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$3000. Very trenchant analysis which, as I too have never worked for a camera company, convinces me completely. The amazing thing to me about current camera pricing (and I have participated more than most in the acquisitive folly of the upgrade wars) is how it compares to the product cycle. My first camera was a Pentax K1000 - I bought it new for about $189 in 1985 and used it exclusively for 10 years. The product could still be purchased new until a few years ago. Then I bought a Pentax LX for about $800, which I used exclusively for four years. Then I bought a Nikon F3, for about $1000 which I used for three years (actually I still have it) . . . but you see where this is going. I recently bought a 5D for $3000 and I have been using it for two years . . . when I heard the siren song of the D3. Now, who's the dummy here? I would dearly love the D3 to last me at least 10 years of good, hard use. But what are the odds?

Ben

Mike, I'm surprised you're considering the possibility that the new 5D could cost under $3000 with the Nikon D3, its direct competitor I'm assuming, selling at $5,000. So this is my guess for the price: $4,995.

Canon don't really have to think too hard, just price it like their direct competitors. If they set the price $1,000 lower they'll be admitting they don't think their new camera is worth as much as the D3, and perception is just about as good as reality these days.

There is also another issue and that is the declining dollar against the yen. This means either Japanese companies will have the eat the losses or they will have to pass that along to consumers.

Credit goes to Thom Hogan on his March 14th post.

Miserere,
The A900 won't be a direct competitor for the D3. The D3 is the successor to the D2h, a high-speed pro camera. Different capabilities, different target markets.

As I've written, I think the A900 is targeted to be a competitor to the Canon 5D.

Mike J.

Mike, maybe I misunderstood your question; my post was concerning the Canon 5D only.

I can't even imagine what Sony are going to try to pull off with the A900; they can either undercut Canon and Nikon and hope people want a mid-priced FF camera, or they can do what they used to do with their laptops, overprice them (don't know if they still do it).

"It's probably difficult not only to price a premium middle-tier camera like the 5D, but also to target it in the first place! "

Yes !

We all know what entry level DSLRs look like, as well as the midrange model (Sony A700, Canon 40D) and even the in-between (Nikon D80) and the slightly exceptional D300. And we know what pro FF DSLRs look like. But the 5D ? It's sort of in a class by itself; not a "pro" camera, but a bargain for pros and a step into FF for well-heeled enthusiasts; it's poor man's medium format. And right now, it's one-of-a-kind. How do you keep selling them ? I think you balance price & functionality while maximizing image quality. You most definitely keep it under (or at worst, not much above) $3000. You don't price it too low; $2200 is an end of life discounted price for the 5D and Nikon raised the bar with the D300 - who would have guessed you could sell an APS-C DSLR for $1800 ? And, of course, Canon is anticipating what Sony will do with the A900 (with probably a far greater degree of accuracy than our own guesses).

Sony, OTOH, has the "luxury" of not having much competition. Sounds silly, I know, but what I mean is that they're going to sell just so many, maybe a few more and maybe a few less, but the details aren't really going to matter. It's "Sony", it's 24MP with Zeiss lenses, it's Alpha mount, it's image-stabilized. A certain number of people are going to buy it. Please - I'm suggesting it's going to sell in numbers that will absolutely pale in comparison to the 5D successor; I'm just also suggesting that those numbers are going to be those numbers regardless of who hits the market first and who is $500 more than the other guy.

So ...

5D successor: $3000 - $3200
A900: $3500
Nikon model built on 24MP sensor: $4000 but more pro

(Unintentionally, this pricing sort of mirrors the pricing of the Canon 40D, Sony A700, Nikon D300 ... in each case, the FF model is 2.2X-2.5X the APS-C model ... hmm).

These prices are as sure as my NCAA tournament bracket. I had Georgetown getting to the Final Four, so "Go Wisconsin" !

I use the 5d. The more I work with it, the more I question the rumors flying around. Why would I need, now, a successor to a perfectly able camera suiting my needs, and the needs of thousand of other photographers? Would it make sense for Canon to 'kill' such a commercial success? What would be the rush? Why replace something that doesn't 'need' to be replaced? Sony is coming? So? I doubt that many Canon users will rush to eBay to unload their 5d and lenses to buy a Sony 1.0. And in this price range, I doubt that first time SLR buyers would make any difference, commercialy speaking. Nikon is almost ready to compete with the 5d? Let them come, and THEN bring the 5d MKII or whatever the successor will be named. I am convinced it is ready to be manufactured, but the timing, from a business point of view, doeesn't really seem right. Just my two yens...

