A Lunch with Nikon

Yesterday I spent the afternoon at a press event held by Nikon here in Australia. It was a most interesting and surprising afternoon.
The event was based around allowing members of the local photography press to get an initial hands-on with the new D3 and the D300, as well as the recently new Coolpix models.

Until we get hold of final production press evaluation copies of these cameras (probably late October, locally), all I can say is that both seem to be very impressive cameras. The D3 is, of course, Nikon’s first full frame digital. But Nikon have been very smart. You can setup the camera so that when you mount a full-frame capable lens the camera will use the whole sensor but when you mount a DX lens, the camera will only use the part of the sensor that is appropriate. You can choose for this to happen automatically or you can set it to be always one way or the other. You get a lower resolution file with DX lenses, but this is a nice touch. The D3 seems solid (as you would expect) and the controls fall to hand quite nicely. The large LCD on the back is excellent to work with, as is the bright viewfinder. The D300 is similarly impressive and looks to continue the success of the D200. Because these were not production models we could not shoot with them and take away the files. But example images we examined there, taken with the D3 at 3200ISO, show remarkably low image noise and excellent sharpness, plus smooth tonality. Needless to say, I am looking forward to shooting with both cameras.

Nikon D3 dSLR

What was very interesting was what was discussed. The D300 is not replacing the D200, but rather both will be part of the range. Sales of the D200 have outstripped supply and continues to do so, even after the D300 announcement. This, I suspect, even surprised Nikon. Basically, the feeling is that the D200 is such a solid performer (which it is) that there will be ongoing demand for this camera for some time. With the D3, Nikon sees this as their sports photography camera. The comment was made that their studio camera has not been seen, yet, in the context that the D3 competes with Canon’s 1D Mark III and not with the 1Ds Mark III. It is obvious when you look at the specs. This suggests to me that there is another announcement coming, as I had the distinct impression that Nikon intends to compete with Canon at ALL levels and, in fact, beyond. This fits with another comment of major product announcements happening within the next six months. Of course major could mean Coolpix models, so we will have to wait and see. An example of how they will compete beyond where Canon goes is encapsulated in cameras like the D40. While Canon’s range starts at the excellent 400D at 10MP, the D40 goes down further into the territory occupied by Pentax, etc, at 6MP, and is still in the sales lineup even with the arrival of the D40x. And Nikon couples it with a kit lens featuring ED glass, making it a strong contender in the image quality stakes.

Nikon D300 dSLR

They were also quoting recent industry figures, which shows that globally, in the first six months of 2007, Nikon outsold Canon in the dSLR market, with 1.42 million cameras vs 1.3 million for Canon. These sales figures represent a 112% sales increase for Nikon over the same period in 2006, compared to a 30% increase for Canon. These figures, if correct, suggest that Nikon has managed a massive effort to pull Canon back from their dominance of the market last year (and I would say for a fair number of years). In Australia, where it is less than 12 months since Nikon came in directly compared to being represented by a distributor, Nikon has doubled its market share. Globally, Nikon claims a 40% market share in dSLRs. It is less than this in Australia.

Nikon is throwing a lot of money into R&D, with a major increase planned for 2008. The sensor in the D3 is a Nikon developed device, not a third party one, and this seems to be at least part of their R&D effort. Coupled with this will be a major increase in marketing efforts to reinforce two key things: that Nikon has great things to offer in the dSLR market; and that Nikon offers great and very cost effective compact cameras that are competitive with any manufacturer on price whilst maintaining great quality. Nikon is also putting a major effort into its lens technology. They are very proud of the advances in their vibration reduction line and have made real efforts to make the kit lenses that come with their consumer dSLRs much better quality.

I came away from the afternoon with the strong impression that Canon’s easy dominance of recent years has gone and that we are in for a period of very strong competition, especially in the dSLR market. Nikon seemed to have slipped away there for a while. It became apparent a change was afoot with the success of the D200, a really lovely camera. This has been followed up with the D80, an effect successor to the D70s, and the D40x, which I am testing at present. The new D3 and D300 look to further this turn around. This is, I think, good for all of us photographers, whether a Canon user, like myself, or a Nikon user. Solid competition will make for faster developments and ongoing price pressure, making great cameras more readily available to a wider market.

Now, of course, the real losers in all this could be the smaller dSLR makers. Canon is big enough to weather the threat, put in the R&D dollars (Yen) and come back with ground breaking products, as we have seen them do many times, basically defining the pace of the technological change (with some exceptions). But how will Olympus, Pentax, Sony and Samsung cope, along with Panasonic and Leica? If the market is heading towards roughly 80% of the dSLR market spit between Nikon and Canon, that only leaves 20% to be fought over by the others. The relative ranking of these in the marketplace certainly varies significantly from country to country. Will they have the depth of pockets to do the R&D to keep moving forwards? Or will they be successful in carving out special niche segments for themselves? Or will some of the strategic partnerships need to go further? In many ways this market situation reminds me of the state of play in the days before digital camera. Sure, the names of the minor players were different but there was still a heavy dominance by Nikon and Canon. The difference is the complexity of camera development today. Whilst there is still the same requirement for optical and mechanical innovation, we have added requirements in computer processing, software and electronic sensor innovation, plus ongoing battery issues, displays and memory developments. This has made the job of designing cameras even harder and more complex. Sure the small player can buy this development in from outside, but then differentiation becomes much harder.

The above raises some big questions for Nikon that only time will tell. Can Nikon ramp up their manufacturing to meet the growth in demand and market share, especially as they are keeping several of the older dSLR models in the lineup rather than replacing them, as might be expected? Or will they continue to suffer from supply issues on popular models, as they did with the D200? Did supply issues hold Nikon back from an even better performance? Will the surge in market share be sustainable? Did Nikon’s growth come at the cost of Canon or of the smaller brands? Will the old Nikon lens mount continue to serve them well or will it create issues for their lens designers? How will the competition respond, and that is not just Canon but also Sony, Olympus, Pentax, Leica, Panasonic and Samsung? Will Nikon be able to adequately communicate its emphasis on image quality over absolute resolution to the buying public? Will Nikon be able to adequately handle such a growing list of dSLR models, from a support, ma
rketing and production perspective?

Only time will tell, but we sure live in inte
resting times.

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