lately. Coupled with the worldwide economic slowdown hitting us all from COVID-19, the waters have been choppy indeed for the major camera brands.
Minolta's camera business was the first boat to capsize. Never in the same league as Nikon and Canon, Minolta did offer a wide range of cameras and lenses. My father used to be a Minolta shooter. But even with his loyalties, the company never had the market share to be truly competitive. In an attempt to solve their financial woes, they merged with Konica in 2003 to form Konica-Minolta. But three years later, Konica decided to drop the Minolta brand of cameras and keep the more profitable portions of the original company. Demonstrating their newfound common sense, they dropped the Konica line of film at the same time.
Canon is a much larger and more diversified company than Nikon. While they did report a net drop of around twelve percent in profit for the fiscal year just ending, they can afford the loss more than Nikon. And the overall digital camera market has lost roughly ten percent every year for the past decade, so Canon's losses aren't out of line. Also, Canon has done an excellent job of controlling costs. Remarkably, the company has seen an increase in profits for the year, even with the drop in revenue. In rough seas, bigger boats generally do fare better.
Upstart Sony took advantage of the situation and acquired much of the technology from Konica-Minolta and launched their Alpha line of DSLR in 2006, followed by the NEX (New Experience) mirrorless system in 2010. But they, too, have seen progressive losses since, in line with the general industry trend of around ten percent per year. Many analysts predict that the camera market other than smartphones simply won't be large enough to support so many players at some point. And that makes people nervous.
So, what of Nikon? By way of disclosure, I'm not a market analyst, nor do I play one on TV, so I don't plan to represent myself as one on the internet here. But here's what I do know.
Nikon's share of worldwide DSR sales stands at only around thirty percent compared to forty-five percent for Canon. That isn't an assessment of camera technology or quality. Indeed, the Nikon D850 consistently scores above any DSLR offerings from Canon. Being a larger company, Canon makes more different models than Nikon and can thus appeal to a broader customer base. And Canon has long been regarded as a better marketing company than Nikon. The saying goes that Nikon makes better cameras, but Canon makes better ads for cameras. Such wit doesn't help Nikon's profits, though.
Over the past year, Nikon has experienced dramatic losses, the largest in the company's long history. That much is clear from even a cursory reading of their financial disclosures. But much of it has been in the manufacture of semiconductor equipment, primarily to Intel. Still, losses from their imaging business are above industry average, owing mainly to their late entry into mirrorless. Nikon generally takes longer to engineer new products than Canon, but the results seem to justify the longer development times. The Nikon Z 7 image quality ranks higher than that of Canon's mirrorless offerings. Their advertising department is trying to get the word out, and only time will tell how successful they will be.
As much as the industry-wide decline in camera sales may seem alarming, but in a historical context, the picture is less clear. Current sales now compare roughly to where they were in the mid-eighties when everyone wasn't panicking. The difference now is that we've seen the stratospheric heights of camera sales driven by the mirrorless revolution rise and begin to fall and that there are more players in the market today than just Nikon and Canon. Today, there are more camera owners thanks to smartphones, but there's no doubt many of them would never have owned a camera at all had one not come with their phone. One can look at all this in any number of ways, but the dire predictions of Nikon going out of business are premature at best.
Naysayers and Canon trolls have been predicting the demise of Nikon for years. An April Fools announcement from 2019 caused some turmoil across the internet, declaring that Nikon was restructuring and leaving the camera market immediately. At least some users already worried by cries that the sky was falling didn't find it all that funny. It wasn't true then, nor is it true today. Nikon isn't going anywhere. At least I don't think so.