From my days in the computer industry, hence, talking through my hat:

1. Pricing is built on gross margin. R&D is a different line item in the budget. However, a given product usually has a fixed R&D budget, and if it is going over, it may not see the light of day. I saw this happen often! Generally, your business model has a gross margin, and you design the product to fit the margin, so the price gets decided before the product is even spec'd.

2. Why has the 5D successor taken almost as long as the Oly E1 successor? I have some ideas, such as sensor yields, etc... or just no real need: after all, its in a class by itself, as has been stated. I do wonder about fabbing 24x36 active area sensors, though: my understanding (quite possibly wrong) is that current semiconductor equipment is not designed to make chips that large, so manufacturers are stuck on older / obsolete / expensive to maintain fabs.

3. Price drops for a variety of reasons. In the case of the 5D I suspect end-of-life, and its replacement will be quite a bit more, though not as much as the original camera. So I'm with Dennis: $3000+. Are we going to have a "guess the 5DII price" contest?

I definitely "get it" that the 5D works for you, and likely works for many others, too. I think, though, that the reason is "mind-share": with Sony and Nikon (and Pentax?) coming in with 135 sized sensors, Canon might end up "looking bad" in the eyes of the marketplace if they didn't keep up with the specs, and preferably put up some sort of market-leading featureset.

There's also the issue of people moving "up" from Rebels/40D's, who may not have the lens investment of a current 5D user. Those customers may be subject to poaching by Nikon or Sony if Canon doesn't come up with a new model.

It would be great if the camera companies would ease off, and not bombard us with new products constantly, but I doubt that will happen. In the meantime, if you are happy with your 5D, well, it won't stop working when its successor is released.

well since I am responsible for the question that might wrote this about, let me ask another question.

How long will Canon support the 5D? If I buy one now, will Canon still answer calls and fix the camera 5 years from now? How about 10?

"I definitely 'get it' that the 5D works for you [...] if you are happy with your 5D..."

Archer,
Are you, um, talking to me? I've never seen, used, or owned a 5D. (Just to be clear.)

Mike J.

I wonder along with davidb how long we can expect to get support for our favorite cameras. Does Canon or Nikon (or Sony) expect that we'll run through our 100,000 or 200,000 shutter actuations and buy a new camera? Will spare (new) parts be available for at least a period of time? If one of those who loved their D30 wanted to get support for it now, is that possible? If so for how long?

If Canon could promise that they'd support the 5D through, say, 2015, I'd probably keep what I have and pay for any fixes I needed. And there's another market for them to tap...

Mike posts: "Market research can help with this, but, for a number of reasons, market research is a less-than-perfect tool. The two biggest reasons are that, first, what people tell you they want might not actually be what they will buy." and "Canon might be able, from an engineering standpoint, to offer several surprise new capabilities in a new camera. Market-research subjects often don't know in advance whether they will like surprise new features or not, because they basically like what they're used to."

Actually, there are well-known techniques for determining customer wants/needs as they define a "customer specification of value" for a set of product attributes using a technique called a Kano survey. This technique divides cutomer needs and wants into three main categories: one-dimensional (more or less is better), "must-be's", which are basic expectation of quality, and "attractive" or "delighters". This Kano survey approach is used to generate a set of customer specifications of value for requirements with statistical power that also elucidates the "delighters" (what you refer to as what the customer doesn't know they want, but would be delighted with if they had it) in addition to the "one-dimensional" attributes that customers talk about.

The key to getting this market intelligence is to do "Voice of the Customer" ("VOC") type market research as defined by Griffin and Hauser in their seminal 1993 paper in Marketing Science as opposed to the classic focus-group based market research that you're referrring to. If Canon knows what they are doing with respect to VOC, and I presume they do given their past, historical, marketing expertise (which Olympus would do well to learn from, BTW), they are probably using a Kano survey approach to establish the relationships between camera attributes and the customer specification of value for those attributes. So, my guess, is Canon would, in fact, know how to address both of the points you describe above as difficult to determine from market research.

Stephen,
Correct me if I'm wrong, but I thought Kano surveys were only for finished product--i.e., prototype evaluation. That doesn't help you at the planning stages.

