It's
rare for a mature product category on the downhill slide of the bell curve to
cough up not one but two new savior gadgets within a relatively short time
frame. But that's exactly what has happened in the digital imaging business.
Smartphones
clearly have become the go-to digital imaging solution for most consumers. Even
at the recent presidential inauguration balls, it was clear from the coverage
that most of the formally attired attendees were capturing the once (well,
twice)-in-a-lifetime historic moment with their phone cameras.
If
these smart and well-heeled folks decide smartphones are "good
enough" for moments-of-your-life preservation, what hope does the industry
have of maintaining any on-going sales integrity?
As
sales of both point-and-shoot digicams and camcorders plummet faster than Felix
Baumgartner, sales of compact system cameras (CSCs) and wearable actions cams seem
to be acting as the category's parachutes.
The
question is whether either or both new products will prove to be a long-term
solution for what ails the industry. Or, to illogically conclude our parachute
metaphor, if CSCs and action cams can provide the digital imaging industry with
a soft landing.
Yes
and no, IMHO.
Blowing smoke?
Most
of our market research compadres are understandably bullish about the future of
CSC, with 2013 sales expected to represent around 6-10 percent of all digital
camera sales worldwide, depending on who you ask.
But
digital camera makers we spoke to at CES enthusiastically reported CSC sales
beyond their expectations. Admittedly, this enthusiasm may have been smoke
blowing for the benefit of a journalist, but from the genuine glow of glee these
product managers exuded when talking about CSC sales it didn't seem so.
In
the past year or so, Canon, Fuji, Nikon, Samsung, Sony and even Polaroid have
entered the CSC fray with their own proprietary CSC systems, intro'ing models with
even smaller camera bodies than the Micro Four Thirds CSCs originated by
Panasonic and Olympus four years ago. And all unveiled new advanced models at
CES or afterward due to hit stores this month and next.
All
these new CSC camera makers are drooling at the higher margins these shrunken
upscale imagers produce. Even the most conservative forecasts see CSC sales
catching up to D-SLRs in three years or less.
Sure,
CSC sales volume will never approach those of point-and-shoot models a few
years back, but that's not necessarily a bad thing. CSC makers will be happy to
be rid of their loss-leader point-and-shoots, leaving the low-end feature phone
owning market to supermarket camera vendors such as Vivitar and GE.
By
2016, CSC body and lens kits could drop below $300 without an appreciable loss
in margins (thanks to increased manufacturing economy-of-scale efficiencies).
Combined with trimmer distribution, camera makers could maintain a semblance of
historic digital camera revenue levels sans the distribution and support
headaches of high-volume/low-margin point-and shoot models.
It's
easy to see a future 5-10 years hence in which CSCs represent a plurality of digital
camera sales.
What the fashionable
X-treme sporter is wearing
Camcorder
sales numbers are a greater wreck than the Titanic. With the virtual
disappearance of the Flip camera – after all, why spend $150 on a standalone slab-shaped
HD camcorder when your smartphone has an equal or better video recorder built
in? – camcorder unit sales collapsed, dropping around 25 percent in each of the
last three years in the U.S., according to CEA.
The
lone pillar propping up the camcorder category is the new small and lightweight
"wearable" action cams that mount on helmets or handlebars. GoPro's
Hero3 has been the top selling camcorder on multiple Amazon sites worldwide
since it came out last fall, for instance. And wearable models from Contour,
Liquid Image and Ion also have proven increasingly popular; some industry wags
estimate action cams represent around 20-25 percent of camcorder sales.
Just
as they took notice of the Flip phenomena, mainstream camcorder makers have
taken notice; JVC was the first ski-jumper with its Adixxion wearable cam,
followed by Sony with its two cleverly-named Action
Cam
mountable models (one with Wi-Fi, one without) and Panasonic's
A100. No doubt there's more
action cam action to come.
But
with its limited demographic – extreme sporters – just how sustainable is the
action cam business?
Flip
cams had a far-wider constituency (everyone) and yet proved to be merely the
Pet Rock of camcorders. Action cams have a much smaller, yet admittedly more
dedicated, user base. As a result, action cam sales may be more sustainable
than Flip cams, but certainly not in the same numbers.
With
a limited purchasing public, the action cam niche may not support the number of
me-too makers the currently exciting category may attract.
Whether
or not the CSC/action cam parachutes prevent an eventual total crash of the
digital imaging market remains to be seen.
