We recently chatted with some of the industry’s leading DSLR manufacturers to get their take on the future of this rapidly evolving market. While each manufacturer provides their own thoughts on this red-hot market, a common theme developed – understanding and catering to today’s customers needs is key.
The fact this category now appeals to a much wider and diverse demographic has taken the innovation within it in new directions and a new sales approach is necessary.
Women have emerged as a major buying force of DSLRs over the last 2 years and research continues to show that the 25-44 year-old demographic is leading the way. Lower prices and far less intimidating camera operation have led the way as reasons to buy for this crowd, but some feel there are other reasons as well.
“Many women in that demographic also have a creative spark,” began New Jersey photographer Kim Horan. “They want to take great pictures, not just good pictures, and they know they can’t get there with a point-and-shoot. They see the DSLR category has changed and a door has opened and they want that new power to take great pictures. Next time you’re at an event where people are taking pictures, whether it’s a soccer game or simply walking around Manhattan, you’ll see a lot of women with compact DSLRs.”
According to a recent report on DSLR sales conducted by InfoTrends, the category clearly represents the brightest spot in the digital camera market, offering vendors growth far outweighing the increase in the digital camera market as a whole. InfoTrends’ research shows that in 2007 the DSLR market grew by 40% compared to the point-and-shoot market. The growth rate for 2008 was said to be 16% and isn’t expected to peak until 2012, for a compound annual growth rate (CAGR) of 3.8% between 2008 and 2013. These are numbers this category has never seen.
As you’ll see from the entries below, the innovation isn’t expected to slow down anytime soon either.
Panasonic: Creating a New Bridge Camera that Reaches DSLR Intenders
There is great sales potential in reaching “DSLR intenders” – defined as consumers who have considered buying this more advanced camera, but for whatever reason, have not made the purchase. Panasonic conducted research to discover the barriers preventing these consumers (an estimated 23 million DSLR intenders) from stepping up from a point-and-shoot digital camera to a DSLR.
Two key findings among those surveyed were DSLRs are heavy and bulky; and complicated to use. Makes sense, since most point-and-shoot models these days are small, compact and feature familiar automatic settings. Addressing the size of a DSLR is the most difficult challenge, as there are certain technologies and components that are required.
However, recently, Panasonic and Olympus announced the innovative Micro Four Thirds System, which eliminates the internal mirror structure that defines DSLR, thus significantly reducing the size and weight. With the mirror-less system, the flange back has been reduced from 40 mm – as specified in the Four Thirds System – to approximately 20 mm; yet the sensor remains the same size. Using a Micro Four Thirds system, makes it possible for a camera to maintain its ”DSLR-like” characteristics, but in a much smaller body, and by strict definition, not as a single-lens reflex camera.
It is important to also keep in mind the DSLR-like features that consumers want: interchangeable lenses for increased flexibility; a large sensor that helps produce high-quality images; fast auto focus so shots are not missed; and a complete menu of manual controls. Manual controls on an advanced camera system are important, so it may seem like an oxymoron to strive to make the system “easy-to-use,” but with more DSLR purchasers being first-time users, it is imperative.
While most consumers aspire to get to a level where they are able to manipulate manual settings, it can be intimating for beginners. Manufacturers must find a balance where a camera system is powerful, yet not confusing. Thus, the digital camera should have tools that help the consumer learn about digital photography. By including familiar automatic features, combined with the ability to visually confirm how changing manual settings effects the photo they are composing, manufacturers can create a “bridge” camera.
Panasonic’s LUMIX G1 – the world’s first Micro Four Thirds digital camera and the first digital interchangeable lens camera available with a choice of body color – blue, red and black – is the ideal bridge camera for those users looking to step-up to a more advanced system.
The LUMIX G1 offers the best of both worlds – compact and DSLR – as it features interchangeable lenses, a high-performing sensor, fast auto focus speeds – all in a package that is approximately half the size of Panasonic’s LUMIX L10 DSLR. Also, not to intimidate new users, the LUMIX G1 incorporates Panasonic’s popular iA (Intelligent Auto), which is a system of technologies that engage automatically, so the user doesn’t have to make any setting changes.
The new Micro Four Thirds system creates an entirely new camera category and could be the much-needed bridge for 23 million enthusiastic consumers to make that next step in their digital photography evolution.
—David Briganti, National Marketing Manager, Imaging, Panasonic Consumer Electronics Company
Olympus One Size DSLR Does Not Fit All
For Olympus, there is no separation between a DSLR’s form and its function. For example, the comparatively larger E-3 is designed for rugged professional use, while other models like the E-420 are smaller, lighter and geared toward general consumers who put a premium on portability. In the years to come, as the DSLR market continues to grow, we’ll see more categories of interchangeable lens cameras emerge that cater to the individual needs of consumers.
As we move through 2009, an increasing number of consumers are interested in having the versatility of a Digital SLR (single lens reflex) with the portability of a point and shoot. The global market for interchangeable lens type digital cameras is growing steadily, but still only accounts for approximately 7 percent of the market. Market surveys indicate that many customers still choose compact models because they find digital SLR cameras to be “big, heavy, and difficult to operate.”