There's another factor to consider, which is that sometimes camera features take long familiarity in order to be properly evaluated. That is, you might not be able to look at the product superficially and determine if the features it offers are going to be useful to you. Of course, possibly a company would be most interested in that stage of a customer's exposure to a product anyway, since products are primarily made to be sold.

I have no doubt that Canon are expert in market research, but I still think there are inherent problems with the quality of that sort of information--at least when it comes to cameras, and when you're looking at them from the photographer's viewpoint.

Mike J.

Mike, I just read your comments that you have never seen, used, or owned a 5D.

My first response when I read this was, "Oh man, you neeed to see if you can find a buddy to lend you one, or rent one from a local pro shop for a few days, and make some prints..."

This is a lankdmark camera with respect to image quality, and you'll truly know what your readers that use one have been saying when you open up those gorgeous files, and make a print. I know you respect Sean Reid of "Reid's Reviews", and he is correct when he says that the images that the 5D "draws" are very special, indeed. The black and white files it produces are also remarkable.

At this stage Canon no doubt have recovered all their 5D r&d and ancilliary costs so are probably doing very nicely with this camera. If they wished they could cut the price severely, perhaps with a 'Lite' version, but essentially the same camera at a lower price point. This would queer the pitch for their competitors who may have been assuming they would be competing at the 5Ds price level but now find the goal posts have shifted. It might also persuade a significant number of the Canon smaller sensor users to switch to the FF scene. The consequence of this would be the necessity of replacing their lenses also. All very nice for Canon.

One factor also to be considered is the credibility factor. Canon/Nikon have a very high rating in the pro end of the market and a lot of amateurs follow the pro lead in this respect. For years Minolta users suffered the sneers and snide looks of the Canonikon users ( I can only speak for the U.K. market)and I can't see Sony coming any higher in the pecking order than Minolta with regard to this. They might even be coming in lower. They have to overcome this if they wish to compete at the top end of the market which might mean emulating Lexus in the luxury car market. (i.e.) Load the camera with extras whilst keeping the price down. Canon could restrict their ability to do this with severe price cuts.

So Canon, assuming they see Sony as viable competition, could now either pre-announce a new super 5D with loads of bells and whistles to compete with Sony's bells and whistles or they could just re-badge the 5D and cut the tripe out of the price.

Either way Canon appear to hold all the cards

@Miserere: The D3 isn't a 5D competitor, it's a 1DmIII competitor. We're talking about a 9-11fps fully sealed pro body with world-beating AF performance from the D3 vs a consumer/amateur body with high-end sensor and low fps for the 5D. Completely different market despite the similarities in the basic sensor.

@Dennis: Nikon's last 12MP 5fps+ APS-C body sold for the same price as the D3 when new(D2Xs). The shocking thing about the D300 isn't it's high price, it's how low the price is for an 8fps capable sealed body with pro-level AF & build. You're getting 95%+ of the performance of a 1DmIIN or D2H, with more MP and better high ISO performance. The D300's a steal for the performance it gives and is also one of the few digital bodies out there to be priced similarly to its film counterpart (the F100 was a similar price when new).


I'd expect the 5DmII to come in around the $2500 mark and be quite similar in spec to the 40D overall (apart from the imaging system). I'd guess 4-5fps is likely. But Canon needs to do something innovative with it, a straight update will not be sufficient. Given the 5D's rep for noise performance, I'm guessing Canon will try and deliver better noise performance than the D3, possibly combined with more megapixels.

As to the Sony, it will be overpriced to start (like the A100 and A700 were/are). Maybe $3500-ish? Performance will likely be excellent at lower ISO's, but only time will tell if Sony's figured out what it did wrong with the A700's noise reduction.

Sorry, on the "I get it" front I was responding to Luc.

And Stephen, as an Olympus user, I heartily second your comment on marketing!

The issue of the 5D replacement pricing is a complicated affair because we are starting to reach market maturity in digital cameras. A few years ago it was about who could make them.. Now it’s how well you make them, what features they have, and overall how much they cost. When I say that the market is reaching maturity, it’s not so much to do with what camera makers are offering, but the fact that DSLR buyers are a finite number, and there are fewer future buyers than a year ago. Think of all those people who already have a digital SLR. Many of those may have already been through a few upgrade cycles.. Many may be eying more important products (i.e. lenses) to not be so concerned about new products. This is starting to happen, and camera makers are aware of this.

