A new report published by Business Journal in Japan revisits Nikon’s current status in the country and cites a new report that found Nikon has fallen to fifth place in mirrorless cameras in the country with just 7.5% market share.
The story leans heavily on the idea that if Nikon isn’t considering exiting the industry, it should be, citing that its camera sales have collapsed by 46% over the last five years. PetaPixel previously reported that Nikon would post some serious losses in the coming financial quarter. This did come to pass, as while it posted higher-than-expected revenues, it had a larger operating loss than anticipated in Q2 (which started April 1, 2020 and ends March 31, 2021).
Business Journal echoes these reports, stating that Nikon’s photography business has “dropped sharply” in revenue, and insinuates that given that the photography division accounts for 60% of the company’s operating deficit, remaining in the photography business may be a poor decision.
The publication also notes that according to market research firm Techno Systems Research, Sony and Canon lead in market share with 35% and 30% respectively, followed by Fujifilm with 12%, Olympus with 8%, and finally Nikon with 7.5%. Nikon is in second place for DSLRs, but as reported previously, DSLRs provide higher sales volume but much lower sales value.
Nikon also operates as a semiconductor manufacturer for Intel which Business Journal reports makes up between 70% and 90% of all of its semiconductor business. It’s other clients have shrunk considerably, leaving Nikon leaning heavily on Intel’s business in this segment. Unfortuantely, sales of semiconductors fell sharply to due to “Intel’s investment cycle.” Adding to this, Intel is said to be switching to the production of semiconductors internally, which would have a dramatic impact on Nikon’s income since they rely so heavily on production for Intel.
“The difficulty of supporting digital cameras with sluggish semiconductor manufacturing equipment became a double punch,” Business Journal writes.
The publication goes onto compare Nikon’s struggles with those of Olympus, and poses the question: “Is this the day that Nikon withdraws from the camera market?”
Clearly, Business Journal’s goal was to push the idea that Nikon is going to flame out of camera manufacturing and draws lines between Olympus and Nikon. That said, Olympus and Nikon have very different business strategies and a straight comparison of the two businesses may be a flawed perspective. Nikon also has stated that it plans to dramatically reduce its operating costs by 59% over the next couple of years by moving a majority of its factories out of Japan and consolidating any remaining production into one Japan-based factory.
The lengths Nikon is going to address its precarious financial position make it incredibly unlikely that it would exit the industry at this juncture.
While it is scary to see Nikon’s market share position so low — falling even below both Olympus and Fujifilm in Japan and trailing market leaders Sony and Canon by significant margins — it is still unlikely that this will be the end for Nikon despite what Business Journal insinuates. As has been argued before, Nikon is probably going to be fine. Expect to see Nikon’s financials look rough for the next couple of years before they are able to see the fruits of the recent restructuring.