What Will the Canon 5D Replacement Cost?

March, 2008 – The Canon 5D is currently $2,200 at B&H. Are the new "5D Class" cameras going to be in that price range?

The answer is, I don't know. It would be interesting if we could get the real inside skinny on pricing; I suspect it's far more of a "black art" than people realize.

The goal is first to make your investment back, and then to make a profit. To do this you have to take into account the R&D costs of the product as well as what each item costs to manufacture. You also have to factor in some percentage of soft costs and overhead. Most companies have pretty well-established formulas for these kinds of things, although they're probably constantly being scrutinized.

Ceilings and perceptions
Probably the biggest wild card in pricing is that if you price something higher, you might sell fewer units; if you price it lower, you might make back your investment too slowly.

When I was at the last magazine I worked for, we had come up against a "perception ceiling." A subscription cost $19.95 and raising it at all would put it above the $20 threshold (in base ten, multiples of ten can be perceptual sticking points). Since a little bit over the threshold is as bad a lot over the threshold, we tested a price of $21.95, by sending out a circulation mailing to non-subscribers offering that price. Previous mailings had given us a baseline for the kind of return we could expect.

In doing this, we needed to account for that percentage of mailing recipients who did their research and realized that the same subscription was still available elsewhere for $19.95. Once that group was (presumably) controlled for, we had to analyze whether the extra income from the higher price offset the reduction in income due to the fact that fewer people subscribed at the higher price. When we did that, it was easy to see that the higher price was hurting more than it was helping, so we abandoned the price hike and stuck with the old number.

'Anchors'
Then, you've got to consider the market and the competition. What we describe when we note that the Canon 5D costs $2200 is called (I think—bear in mind I'm not an economist) an "anchor"—an already-existing baseline for peoples' expectations. If you can price something below pre-existing anchors, peoples' perception is that it's good value. But in digital, with prices going down so dramatically for the past ten years while capabilities are going up, anchors are volatile. It's possible that pricing a Canon 5D replacement at $2200 would not be seen as a good value, even though the new camera would be considerably more capable than the older model. We've seen a number of instances in DSLRs of products missing their pricing window (e.g. the Contax 6-MP pro camera that contributed so heavily to Contax exiting from the camera business) or of cameras having to be priced too far above the competition (e.g. the Fuji S5).

If a product proves popular and sells well, you still have a lot of the same dilemmas, because high-profit items need to be milked for profit to help with the overall corporate bottom line and to help make up for products that lost money. A good-selling product might have made back its investment, and might still be profitable at a price much closer to its production cost, but the company still has to try to maximize its return.

Another issue with cameras is that demand can be controlled with supply. Most cameras are made in "runs," i.e., batches. While a camera is selling well, production might be continuous. From what I hear, for example, the plant where Nikon makes the D3 is at full capacity because the model has been such a torrid seller, and production capacity might actually be limiting sales. But once sales cool off, a model might be made in "a run here, a run there," so to speak. When a camera is "discontinued," it usually means that NOS (new old supply, which refers to selling out of an already-manufactured, warehoused supply) ran out, and a decision had to be made as to whether to do another run. Discontinuation simply means that that decision was negative. Note that this can happen to a camera that is still selling decently well. The company might simply realize that a new run would be costlier than the old one, and, since it can see the rate at which demand is tailing off, the judgment might be that the then-current demand would not extend to the sales life of a whole new run. I've also actually seen instances where a company decides against a further run and announces the discontinuation of a product, only to face a clamor of protest from customers and dealers, and reverse itself.

But before any decision about discontinuance has to be made, a company can actually control when the NOS of a certain model runs out by controlling pricing. If it sees demand evaporating, it can close out the NOS by offering very low pricing. (It can also do so if it has a replacement on the way, which might account for the current pricing of the 5D.) If it needs to keep the model in the product lineup, however (it knows a new run will be problematic, and wants NOS to last), it can do this by keeping the price high, thereby putting a damper on demand. We saw this with the Nikon F3 many moons ago. Nikon wanted to keep the F3 in the lineup well past the introduction of the F4 (probably to give it an answer to buyers who balked at a pro F with AF and built-in motors) so it just raised the price of the F3 again and again as the supply dwindled, giving a "long tail" to its ability to catalog and supply new F3's.

Price adjusting
I suppose you've noticed that digital products tend to be priced higher when they come out and then usually fall somewhat after a few months or a year. One reason for this is to take advantage of the "latest toy" phenomenon, the fact that a small part of the target market is simply not price-conscious and/or will pay a premium to be the first to own a prestigious new product. 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. So it's better to err on the high side at first, and reassess as some hard data on demand is gathered.

Even this can backfire sometimes, as we saw with the Apple iPhone—demand was extremely strong for the product, and Apple quickly realized it had priced the product too high initially, so the price was quickly dropped by a large amount (I think it was $300). But this so angered early adopters of the iPhone that Apple ended up having to give rebates to early purchasers to keep them from getting alienated from its brand.

