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Nikkei Market Share: Bad News for Nikon... Or Is It?

Nikkei recent published a synopsis of Techno System Research's Market Share Survey for 2020, a detailed paywalled survey of camera shipment data from major manufacturers. The headline is a 5.0% drop for Nikon, decreasing its total market share. This isn't great news for Nikon, but is it all it seems?

Nikon isn't having a great year in terms of sales and market results, a topic I recently covered reviewing their latest quarterly report. The good news is that income is up across the whole business, however that is mediated by the fact that they are expecting a reduction in ILC camera shipments this year. Overall this paints a worrying picture for sales of Z-system cameras and lenses as they remain firmly rooted to the lower end of the mirrorless shipments table, not coming close to Canon and Sony while also trailing Fuji and Olympus last year.

Another data point in the year that gives a little insight in to how the 2020 market evolved is the Techno System Research Market Share Survey which uses self-reported survey data from camera manufacturers to paint a similar picture to CIPA's shipment data but also breaks down the data by both sector and manufacturer. The report is almost entirely behind a paywall, but two recent pieces of information that have been released are the manufacturer breakdown for the entire digital camera market, along with a breakdown for the mirrorless sector (as reported by Fuji Rumors).

There are several key points to note from the report. Firstly, it confirms camera shipments for 2020 at around 8.9 million units and shows that the impact of COVID was a 41% drop, partly because factories were closed for a period of time and partly because consumers weren't buying cameras. A double edged sword that severely affected shipments.

Secondly, the split in those total shipments shows that Canon topped the table at 47.9%, with Sony second at 22.1%. Both are up on last year by 2.5% and 1.9% respectively. These gains are a result of a loss of market share by Nikon who trail a distant third at 13.7%, down 4.9%. Fuji (5.6%) and Panasonic (4.4%) bring up fourth and fifth places respectively.

When looking at mirrorless cameras only, the figures are reported by quarter with most companies having a better second half of the year, Nikon in particular. That said, both Olympus and Panasonic saw shipments decline sharply which can't be good news for Micro Four Thirds. Looking at the figures in the graph, Sony lead market share at about 36% (down from 42% in 2019) followed by Canon at 33% (up from 24%), Fuji at 12% (down from 13%), Nikon at 8% (up from 7%), and Olympus at 7% (down from 8%).

What Does This Say About the Market?

The obvious stand-out point is Canon's utter dominance of the market; they ship nearly half of all cameras manufactured. The inference is therefore that that they sell nearly half of all cameras shipped. The second key point is that Nikon is trailing a very distant third and is no longer the force it once was in the camera market. Not only that, but it lost a significant portion of that last year. In fact, that 4.9% equates to some 430,000 cameras, not a trivial amount in the current climate.

However, we need to mediate these figures on the understanding that they represent the whole camera market and not just DSLR and mirrorless cameras. What we do know from the CIPA data is that integrated cameras made up 3.5 million units last year, their smallest share of the camera segment ever at just 39.7%. That figure has been in freefall since the smartphone saw widespread uptake and the expectation is that it will only continue to drop. In fact, so much so that Nikon has implemented a medium term restructure (which led to large write-off costs last year) and purposefully all but pulled out of the integrated camera segment with a minimal 14% share in 2020 and an estimated 7% this year.

All manufacturers have made it clear that profit in the camera segment is to be made from the quality amateur sector and the more limited professional markets. In practice, that means building out a fully featured mirrorless camera and lens range but with no bargain basement options. Integrated cameras are all but a thing of the past other than for very specific premium models that include super zoom travel cameras, tough cameras, and high-end fixed focal length models. Expect the shipment numbers in this category to drop further, possibly to a point where CIPA no longer segregate them out.

It's perhaps the mirrorless shipments that shows how the market is shaking up. Nikon had a particularly good last half of the year and appears to be moving up on Fuji. In short, it is making small but real gains in shipments and so 2021 will be an important year. Again, Canon's gains and increased dominance is remarkable and principally at the expense of Sony which is losing ground on its competitors. The other weak area is Micro Four Thirds: Panasonic is largely quiet, with Olympus having slowed down as a result of the sale of the Camera Division.

Is Nikon's Loss a Real One?

Overall then, the headline was a drop in Nikon's camera shipments of 430,000 cameras, but this has to be set against a backdrop of a falling market of which Nikon has pulled out of one of the segments. In 2019 Nikon estimated it had a 20% market share (20.5% ILC and 19.5% integrated) , dropping to 17.4% in 2020 (20.5% ILC and 13.6% integrated). These broadly match up with the Nikkei report and suggest that Nikon's market share losses are actually coming from its integrated cameras, unsurprisingly given that it's pulling out of the sector. It has made small gains in mirrorless shipments with the trajectory from the end of 2020 indicating a more positive 2021. It can be difficult to get a sense of year-on-year manufacturer growth from the nature of camera and lens specific release cycles. In 2021 it seems that Nikon will only release the Zfc which won't lead to a sudden rush in sales. This is in contrast to the sales bump Canon received from releasing the R5 and R6 last year which undoubtedly helped its bottom line. This is a medium term strategy and if Sony has proved anything, it's that by having a very good product and filling out your lens range you can encourage users to jump systems. That strategy works both ways and we are now already seeing the relative performance of the big three change.

It's also worth noting that retailers are increasingly marking Nikon DSLRs and lenses as discontinued which suggests that all their focus is on the Z-system through a fairly extreme rationalization of their product lineup. It really has thrown all its eggs in one basket, with the full-frame and APS-C strategy now very much underway. With its focus in one place, it has to deliver on a convincing set of cameras and lenses that the market can both figuratively and literally buy in to. Within this in mind, can it take advantage of Sony's very broad consumer focus and Canon's dithering over its EOS-M system. The next five years will be critical for building out these systems to in order to bring in consumers. One things for sure, it's been very quiet from the L-Mount Alliance camp over this period!

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