In the 5DII’s case, the prospect of price and feature set is complicated. In many forums there were rumours of a ready camera waiting in the wings.. but the surprise announcements of the Nikon FF and the Sony prototype probably made Canon rethink their whole product paradigm, which is no revolutionary change, just evolutionary logic. Remember that up until the middle of last year they were top dog in DSLR land. Their own marketing documents spoke of “Dominate and Monopolise” the various product niches. That smug sense of domination came crashing down once Nikon deftly poked holes in the Canon line-up, not competing directly and therefore sufficiently differentiating their products. Nikon’s D3 is not a competitor for the 5D or the 1DsMk3, but in many respects it is better than both.. it’s perception is that it’s a better more rounded and capable camera, much like a top-line film camera would have looked like. For those with a more modest budget comes the D300, again, a more capable camera than it’s competitors (and priced accordingly). Someone mentioned that it’s price was too low compared to it’s worth, but I say it’s priced just right. Any higher would have made it’s market penetration less pronounced, any lower would have made it more comparable to other similar cameras (read 40D). Nikon want you to make an effort to buy their cameras.. they’ve certainly made an effort to pack them full of stuff.

Canon’s offering up until now has been, as I said previously, more of an incremental evolutionary approach. This worked when other camera makers were far behind and couldn’t keep up with the shortened product cycles that DSLR market seems to take for granted now. This led them to be a bit “mean” in offering new features, as well as the odd situation of having a lower tier camera with a better sensor that it’s higher tier brother (400D – 10mp and 30D – 8mp, and again the 450D 12mp and 40D – 10mp).
It is safe to say that Canon has been shaken up by the rather spectacular bounce back by Nikon that is competing with it on all fronts; Stabilised pro telephoto lenses, Tilt and Shift lenses, innovative wide angle lenses 14-24. This last one is particularly sore considering that Canon more or less in the same week announced it’s 14mm 2.8. Which is more versatile?

So in all of this I suspect that Canon has had to go back to the drawing board and redesign the 5D replacement from scratch. Price wise.. it will have to fall within the D3 and D300. Admittedly that’s a large range. However when it comes to features I think it will be necessarily a lot closer to both of these cameras. The 1D cameras of it’s line-up are far too new to warrant any major review (and both need serious reviewing), so it’s only chance to take on the Nikons is with the 5D. Someone mentioned that there was no need for a replacement, that it’s quite good enough. Subjectively it’s image quality may be quite good (and Ken Rockwell compares D3 with 5D images and prefers the Canon) but as far as feature set it is totally dated. Let’s remember that this camera was released in 2005. In August of this year it will be 3 years old. In this age of disposable electronic products, that is remarkable, almost incredible. Then again Nikon did this regularly with it’s pro cameras.

So with all this background on the 5D, what will it’s replacement cost? Well, quite apart from it’s feature set, which vary from baby 1DsIII to a 5D makeover, the price should be around $3000+ for starters, with a rapid decline by X-mas when the Sony should be out… Yes, the 5D is a bit of a landmark camera, but I for one can’t wait for it’s replacement!

"it’s not so much to do with what camera makers are offering, but the fact that DSLR buyers are a finite number, and there are fewer future buyers than a year ago."

Mario,
What's your basis for making this statement? Reminds me of the car called the Wills St. Claire. C. H. Wills was one of Henry Ford's top engineers, who tried to strike out on his own and start his own company in the 1920s. At one point his backers got cold feet, and hired an outside market research firm to analyze the U.S. automobile market.

The conclusion of those estimable personages? That there were already 3 million cars on the road and the market was saturated. The bankers pulled their backing; Wills eventually closed down.

The DSLR market has continually outstripped predictions. In any event, I hardly think you can accurately call a prediction about the future a "fact"--even though it may turn out to be right.

Mike J.

"There's also the issue of people moving "up" from Rebels/40D's, who may not have the lens investment of a current 5D user. Those customers may be subject to poaching by Nikon or Sony if Canon doesn't come up with a new model."

Speaking as one of those customers, I'm very willing to be poached!

Posted by Mike: "Correct me if I'm wrong, but I thought Kano surveys were only for finished product--i.e., prototype evaluation. That doesn't help you at the planning stages."

