Tuesday, June 12, 2012

A New Digital Camera Market Segment With No Name

Tuesday June 12, 2012 – Stewart Wolpin

What do you call digital cameras that aren't point-and-shoot, but aren't D-SLRs – yet feature interchangeable lenses?

Some folks call these digicam tweeners Compact System Cameras (CSC). Some group them under the more specific yet simpler rubric of "mirrorless." Other want something a bit more jargon-y so combine these two sobriquets into Mirrorless System Camera (MSC). Highlighting their lack of fixed lenses informs the sobriquets Compact Interchangeable Lens Camera (CILC) and Digital Interchangeable Lens Camera (DILC).

Perhaps the most clever but quizzical acronym offered is Electronic Viewfinder Interchangeable Lens (EVIL).

Based on initial market impact, however, whatever-you-call-them seem the opposite of malevolent.

But what is a mirrorless interchangeable lens camera – MILC? Hey, another category name nominee! Since no one acronym has been officially adopted by the industry, I'll use mine.

MILCs consist mainly of two types: Micro Four Thirds (mainly Panasonic, Olympus and Pentax) and APS-C (mainly Fuji and Samsung). Nikon's 1 MILCs use a proprietary CX-format sensor.

But next month, Sony will start selling what it calls a "premium compact," the DSC-RX100, a fixed lens camera but with a larger-than-point-and-shoot/smaller sensor and lots of manual controls.

With a 1-inch CMOS sensor the same size as each of the two MILC Nikon 1 models, the RX100 isn't exactly a point-and-shoot digicam. But at $650, it isn't what we typically think of as a point-and-shoot digicam, either. Yet, it is a mirrorless camera but with a fixed lens, which makes it a point-and-shoot camera.

I think.

One gets the feeling MILCs will come in a lot more blurry flavors going forward.

Got MILC?

According to most digicam industry know-it-alls, D-SLRs represent around 15 percent of the total market. The now catch-all interchangeable lens camera (ILC) category – which encompasses both D-SLRs and MILCs – is expected to rise 2-3 percent this year on the strength of growing MILC sales.

Nearly every major camera maker now has a MILC with the exception of the camera industry's 800-pound paparazzi, Canon, which is rumored to be readying one for the fall.

Geographically, the U.S. has been a bit slow on the MILC uptake. But a recent survey conducted by gadget research site Sortable found 22 percent of U.S. consumers are searching for information on MILCs, compared to 36 percent for all other camera types.

But MILCs are being soaked up in Japan like, well, milk. The Japan Economic Newswire reported retail sales of MILCs nearly doubled in March compared to March 2011.

More optimistic forecasts have MILCs surpassing D-SLR unit sales in around four years.

Camera of necessity

MILC development was practically forced on camera makers by makers of smartphones (which must make Samsung schizophrenic). More and more, consumers are eschewing entry-level digital cameras for the 5 or 8 MP imagers in their smartphones.

But smartphones aren't replacing all photo-taking. It's clear that consumers employ smartphones for in-the-moment candids and videos. But when events are planned – vacations, celebrations, et al – we tend to pull out a real camera to make sure we get the best shots.

MILC marketing is based on the premise that consumers want a camera demonstrably more sophisticated than their smartphone to satisfy their event-based photography needs. Even a mid-level point-and-shoot – now smaller than most new smartphones, which all have much larger screens and far more powerful processors than similarly-priced digital cameras – just won't do.

But consumers also are daunted by the complexity of D-SLRs, which also are deemed to bulky to schlep around while site-seeing.

Hence, the appeal of MILCs, nearly as small as a point-and-shoot but offering definitely-not-a-smartphone differentiating interchangeable lenses.

MILCs also make camera makers happy – more expensive cameras make more profitable cameras. Considering overall falling camera sales as a result of the economy, last year's Thailand flooding and other industry bad news (Kodak's bankruptcy, Olympus' accounting issues, everyone's 2011 earnings disappointments and executive changes, etc.), MILCs may seem like a godsend.

But lingering questions persist about optimistic MILC sales forecasts and the new category's long-term success and affect on the camera business.

For instance, how sustainable is a $600-plus camera business given the inexorable improvement in smartphone imagers? And will MILC sales cannibalize the low-end D-SLR business?

Forgive the pun, but we'll wait and see how the MILC business develops.