By Kevin Purcell
The graphic both shows (and tries to hide by using area comparisons) the major changes in the market for Sony's image sensors over four years, fiscal year (FY) 2013 to FY 2017.
The first thing you notice is all the growth is in "non-traditional" camera markets: smartphone and tablet cameras, automotive cameras and Internet enabled security cameras. Ordinary still cameras are in decline.
The volume of compact digicam (DSC) sensors Sony will ship will drop from 51 million to 13 million pieces over the four years; that is, the FY 2017 market will be about a quarter of the size of the 2013 market for Sony. But the total market for DSC sensors will drop from 92 million (i.e. using Sony's volume and current share 92 = 51 * (1/0.55)) to 13 million (= 13 * 1.00) so the total DSC sensor market will be 15% of the FY 2013 market.
Compact digicams really are going away. I suspect the remaining will all be long zoom digicams or large sensor compacts—the two areas where smartphone cameras can't compete.
Perhaps more important for the TOP readership are the numbers for interchangeable lens (ILC) sensors, from type 1-inch to 36x24mm ("full frame"), from FY 2013 to FY 2017. The FY 2017 market for Sony ILC sensors will be about 55% the size of the 2013 market. The total market for ILC sensors will drop by about half from 60 million (60 = 18 * (1/0.3)) to 29 million (13 * (1/0.45)) so the total ILC market will be 50% of the FY 2013 market.
So Sony expects half the volume of ILC cameras in the market in FY 2017.
That means fewer cameras and fewer redundant product iterations, but perhaps less choice too. On the other hand it might mean more narrow niches in the market will be served. Camera company makers are going to move to where the largest margin is.
Sony Semiconductor is helping that by pushing 4/3, APS-C, "full frame" and now "645D" sensors to any camera company that wants them.
Sony (the camera making part) is in a scramble to get their camera systems into position before the market sets in concrete again (rather like the old SLR film camera market with two major protagonists). That means other companies are going to have to do the same. This would explain Sony's rapid iteration in the market with "mark 1" rapidly followed by "mark 2" the next year to gain traction in particular niche markets. This sense of urgency would also explain Sony's aggressive pricing strategy on A7 "full frame" mirrorless cameras.
I'd expect to see "full frame" (or larger) cameras from Fuji, Ricoh/Pentax and perhaps Olympus in the next year or so. Not because of "sensor-size fanboyism" but because the business is driving them in the direction of higher margins. All three of these companies have "hobby camera" businesses—the business is not a real income generator, and in most cases makes losses, but seems to appeal to Japanese traditionalism ("we used to make good cameras and film and we still do even if there is not much of a market because we're Ricoh/Fujifilm/Olympus").
It's also possible that it may mean fewer ILC camera companies as some of the traditional camera companies in a loss-making business get squeezed and decide to exit the market. You can see parallels with previous market turndowns in the 1970s, 80s and 90s and the trail of missing companies they left. Nikon and Canon may have already seen this direction and have decided that they'll come out ahead after yet another market transition if they keep a steady path. I don't think that's guaranteed this time. It would also explain Nikon's strategy of pushing "full frame" DSLRs now. I still can't understand why Canon is lagging in sensor performance. Perhaps they'll start buying Sony sensors too but if they haven't started by now one starts to wonder what their sensor strategy is.
In the meantime this may be a golden age for camera purchasers. The quality and variety are high. Competition is keeping up pressure on the manufacturers to keep prices down. It can't last.
Perhaps this is indicating a future camera market that looks more like the film camera market of old. People will upgrade their cameras every five to 10 years just like in the old days (but they no longer need film in the meantime).
©2014 by Kevin Purcell, all rights reserved
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(To see all the comments, click on the "Comments" link below.)
Featured Comments from:
Ken: "For my tastes, this article sounds too much like a knock off of the Thom Hogan article that other commenters apparently already linked to. I am not saying there was any plagiarism involved but just seems to make mostly the same points, coming right after (as far as I can tell) Thom's article."
Kevin Purcell replies: No plagiarism, Ken.
I emailed a note to Thom Hogan on Saturday, Nov. 29 pointing to that slide in the Sony presentation and said what it implied. We exchange emails sometimes. He emailed back saying he'd seen the Image Sensor World article and was thinking about writing about it.
I also sent the same hint in an email to Mike on Saturday, Nov. 29 which he sort of used in this article on Sunday, Nov. 30. Note the thanks to Kevin Purcell at the end of the article—that thanks was for the Sony information.
I corrected one problem with Mike's interpretation on Sunday in email but also felt he missed the big implication of the chart. So I wrote a long comment to that article (the text above). I submitted it as a comment and also sent it in a text file to Mike in email and said he could use it as a blog post if he wished.
Mike was on the road over the weekend so he didn't post it until today.
Thom Hogan published his article on Monday, Dec. 1.
Mike published my text (from Sunday) on Tuesday, Dec. 2.
Both Thom and I came to the same conclusions independently.
Thom does make a very good additional point about the impact of the reduced number of camera sales on funding of blogs in the future. That's an interesting point for TOP and its readership...."
Richard Newman: "This analysis may well be correct, but I would caution not to consider it definitive, for three reasons:
- The data was presented by a company to its shareholders—not a disinterested party. This means that there is considerable doubt as to why it was presented as it was.
- It doesn't address new technology which may be developed and implemented in the next few years and affect the market. For example the 'selectable focus' technology may become widely available, which could change the market.
- The effect of increased interest in video may also skew buyer spending.
"All of which doesn't say this analysis is wrong, but just that it needs to be considered less than definitive."