Z's Return Nikon to Growth

The financial results for Nikon's last quarter of calendar 2023 are in, and to quote them: "revenue grew on strong sales in the Imaging Products Business...

Every part of Nikon's business was better than the same quarter last year, but Imaging revenue was up 20.4%, with profit up 4.2%. Average selling price rose, the weak yen helped things, and the Zf and Z8 were specifically called out as reasons why sales improved. Nikon sold the more cameras in the quarter than any other quarter since the last calendar quarter in 2021. All good. Nikon believes that they'll finish their fiscal year (ends March 31, 2024) at 800k interchangeable lens cameras sold (market share 13.1%) and 1.25m lenses sold (market share 12.8%). However, also noted was that much of the expansion is being driven by China, a market that is started to experience devaluation overall and may prove tough to continue to make advances in. Also, given Nikon's forecast, it doesn't appear any new camera will be on sale until at least April.

Commentary: The problem I have is "where does Nikon think they're driving?" The management plans all essentially say that Imaging should be used to provide funds for expansion in other areas. I continue to find that problematic. Currently, 42% of Nikon's overall corporate sales are cameras and consumer facing while 43% of Nikon's business is equipment and parts and business facing (the other 15% is healthcare). And of that 43% business-facing, 29% is Precision Equipment, which management plans also say should be used to provide funds for expansion in other areas. 

It feels to me like Nikon is a company that isn't all-in on 71% of their current business, just trying to milk them rather than grow them. 

For example, it seems clear at this point that Coolpix has been added to the graveyard that includes Nikon 1 and KeyMission, among others. DSLRs are in hospice waiting out the end. DX seems to be in a managed care facility. 

On the other hand, Nikon has found a couple of strategies that are making at least FX mirrorless look like a winner. The first strategy centers on the Zf and the energy Nikon first found with the Zfc. The second is using major firmware updates on significant cameras to take the place of new camera announcements, pushing well received cameras (Z8, Z9) further forward in potential buyer's minds. 

To me, the first strategy is a deceptive and short-lived one. Why do I say that? Where are the lenses? ;~) Certainly there are no lenses that support the Zfc idea, and I count only four that could be said to do that for the Zf, and they're all the least capable Nikkors. Most of you reading this know that I've been buzzing about (lack of) lenses now for 17 years. In essence, not building out a system says to your customer "you've bought a dead end, please plan to spend even more money buying our real product." (Nikon's not the only company failing at this, by the way.)

Insulting your customer like that is a good way not to keep that customer.

Meanwhile, the firmware update strategy—which realistically started with the Z6/Z7 but has now hit new heights with the Z8 and Z9—is a solid one, but again, short-lived in its current form. Sony is really feeling the product advancement heat now. Sony owners are looking at their company of choice, who says "buy a new camera," while looking on in envy at Nikon owners who are getting "here's something that's free and makes your camera new." 

However, neither Sony nor Nikon are doing the correct thing, methinks. In Sony's case, the customer runs out of money. In Nikon's case, the customer doesn't need to buy a new camera. The correct approach is probably in between, but is a tough one to get right: HaaS (that's Hardware as a Service). At the simplest, that would be for-a-fee firmware updates. At its most complex, it would be close to long-term extendable leasing. 

Bottom line: Right now, Nikon's executing quite well in a fairly narrow opportunity. The challenge will be to either continue to execute that well in a narrowing opportunity, or to expand the opportunities. Right now, it appears to me that Nikon management has chosen the former. 

Looking for other photographic information? Check out our other Web sites:
DSLRS: dslrbodies.com | mirrorless: sansmirror.com | general/technique: bythom.com | film SLR: filmbodies.com

text and images © 2024 Thom Hogan
All Rights Reserved — 
the contents of this site, including but not limited to its text, illustrations, and concepts, 
 may not be utilized, directly or indirectly, to inform, train, or improve any artificial intelligence program or system.