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Camera makers see different futures

Comparing and contrasting the latest financial results from the big three camera makers, Canon, Sony and Nikon – and more so their predictions for the current year – provides an insight into their very differing attitudes towards the industry’s future. 

Looking at Canon’s first half results – January to June 2017; Sony’s first quarter results – April – June; and Nikon’s full year results – April ’16 – March ’17; tells a story of one company going ahead in leaps and bounds, the dominant player fighting to hold on to its market leadership in what it predicts to be a declining market, and the third seeing itself in troubled waters.

Nice figures: Sony Corp’s camera division made a significant contribution to an outstanding first quarter.

It’s perhaps the ‘forward-looking’ commentary to investors on future results which is more valuable than the raw figures themselves, which are, after all, history. 

The stand-out is Sony, which has just posted the best first quarter (April-June) result in its history, with its sensor and camera businesses major contributors. Operating profit rose almost three-fold in April-June to 157.61 billion yen (US$1.43 billion), exceeding the previous first-quarter record – set back in the ’90s – by about 30 percent, and beating analyst estimates by a similar degree.

Sony’s Semiconductor division – in which image sensors are the major product – posted a profit of 55.4 billion yen, a reverse of last year’s loss. The Imaging Products (cameras and lenses) business increased sales by 27 percent and profit by 209 percent. It’s worth noting that when Sony’s camera and imaging sensor businesses are combined, they represent the second largest revenue earner for Sony after the gaming business.

Due to the Kumamoto earthquakes, 2016 was a far more difficult year for the camera makers (and even more so for Sony’s sensor business) than otherwise would have been the case. Nikon’s results, which cover that period, are also and consequently the most disappointing. But even when looking towards the future, Nikon seems unnerved – judging by its comments to investors, it’s wracked by doubt and pessimism. It’s worried about competitors undercutting it; it’s worried about the decline in the market; it’s worried that investment in new technology won’t provide an return; and its worried about patent litigation. 

Second quarter 2017 results were just under second quarter 2016 results. Source: Canon Inc.

Toshizo Tanaka, Canon CFO, made the following comments to accompany Canon Imaging Systems business’ second quarter (April-June) results:

‘For cameras, we will work to achieve sales growth – for the first time in five years – by expanding sales of new models and promoting a shift to high value-added cameras.

‘The interchangeable-lens camera market continues to recover from the impact of last year’s earthquake, particularly in developed countries. As such, the pace of market contraction has been gradually slowing on a global basis. Within this business environment, we sold 1.43 million units in the second quarter (April-June), as we limited the decline to 5 percent. And for the half, we secured the same level of unit sales as in the first half of 2016.

‘In this quarter as well, sales remained strong, particularly for mirrorless cameras. Within this trend, we grew sales of the EOS M6, a new mirrorless camera that has been highly rated not only for its high image quality, but also for its compact and lightweight form factor…Including this factor, first half unit sales of mirrorless camera grew more than 70 percent compared to the same period last year, leading to overall sales growth for interchangeable-lens cameras.

Interchangeable cameras and lenses account for 86 percent of Canon’s camera business. Source: Canon Inc.

‘As for compact cameras, we continue to alleviate the pent-up demand following the earthquake last year. Under these circumstances, although our second quarter sales declined 8 percent to 1.07 million units, we significantly expanded unit sales of our G-Series brand of premium models that have been well received by the market for their design and portability, which subsequently contributed to revenue growth.

‘For interchangeable-lens cameras, as our first-half results were in line with our plan, we left our projection unchanged and still expect the market to shrink by 4 percent to 11.0 million units and our sales to decline by 7 percent to 5.3 million units. As for revenue, however, we raised our projection to reflect further efforts to improve the product mix and limit price decline.

‘We have enhanced the appeal of our EOS lineup, incorporating proprietary high-speed AF technology into all new products since the second half of last year. This year alone, we have already announced five new models. Going forward, we will continue to actively launch new cameras incorporating new technologies in order to stimulate the market.

‘As for compact cameras, although we left our market projection unchanged and still expect it to shrink by 13 percent to 13.0 million units, we raised our projection for our own sales by 200,000 units due to the fact that our results in the first half were better than we expected. As a result, we now expect our full-year sales to decline 8 percent to 3.7 million units. Going forward, we will continue efforts to raise our market share and improve our profitability, concentrating our energy on expanding sales of such high value-added products as G-Series models.’

Sony CEO, Kazuo Hirai, had the following comments on the results and immediate future performance of the Sony Image Products and Solutions segment: 

Parallel universe: Sony predictions for 2017 sales (blue) and operating income (light blue) are unlike Canon’s – and particularly unlike Nikon’s – entirely positive. 

‘Sales for the quarter (April-June) increased 27 percent year-on-year mainly due to the absence of the impact of component shortages which resulted from the earthquakes in the same quarter of the previous fiscal year. Operating income increased 15.7 billion yen year-on-year to 23.2 billion yen mainly due to the impact of the increase in sales.

‘Excluding the impact of the earthquakes, the underlying year-on-year increase in
operating income would have been 6.1 billion yen.

‘In the digital imaging business, we launched the α9 in May, a full-frame mirrorless
interchangeable single-lens camera, which has a high-rate burst capture feature.
This camera is being received very well not only by professional sports photographers but also by news photographers

‘Our operating income forecast has been upwardly revised by 12 billion yen to 72
billion yen, primarily due to the impact of depreciation of the yen.’

Mr Hirai had the following comments on image sensors: 

‘(Semiconductor segment) sales for the quarter increased 41 percent year-on-year and operating income of 55.4 billion yen was recorded, an improvement of 99.0 billion yen year-on-year. This increase in sales was primarily due to an increase in unit sales of image sensors for mobile products and the absence of the impact of the earthquakes in the same quarter of the previous fiscal year.