To meet these demands, one segment that will emerge is the Micro Four Thirds camera, which will be even smaller than current compact DSLR cameras on the market today. The Micro Four Thirds standard is an extension to the Four Thirds Standard. This translates into much smaller bodies and interchangeable lenses with all of the advantages of Four Thirds cameras – particularly high-quality images. One of the key elements for creating high-quality images is 100 percent digital lenses for edge-to-edge sharpness in a durable, yet portable design.
Olympus recently announced plans to develop an interchangeable lens camera based on this new standard. We showed a concept of this new camera at Photokina, and it will be even more compact than our existing E-420, which has held the title of world’s smallest DSLR since it was introduced in March.
The Micro Four Thirds System will also have the capability to record video (another trend we’re seeing in the DSLR market). This new standard will help consumers who previously used only compact cameras, because of their extreme portability, to step up to an interchangeable lens system.
Recognizing that the DSLR market is segmenting into multiple tiers, Olympus is also committed to the Four Thirds System, and we will continue to expand our lineup of digital SLR cameras to satisfy a broad spectrum of customer needs. This includes professional photographers, aspiring artists, hobbyists and general consumers.
The newest addition is the E-30, which is taking the art of photography to new creative heights. New Art Filters and a Multiple Exposure function enable artists of any discipline (not just photographers) to capture what they see in their mind’s eye, and not just what’s in front of the camera lens. The new features produce striking works of art inside the camera without the need for costly computer image editing software. For additional information visit www.getolympus.com/dslr.
—John Knaur, senior marketing manager for DSLRs at Olympus Imaging America Inc.
Pentax Understanding Today’s Consumer is Key
The digital SLR is showing healthy growth as a camera of choice in homes, on the sidelines and in the outdoors while the compact market is leveling off. Photo manufacturers and dealers are beginning to understand that demographic characteristics are much more than age and zip code. We need to understand where and when users use e-mail, store photos, research products, and ultimately buy.
Delivering our messages through alternative channels and understanding how our products are used is vital. Further, the technology that will attract users must be seamless and easy-to-use with the focus on the application and the results – not the technology.
Research shows that our target audience relies heavily on the Internet to evaluate and shop for related products. Pentax recently launched a new Web site at www.pentaximaging.com that is very shopper friendly to efficiently educate consumers about products and provide convenient access to purchase online.
One of the products is our Pentax K2000, which is a perfect system right out of the box to equip new digital users in one step. Bundled as a kit, the system includes the body, smc Pentax DA L 18-55 lens and the Pentax AF200FG Auto Flash. Featuring Pentax Auto Picture modes and powerful learning functions including a dedicated help button that prompts digital explanations just like an in-camera instruction manual, the camera is ideal for beginners, a new crowd that is just discovering this market in large numbers today.
—Bill Zani, Vice President Sales & Marketing, Pentax Imaging Company
Sony Demand and Innovation Remain Market Drivers
Although it’s one of the hottest segments of the digital camera market, Digital SLR cameras represent less than 10 percent of units sold. However, their higher average price leads them to be more than 25 percent of the market’s total dollars, and their continued strong growth make DSLR cameras a highlight of the U.S. imaging business.
According to most consumer research, more than 60 percent of U.S. digital camera purchasers are repeat buyers. These consumers are already familiar with digital cameras, and they are often looking for improvements over the models they’re currently using. For many, the solution is a DSLR camera because of their advantages in picture quality, shooting speed and versatility. Since many consumers are moving from a compact camera to DSLR camera for the first time, features like Sony’s Quick Auto Focus Live View enable the familiar framing-on-LCD shooting style, easing the transition to a DSLR camera.
DSLR camera growth isn’t limited to new users in the mainstream segment, there’s also remarkable growth from enthusiasts in what’s come to be known as the advanced amateur segment. Recent introductions in this segment have advanced performance and innovation to levels previously only seen in the highest-priced professional models, driving existing DSLR camera owners to their second or even third purchase. As models with full-frame image sensors appear in this segment, many professionals are attracted by the unique combination of performance and portability. An example of this trend is Sony’s 900, which delivers 24.6MP resolution and 5 fps continuous shooting, performance never before available in a DSLR camera.
In 2009, market growth will continue, driven not only by consumer demand but also manufacturers’ innovation. The ongoing migration of consumers from compact camera to DSLR cameras will lead manufacturers to refine design to cater to first time users, who often prefer smaller, lighter, and easier to use models. Strong growth from the enthusiast and professional segments will continue to drive development in image quality, responsiveness and versatility, not only in the camera, but in lenses and accessories as well.
—Mark Weir, technical and marketing manager in the Digital Imaging Division at Sony Electronics
Nikon: Creating the Right Mix
Through 2008, even as other products in the consumer electronics channel trended downward, the D-SLR market trended upward. To maintain this trend, particularly in this economy, our industry needs to continue showcasing innovation, but take great care to frame that innovation in terms of value, rather than technology for technology’s sake. At Nikon, our R&D efforts focus on taking some of the most advanced photographic technologies and applying them in a way that contributes to the ease-of-use and accessibility of these technologies, regardless of a photographer’s level of expertise. The result: cameras that benefit the consumer and enhance their photography experience, at more price points than ever before.
