Is Nikon's strategy wrong?

Started Aug 31, 2012 | Discussions thread
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Is Nikon's strategy wrong?
Aug 31, 2012

Is Nikon's strategy wrong?

Lot's of disappointment with the N1. Fortunately, it was not D.O.A. In fact, the J1 remains on Japan's best seller CSC list.

Unfortunately, several people and reviewers have turned their disappointment into hatred for Nikon and N1. In the DPR reviews, I've seen several cheap shots at N1.

Even a Nikon stalwart like Thom Hogan is frothing at the mouth. He indicates that Nikon will not be providing an enthusiast friendly model of N1. Is this the end of N1?

Let's review the CSC market to sort out the competitors. What was their intention when they launched their CSC? How has their strategy changed and evolved?

NEX was launched as an upgrader-friendly product (mass market). Immediately, there was an uproar from enthusiasts who wanted more control and better ergonomics from the camera. Sony turned around and made NEX more enthusiast friendly.

They had to do so because most of the buyers of NEX were enthusiasts. The prices were too high for most upgraders. By contrast, M43 sells very well at $500 and under.

The problem for NEX is that Sony main priority has been profitability. NEX is very profitable because NEX 5N and 7 prices have barely budged after a year. As a consequence, NEX has not competed on price, and has not pursued market share.

NEX could have been the top selling CSC format, instead of M43. Would the NEX5R's PDAF change that?

M43 had the opposite problem. Launched with enthusiast-friendly controls on the PEN and GF. But, successive reiterations of PEN and GF became less enthusiast-friendly, and prices pummelled. Why the u-turn?

M43's problem was that they didn't have the technology to justify enthusiast prices; CDAF and so-so sensor IQ were not good enough. So, they went for volume. But, their average selling price is so low that Oly's imaging division is not profitable. The profits from the growing PEN sales could not offset the losses from declining compact sales.

I don't need to go into the problems facing M43. Oly has decided that they have to use Sony sensors. So, Pany and Oly face hard decisions in the days ahead.

So, the first CSC brands (M43 and NEX) stumbled because their strategy did not fit the marketplace. The NEX was priced too high for market penetration (rare marketing mistake by Sony), and Sony got comfortable with the profit margins. That is, SONY adapted to the situation; instead of becoming the 600 pound gorilla like they normally do.

In contrast, M43 misjudged the technology threshold. They didn't have the tech to play in CSC and they have been playing catchup ever since.

What about Nikon? They are currently at the top of their game. There's class leading innovations in FF. There's strong products in APSC. Nikon has even managed to grow sales in compact cameras even as that market declines.

Yet, Nikon has chosen to do a unique thing with N1. A small sensor in a fast camera? A new category?

With the J2, Nikon seems to be steering a straight course. Will it be a shipwreck, or have we simply misunderstood Nikon's intentions? After all, Nikon keeps saying that it is different from everything else.

NEX5R Nikon 1 J1 Nikon 1 J2
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