Camera producers death spiral
/forum/topic/1167245/0

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rattymouse
Registered: Feb 04, 2006
Total Posts: 4816
Country: China

Fascinating read by Thom Hogan about the global overproduction of cameras by the manufacturers.

Amazing how different industries repeat the same problems over and over and over again.....

http://www.sansmirror.com/newsviews/the-jc-penney-problem-only.html





phuang3
Registered: Feb 09, 2005
Total Posts: 1212
Country: Taiwan

Cameras have very high profit margin (some says 70%+), so big sales is no hurting at all. Those manufacturers are competing in gaining market share, and lowering the price fast is just one of the strategy. Once people buy their camera, they are forced to buy expensive accessories and super-expensive lenses. Those are the main income from camera industry.



rattymouse
Registered: Feb 04, 2006
Total Posts: 4816
Country: China

No one is getting 70% margin on cameras. That's a fantasy.




phuang3
Registered: Feb 09, 2005
Total Posts: 1212
Country: Taiwan

Years ago, I got my digital rebel 300D for $4xx after rebate, and the retail price is still around $800. That is for an entry level DSLR. Flagship like 1 series is possible to have much higher profit margin.



jotdeh
Registered: Apr 07, 2009
Total Posts: 880
Country: Belgium

Where can you still buy a 300D retail?



MarcG19
Registered: Oct 21, 2011
Total Posts: 281
Country: United States

I can't vouch for Thom's data since I don't have access to it, but he claims to have talked to all kinds of executives/insiders and to have strong tech and camera industry experience. I can only judge his logic and the data he presented, which looks good to me.

It is clear that there's overcapacity in the camera market - though I suppose one could say Thom exaggerates by judging black friday sales, but I'd like to see contradictory data - and I do fear that smaller camera divisions with high volume pretentions (Panny and Olympus) might be buried in a race to the bottom.

And there's no way consumer cameras (P&S, low end DSLRs) make anything close to a good profit margin, especially if bought at discount. (that being said, I'd imagine the tops of the line have good profit margins).



ukkisavosta
Registered: Nov 28, 2010
Total Posts: 417
Country: Finland

Thanks for the link. The article sounds plausible to me, and I've been amazed at some of the discounts on mirrorless bodies.

Consumers wait for new discounts, while the lifespan of certain products is only a year or so. Do they actually sell any of those for MSRP?

Jaakko



AhamB
Registered: Jul 11, 2008
Total Posts: 5030
Country: United States

phuang3 wrote:
Cameras have very high profit margin (some says 70%+), so big sales is no hurting at all. Those manufacturers are competing in gaining market share, and lowering the price fast is just one of the strategy. Once people buy their camera, they are forced to buy expensive accessories and super-expensive lenses. Those are the main income from camera industry.


That goes against what I've heard, especially about expensive to make cameras like the Sony A900 and A850 that were maybe even sold at a slight loss.



Jman13
Registered: May 02, 2005
Total Posts: 10690
Country: United States

I really don't understand Panasonic's strategy. They release these great high end bodies, with extremely limited US availability, and for months people can't get them...then the market floods and the huge discounts begin. It is discouraging. I bought my GX1 last January, and in less than a year, it's dropped 36% (B&H). That's really depressing. And on Amazon, it's now nearly half price. I paid $699 for it new, and Amazon has it right now for $379. (which, BTW, is a great price on a great camera). I wouldn't care as much if it didn't so horribly affect resale. I mean, less than a year after release, I'd be lucky to get $325 for it. Though frankly, at that price, I'm tempted to pick up a second one for some reason. (I have a $100 Amazon gift card right now), but I won't.



eosfun
Registered: Dec 22, 2004
Total Posts: 2123
Country: Netherlands

I really don't understand Panasonic's strategy.

If you read this thread you get an idea that maybe this isn't strategy, but more or less survival measures: http://www.fredmiranda.com/forum/topic/1164784



Exdsc
Registered: Sep 25, 2012
Total Posts: 200
Country: Canada

This is great. Its about time the prices of cameras came down to what they're actually worth.



alwang
Registered: Sep 02, 2011
Total Posts: 1045
Country: United States

From my perspective, the prices on old cameras are dropping because the technology is still improving pretty rapidly. Thom talks about a GH2 for $500 as a great deal: I'd have a hard time recommending that to someone over a newly-released NEX-5R which can be had with kit lens right now for $650, and is better than the GH2 in just about everything, except possibly video. Even for the average consumer, I think the changes being introduced every year right now are impactful, particularly for mirrorless: better screens/EVF, better AF, better high ISO and DR.