While the business of making memories might not be recession proof, it is certainly recession resistant. To take advantage of this, dealers need to develop sales strategies that create the right mix of D-SLRs, mapping to both price point and expertise, complemented by a knowledgeable sales staff to help consumers find the right camera for their needs.
Right now, consumer D-SLRs offer the best of both worlds, leveraging features, technologies and designs from both the high end D-SLR and compact point-and-shoot products. The professional D-SLR market has given users such improvements as faster AF, Scene Recognition Systems, enhanced performance and increased resolution, while the ease of use afforded by the compact point and shoot offers such enhancements as live view, Scene modes and simple controls. Consumers realize these benefits firsthand as taking great pictures become easier and they have noticed the impact of Nikon technologies in their photographs. Because of this, Nikon became the top selling D-SLR brand at the end of 2008 and doubled its compact digital camera sales during the holiday sales season.
This “best of both worlds,” scenario manifested itself in the form of our D90, introduced to the market in 2008. When the D90 launched, it borrowed from Nikon innovations in both the professional D-SLR and compact point and shoot lines, as well as introduced new innovations. It took high-end D-SLR features, including the Nikon exclusive Scene Recognition System, an advanced AF system and Active D-Lighting, as well as Live View, and point-and-shoot simplicity from our consumer lines. In addition, the D90 was the world’s first D-SLR with an HD movie feature, which helped propel the D90 to the top of D-SLR sales charts.
In unsure economic times, consumers will always gravitate toward recognizable brands that ensure high quality, value and reliability, which is why Nikon’s heritage will play a strong role in driving sales in 2009 for dealers. Nikon also realizes that driving consumers to dealers to see these new technologies in action can be half the battle, which is why in 2009 and moving forward Nikon will continue offering unprecedented levels of support to authorized dealers.
Most consumers can relate to Nikon as a friendly brand that delivers quality; a brand that their parents relied on for preserving memories. But more than that, consumers also want the latest innovations that will help them take better pictures to better preserve their memories. The main charge for retailers will be to remind consumers that while markets and stocks may fail, memories are always a smart investment.
––David Lee, Senior Vice President, Nikon Inc.
Canon: Lots of Room for Growth
To understand what is driving the DSLR market, it is important to point out that just under 30 million point-and-shoot cameras were sold in 2008. The household penetration for compact cameras is at an all-time high – around 80 percent – and the typical consumer is a repeat buyer, on their second and third cameras. By contrast, the household penetration for digital SLRs is still less than 10 percent, which means that there’s a lot of room for growth.
The SLR market can be segmented three ways. The professional segment was the first to adopt digital photography. Speed, image quality, durability and reliability are mandatory to this market segment, and now professional photographers are utilizing cameras that are over 20 megapixels, like the EOS 1Ds Mark III and EOS 1D Mark III. A new technological breakthrough that also has a lot of appeal to professionals is the ability of DSLR cameras to shoot true high-definition video, like the Canon EOS 5D Mark II. The middle part of this three-tier market is the enthusiast segment made up of those who enjoy photography and have a passion for it. The enthusiast segment is vital to the sustainability of the photography business, purchasing more than just the box, looking for the lenses, flashes and accessories.
This segment appreciates the value and quality of higher-end photographic equipment, and know what they want before they walk into a store. The EOS 5D Mark II and EOS 50D, fit into this group. The third part of the SLR market is made up of entry-level users, who typically purchase an EOS Rebel class camera. With the prices of our entry-level DSLR cameras butting up against our high-end point-and-shoot models, it certainly doesn’t take a big budget to step into DSLR photography anymore, and here we can still expect to see sustained growth in 2009.
How will this continued balancing act of achieving the power that DSLRs can deliver with the ease-of-use and compact design specs this broader market is now demanding, play out? Digital cameras, like other consumer electronics, are no longer household devices. They are personal and must meet the needs of different lifestyles, budgets, and intended uses. Satisfying what customers want to do with their camera is not necessarily a one-size-fits-all scenario and there isn’t one camera for all occasions. For example, the Digital ELPH one takes to a wedding may be replaced over the weekend by the Rebel they take to the soccer game. It is the job of the manufacturer to anticipate intended use and provide attractive styles and features to satisfy those needs.
When you look at the convergence between still and moving images and the success of the Canon EOS 5D Mark II, I believe that DSLRs will continue to evolve to offer more crossover features.
The market itself, by way of the end-user applications, determines what innovations manufacturers look to develop. Look at what a cell phone can do today compared to a phone from a few years ago. This evolution in consumer electronics is being driven by the continued expansion of what the customer wants to do with a product. In a challenging environment consumers are demanding the best overall experience from manufacturers and this means selling beyond the box.
Educational and customer support resources help provide the best overall customer experience through the sale and beyond. We are optimistic about our overall approach to the DSLR market and look forward to the year to come.
– Eliott Peck, Vice President, General Manager, Canon USA