Strategy Session: A Conversation with Nikon Inc.’s Nobuyoshi Gokyu

Strategy Session: A Conversation with Nikon Inc.’s Nobuyoshi Gokyu


Nobuyoshi Gokyu, president and chief executive officer of Nikon Inc., has a long international history with Nikon Corporation.


He began his career at Nikon in 1979 and has held a number of positions within the company. In the 1980s, he was in charge of research and product planning, including the planning of the first Nikon zoom compacts, low-end compacts and tele-wide compacts, as well as Nikon’s first VR compact camera. Following this, he moved to the sales side, responsible for the U.S. and Canadian markets, and in 1995 he joined Nikon Singapore, Nikon’s regional headquarters for Asia. Then, after a short stay at Nikon headquarters in Japan as manager of Communications, he joined Nikon Hong Kong in 2003, as director of sales and marketing. During this time, he was doing a feasibility study for Nikon China, and in 2005 went on to Nikon China as managing director and president. After spending a few years in Hong Kong and Shanghai, Nobuyoshi Gokyu was asked to take over as president of Nikon Inc.


I sat down with Gokyu to talk about the challenges he sees in the imaging industry and Nikon’s strategy for moving forward.


JG: I last spoke with you a little over two years ago, when you assumed the presidency of Nikon Inc. What changes have you seen over that time?


NG: There have been many changes, both in the photo category as well as in our product line. Since I’ve been here, we’ve seen significant growth in the advanced camera segment and with the interchangeable-lens market. We’ve introduced the Nikon 1, a completely new product that expanded that market. We’ve introduced HD video functions across many cameras in our line. One of our latest Coolpix cameras is built on the Android operating system. And we’ve introduced more affordable full-frame cameras. We’ve also seen connectivity become an important selling point in the market. 


How important is connectivity to the future of photography?


Currently, our business has been challenged by the smartphone, especially in the low end of the category, because sharing is so important. So connectivity is key to the future of cameras. While now it’s only in certain cameras of ours, it will eventually be part of much of our line. 


But connectivity is not our only tool to address the smartphone issue. We have to make clear the differentiation of image quality from the phones to our cameras. Right now, most consumers are using iPhones and other smartphones, but they really don’t know the vast difference in image quality between their smartphone and our cameras. Our job is to educate our consumers as to the significant difference in image quality derived from a camera.


What about the Coolpix S800c, which uses the Android system? Is it your answer to the smartphone crowd?


People want to share images, so connectivity is very important; that’s why we introduced the camera. But it also is very innovative in the market, as it begins to make their cameras more interactive. The apps are an important part of this, and we are just beginning to learn consumer reaction to this. 


The compact interchangeable-lens camera segment was an area where Nikon wasn’t first to market. Panasonic, Olympus and Sony got there first. But when you entered the market you did it in a big way with the Nikon 1 system. How important is this category to your business going forward?


To be frank, compared to other categories, the ACIL (advanced camera with interchangeable-lens system) segment in the U.S. is around 17% of the total DSLR market, which is quite low compared to Japan and Asia. But even so, if we look at the incremental growth from two years ago, it’s important. So I think this market is very promising.


Are you getting market share from the higher end consumers, or from people coming up from the point-and-shoot market?


Nikon customers truly understand our products, so there is really something for everyone. The concept when we introduced the Nikon 1 system was more of a step-up from the point-and-shoot market. We noted there was a segment of people who weren’t satisfied with the higher end point and shoot but were also not looking for the size of even our entry-level DSLRs. So, the Nikon 1 was targeted at that segment. We also see consumers of our entry-level DSLRs seeing the advantages of the new compact size of the Nikon 1 system, and they are buying them as a second camera. 


So the real targets are people coming up from the higher end point-and-shoot segment?


Yes, but we’re seeing many first-time Nikon buyers appreciating the benefits of this camera as well. 


This category seems to be doing very well in Japan and Asia, but not as well in the U.S. and Europe. Why is that?


The same thing happened to the China and India market. They also have not jumped to this new concept, because they like the traditional DSLR, but a lot of companies are counting on this category growing, and we’re all confident in this market. The U.S. is often behind Japan and Asia in accepting newer technologies, and we see this trend consistent with this new category.


Lets talk about the high end. There seems to be a new price point, with the full-frame cameras coming in at a lower price point. It seems the $2,000+ price range is something that is acceptable for consumers.


This is due to the nature of the customer. But as a manufacturer, it’s important to create this new segment for our business. Image quality and video quality are becoming more important to our high-end customers. But there is a certain consumer segment that cannot afford to spend $3,000 for a D800, or even more for our D3X. So now, with the D600, we’ve offered a very high-quality product at a more affordable price, enabling us to grow the market. It’s important for Nikon and for our dealers to educate our customers as to the benefits of these full-frame cameras. 


Nikon seems to have a pricing strategy that offers products in every segment. It just used to be point and shoots and SLRs. Now you’ve spread out from Coolpix to ACILs and entry-level DSLRs like the D3200 to your mid-priced D300S all the way to your full-frame DSLRs and professional-level D4. Do you think this is confusing to customers?


Not really, because our customers continue to grow with us. There are many different segments of photographers right now, and it’s important that we serve each of those segments with the best products in the industry.


Do you consider yourself a consumer electronics brand?


No, I don’t think so, because Nikon should always differentiate itself from the CE brands. Our advantages as a camera manufacturer are our optics and our heritage. Nikon is 95 years old, and we have a long history and heritage with imaging, so we know the market. And we have a unique expertise in optics, and we have been grinding our own glass and producing the world’s highest quality lenses for years. This is a big advantage over CE manufacturers.


We do not consider ourselves a consumer electronics brand but we do believe we are a technology brand. And our advantage is our focus. Many CE manufacturers in Japan are facing very difficult times—Sony, Panasonic and Sharp—but the camera manufacturers are making a profit. That’s due to our focused product line. 


This is your second year exhibiting at CES. Was last year successful? 


We get great exposure at this show; before our participation, we had meeting rooms, but being on the floor last year was very exciting. We’re attracting new kinds of customers, which broadens our reach. We were concerned that if we participated in the CES show, Nikon people would think we’re a CE brand. We needed to figure out how to be outstanding from other brands. We think our booth was crowded for most of the show last year—and will be just as crowded this year.


With the imaging category continuing to evolve, what do you see as your greatest challenge? 


We must continue to be innovative, and we have to communicate with our customers and keep them in our franchise. They have come to trust the reliability of the Nikon brand, and we must deliver that reliability with every product we introduce. 


Plus, there is now more competition. We used to just compete with other camera brands. Now we are competing within the consumer electronics category. Today, it’s more challenging, but we’re very confident in our space. We are focused on photography and that will always be our strength.


In five years we celebrate our 100-year anniversary. For a company to last 100 years is very special, especially given the fast-changing environment. It’s very special.


I asked you this two years ago, and I’d like to ask you again. What keeps you up at night?


Keeping the top position in the market is a challenge I face every day, and it is the one thing that keeps me up sometimes. But we’re doing very well, so I’m sleeping much