I do think the time is coming where it will be harder for the average consumer to appreciate improvements in enthusiast cameras, and that might be when the bottom will fall out, much like it has done in the LCD TV market. The one saving grace for the camera companies is they haven't faced price pressure from Chinese electronics clones yet.



Exdsc
Registered: Sep 25, 2012
Total Posts: 200
Country: Canada

GH2 has a inbuilt EVF.



davenfl
Registered: Jun 29, 2008
Total Posts: 4076
Country: United States

AhamB wrote:
phuang3 wrote:
Cameras have very high profit margin (some says 70%+), so big sales is no hurting at all. Those manufacturers are competing in gaining market share, and lowering the price fast is just one of the strategy. Once people buy their camera, they are forced to buy expensive accessories and super-expensive lenses. Those are the main income from camera industry.


That goes against what I've heard, especially about expensive to make cameras like the Sony A900 and A850 that were maybe even sold at a slight loss.


Having spent the majority of my life as an executive in high tech electronic design and manufacturing your statement makes little to no sense. A digital camera is a portable computer with some mechanical parts. There is nothing terribly unique about it save the sensor, firmware, and digital image processors. Cost for full frame sensors were high but directly related to poor manufacturing quality yields. Manufacturing engineering has largely caught up there and while yields on full frame sensors are still not in line with smaller sensors they have in fact increased by 200-300+%, bringing full frame sensor costs way down. Factory costs for a Canon 5dM3 sensor are about $245 versus $800+ not to many years ago. No manufacturer is building high end cameras as loss leaders. Profit margins are excellent and in fact digital cameras have been the saving grace profit wise for companies like Canon, Sony, Samsung, etc.

Dave



Mescalamba
Registered: Jul 06, 2011
Total Posts: 3209
Country: Czech Republic

High profit margin..

D3X almost didnt have any and A900 was like PS3 subsidized. Sure some cams with recycled sensor tech like any 18 mpix APS-C Canon or any camera with 16 mpix APS-C from Sony have probably pretty high profit. For Canon and Sony. Much less for others.



snapsy
Registered: Feb 24, 2008
Total Posts: 4865
Country: United States

Cameras are razors, lenses are the razor blades. Profit is in the lens.



FlyPenFly
Registered: Feb 14, 2011
Total Posts: 6449
Country: United States

Same thing happened with TVs... only Samsung is really making all that much money now. Sony is not making any money on it and neither is any Japan heavy company.

About the only companies immune seem to be Fuji and Leica.



Exdsc
Registered: Sep 25, 2012
Total Posts: 200
Country: Canada

snapsy wrote:
Cameras are razors, lenses are the razor blades. Profit is in the lens.


That is why Nikon V1 is discounted heavily because Nikon thinks they will sell those cute Nikon 1 lenses for V1 and V2. The more V1s in the hands of people, the more likely they'll buy a lens or two for it.



galenapass
Registered: Feb 09, 2006
Total Posts: 3835
Country: United States

AhamB wrote:
phuang3 wrote:
Cameras have very high profit margin (some says 70%+), so big sales is no hurting at all. Those manufacturers are competing in gaining market share, and lowering the price fast is just one of the strategy. Once people buy their camera, they are forced to buy expensive accessories and super-expensive lenses. Those are the main income from camera industry.


That goes against what I've heard, especially about expensive to make cameras like the Sony A900 and A850 that were maybe even sold at a slight loss.


I have to agree. Sounds more like a sweeping generalization. Profit margins are going to vary between manufacturers and within a given manufacturer for different models.



timpdx
Registered: Feb 02, 2005
Total Posts: 1828
Country: United States

Like many things, say the Canon 7D, it may have been sold at cost, but as costs drop, I am sure the 7D is a cash cow now for Canon, the manufacturers realize this. Just as Amazon is selling the kindle fire HD at cost, I am sure in 6 months as things get cheaper they will have a decent margin on the thing. You have to judge the profitability over the lifetime of the product not just on the release date of a particular model.



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