‘Excluding these one-time items, underlying operating income would have increased 21.1 billion yen year-on-year. The primary reasons for the increase in underlying operating income was the increase in unit sales of image sensors for mobile products.  

‘Our sales forecast has been downwardly revised by 20 billion yen to reflect (reduced) image sensor unit sales for mobile products, which are expected to be lower than the
April forecast. Our operating income forecast has been upwardly revised by 10
billion yen to 130 billion yen, primarily due to the benefit of cost reductions
previously undertaken, partially offset by the negative impact of the decrease in

The following text is from Nikon investor relations documents supporting the April 2016 – March 2017 financial results: 

Results from Nikon’s camera and lens business for the year ending March 2017. Reduced sales and gross margins in high single digits. Source: Nikon

‘Net sales for the Imaging Products Business decreased by 26.4 percent year on year to 383,022 million yen, and operating income decreased by 39.4 percent year on year to 27,733 million yen.

‘In the Imaging Products Business, the Digital Camera Interchangeable
Lens Type market and compact digital camera market are expected to continue shrinking.

‘In the market for digital cameras, which are the leading products in the Imaging Products Business, there is a possibility of the market undergoing changes such as the decline in demand for digital cameras due to such factors as fluctuation of the economy of the respective regions and the emergence of strong competition such as new digital equipment.

‘In the Imaging Products Business, given the rapid advances in surrounding technological environments and increasing sophistication and diversification of digital cameras, continual investment is required for the development of new technologies and new products. However, there is a possibility of a decrease in profit in the event that investment does not produce adequate results to fail to develop or bring to market new
products or next-generation technology in a timely manner or there is an abrupt shift in demand to higher functioning digital equipment.

‘As for digital cameras, which are the leading products of the Imaging Products Business, there is a possibility that competitors will launch an offensive with low-priced products as the market matures.

Nikon’s malaise is illustrated in this graph. It anticipates the market for cameras overall is in significant decline and sees Nikon’s share in a declining market declining even more. Source: Nikon

‘…As with the Precision Equipment Business, should a competitor acquire a patent on a new technology, there is a danger that the production and/or sale of a product will be suspended or of a decrease in profit margin due to the payment of royalty, which may impact profit.’

Elsewhere in the financial report materials Nikon elaborates on its full-year results: 

‘In the Imaging Products Business, we reassessed product strategies to enhance profitability by focusing on high value added products, and decided to cancel release of the DL series of premium compact cameras.

‘For the Digital Camera-Interchangeable Lens Type, sales of mid- to high-class cameras were strong, such as the D750, a digital SLR camera with specifications comparable to those of professional models, and the D7200, a high-performance DX-format camera.

‘However, a shrinking market and the impact of the 2016 Kumamoto Earthquake on the supply chain caused a decrease in the number of units sold.

‘For compact digital cameras, high value-added products such as the multi-function model Coolpix P900 with ultra high-power zoom capability of up to 2000mm for excellent image quality and the high-power zoom model Coolpix B500 were strong. However, unit sales dropped sharply along with the drastic shrinkage of the market in addition to the impact of the 2016 Kumamoto Earthquake.’






  1. Peter Michael Peter Michael August 4, 2017

    Great research & resulting insights.

    Thanks Keith & Team.

  2. John Swainston John Swainston August 10, 2017

    This is an excellent and very well structured article, Keith. Thank you.
    Having just travelled for a month across Europe there is little doubt in my mind that the appetite for making pictures is in no way negative. Selfies ( though with dramatically fewer selfie sticks), tablet photography and cell phone cameras were everywhere. But so were DSLR’s and, even more noticeable, mirrorless cameras. Configurations were typically a single camera with a multi-focal length all-in-one zoom. Little evidence of ancillary gear and camera bags were very small or just not evident. Given my background I was happy to see many women carrying Nikon DSLRs and,of the camera bags and packs I did see, the vast majority were Lowepro.
    For myself I was fitted out with six lenses, a single body, flash, filters and accessories, including a full sized carbon fiber travel tripod. In all my Lowepro Flipside weighed 11kg, so it just got under the Carry-on weight limit. I was able to make images with which I was very happy. And unlike regular consumer backpacks, my back and hips survived to walk another day. But people like me are a dying breed.
    I have no doubt that the future of photography will be increasing computational wonders driven by cell-phone companies like Apple and Samsung and Sony. Where people do choose multi focal options it will be mirrorless, smaller and lighter.
    The hassle of security check-ins with advanced photo gear now is significant and onerous. All lenses have to be exposed and horizontal in France now to go through the machines. For most the hassle is just too much. got images that outmatch anything achievable on a phone. But I must also concede I made one interior panorama image on my iPhone 7+ that would have been impossible with any camera brand.
    Finally, I think Nikon is being honest and responsible in its annual report. They are a public company and they are correct. Patents are both positive if you have them, and potentially negative traps if someone else does. Despite the cautions and poor results they are actually still profitable operationally. I am very confident that they are working on real solutions that will address many of the issues in current offerings, and deliver significant innovation. After 100 years there are times that direction is hard to gauge. Sony went through it for more than a decade. Canon too saw darker days when the world shifted from wet to dry toners in the 80’s or early in the digital photo area a decade later. But Canon, Sony and Nikon I am sure will give us some really strong new offerings, spurred on by Apple and Samsung, and mindful of persistent innovation from a Panasonic and Fujifilm, knowing that in a world of 4K and even 8K video it’s an exciting and terrifying new world.

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