Actually, a Kano survey is used at the beginning of a VOC project as a means to put statistical power on the customers wants/needs that are elicited in contextual inquiry (interviews and observations of customers in their own environments), and which are translated by product definition teams into a set of product requirements at the beginning of a proposed product's life. In fact, if one follows a disciplined VOC approach, product "solutions" are not part of the process at all. The VOC process is only to define customer wants/needs. Solutions (product concepts) are only created once the product requirements are structured, prioritized and ranked. The Kano survey provides statistical power behind behind the customer requirements, and provides key information as to whether a requirement is attractive, one-dimensional or "basic" or must-be requirements, and provides the prioritization and ranking function of requirements, which is one of the key deliverables of any VOC process. As such, it is used well before any actual concepts are actually generated. We use this approach at the company I work for, and part of my current job role as a Design for Six Sigma Black Belt is to train product managers on VOC and VOC best practices. You would be surprised to find how many product managers do not know how to write a properly structured requirement.

I thnk the process you are referring to above is a conjoint analysis that allows product management to determine how to make product attribute tradeoffs based on customer input.

Regards,
Stephen

Stephen,
I really MUST defer to your obviously superior expertise on this subject, but as I sink slowly below the waves, I'll still try one last time to make the point that people (however accurately polled) don't know what they want when it concerns something they aren't familiar with yet...witness Eamon's testimony about Nikon's market researching failing it WRT pro AF in the early '90s. But I'm not an expert, and you obviously are, glug glug glug...down I go....[g]

Mike J.

To Mike - Regarding the future and the "shrinking" DSLR market, what I meant was that the growth rates are slowing. This is a sign of a maturing market. Growth is still strong, and profitability is in the DSLR segmant, but as more and more consumers already have a DSLR, the growth rate will drop. This may be akin to the ipod generation. Demand is strong, people but them. Some upgrade to a newer model. There will be many though who don't feel the need to "upgrade", certainly not with every single model that comes out.. so demand will slow. I didn't say that it would drop.
What does this mean for camera makers.. that they must compete for fewer new customers, as there is resistance to swapping brands because of the investment in the kit (i.e. lenses etc). That means for example that Sony, which has no pro shooters as clients will price very aggressively in order to gain them, and Nikon and Canon will have to in turn be more aggressive to keep their clients as well as woo any new buyers out there.. For us consumers, notwithstanding the USD/Yen trend, it may still be stable prices. US customers don't like increases. The only way a camera company can increase its prices would be to introduce new or updated products, thereby increasing price. But this is all dangerous because as much as Canon is a Behomoth, Sony is a Mastodon.. and Nikon ever more an agile Velociraptor.. Sorry for my zoological comparisons, but this fight for our dollars will be all to our advantage and higher prices because of declining USD value will be relative..

So, to sum.. a slowing in DSLR market growth rates is starting to happen as more and more film and digicam users switch to DSLRs.. means fewer future buyers.

Competition will contrast with USD/YEN currency fluctuation and maintain competitive pricing except for new products launched (cameras and updated and new lenses).. That's my 10 cents worth, seeing as the USD is worth so little now.. :-)

MIke, you're absolutely correct that people don't know what they want when it concerns something they are not familiar with, that is true.

But, here's the key point...

Those folks *still* have wants/needs or problems they are dealing with with the products they use in the job they are trying to do, or function they are trying to accomplish. If you can watch customers use products carefully, and look for their pain points, or talk to them in depth about what really frustrates them (like the lack of a mirror lockup button on Canon D-SLRs), or what makes what they are trying to do difficult or problematical, you can use the Kano approach to identify those "delighters"....this is the real power of this approach. With careful inquiry, you can in fact, figure out what will delight customers when they themselves, in fact, do not know what will delight them.

The key here is not know what they want, but rather what their problems are, and why those problems are problems for them.

Obviously, Oly figured this out with LiveView, just as Apple figured it out with the Mac, iPod, and iPhone.

"But I would guess that it's also a form of price-testing. A company can't easily raise the price of a new product if it guesses market demand wrongly."

Indeed. I heard that the first quality digital video camera (Sony?) back in the nineties, was initially priced for amateurs, and when they saw that professionals loved it, they raised the price by a couple hundred percent.

i have never seen such eloquent and insightful discussion on a topic on the Whole Wide Web.

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