In the case of the Canon 5D "class"—both Canon's 5D replacement and its coming competitors—I suspect that pricing is more problematic than it is with DSLRs on either extreme of the scale. Canon probably has a very good idea what prices pros and pro-camera consumers will put up with (although it's possible that Nikon is currently kicking itself for pricing the D3 too low—notice that the price hasn't come down so much as a nickel, and the product is frequently backordered), and it probably has a very good idea of what's what at the bottom end of the market (where prices are more closely controlled by real costs anyway). But the middle ground might well be (appropriately) a sort of "gray area."

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Market targeting
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! In the planning stages, targets are selected not only for what can be offered (the engineering aspect of the problem) but also what should be offered from a perception and market-appeal standpoint (the marketing aspect of the problem). Some features that are present on less-expensive cameras (anti-dust measures or buffer-clearing rates, for instance) need to be incorporated in a higher-class model, or the better model will be seen as being "crippled"; however, some features present in lesser cameras should not be incorporated because they're seen as being typical of "amateur" cameras and their presence on the better camera would be seen as a turn-off by the target market—for instance, scene modes, and perhaps pop-up flash.

This targeting is growing ever more complex as DSLRs of various makes and models begin to offer unique or distinctive features in order to differentiate them from the competition. One problem Canon no doubt faces is whether to make a 5D replacement with sensor (in-camera) image stabilization. The company has gone with in-lens IS so far. Initially, when it had that feature all to itself, putting it in the lenses was probably much more profitable, as well as being more feasible. But now, some of its competitors are scoring points and sales with sensor IS, and Canon knows that at least one of its competitors (the A900) will be offering the feature. That creates a thorny problem. Would the lack of sensor IS in a 5D replacement be a drag to sales? Would its presence help sales? Would it be too expensive to implement? And, once that decision has been made, what about live view in its various forms, or an articulated LCD, or weather sealing, or any of a half-dozen other possible features in a feature mix? These are all essentially targeting problems, and they require intelligent guesswork.

The pitfalls of asking in advance
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. (Research subject guy: "Only if it has x, y, and z would I consider buying it." And, later, Potential customer guy: "It's beautiful, but since it has x, y, and z, it's too expensive and I can't afford it." And they're the same guy.) And second, people can only base their needs and desires on what they already know. 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. Maybe some new feature has low "thought appeal" but will have high actual appeal when the product is realized and photographers start trying it out and comparing notes.

A couple of examples: autofocus tested poorly before its introduction (and we all know how that went for the companies that decided against it on that basis). And the APS system was perhaps the most well-researched new product in photo-industry history—it consistently did very well among focus groups and in all kinds of market research. But it flopped pretty decisively when it was actually brought to market.

And back to our question
So, what would you guess would be the price of a Canon 5D replacement? It really depends on what Canon is planning the replacement to be. If it's essentially a "Mark II" version of the 5D, with more or less the same body, operability brought more or less up to date, and the same to half-again as many pixels, then the price could well be within a stone's throw of the current discount prices of the 5D—maybe $2,400 to $2,800 to start, maybe even $2,000. But none of us know what Canon is planning. Maybe the project is for an all-new, from-the-ground-up camera with a dazzling feature set and double or more the pixel count. If that's the case, then initial pricing at the level of the current pricing of the 5D is unrealistic.

A better gauge of upcoming pricing can be made if you have a pretty good idea what the proposed product's feature set will be. What, for instance, would be your guess as to the pricing of the Sony "flagship" A900? We don't know anything close to all the facts, but consider just a few of the facts we do know:

• It will have more megapixels than any other DSLR, ever.*
• It will be among a small, elite handful of full-frame DSLRs.
• It will be the only camera anywhere near its market position to have sensor IS.
• Nikon is selling all the D3's it can assemble priced at $5,000.

If the A900 were brought to market this minute, it could probably justify initial pricing (before adjustment) of at least $3k and possibly $4k. For it to cost $2k, just a couple of hundred more than the D300 and lower than the current price of the aging 5D, would be seen as a screaming bargain, so it probably won't be that low.

But now consider the very same camera if, before the A900 ships, both Canon and Nikon were to announce, and show prototypes of, their own new 5D-class cameras, with full-frame sensors, mid-sized bodies, and high pixel counts. And say one or both of them were aggressively priced. That would put considerable price-pressure on the A900, and rob it of that crucial "honeymoon period" during which it stands more or less alone in the marketplace. (This is a major cause of "aggressive announcing," where a company announces a product way in advance of its actual ship date—a strategy which can also easily turn around and bite it on the katuschka.)

Last one to go home, turn out the lights
In any event, pricing is probably one of the very last decisions made by a camera company before a new camera is announced. (I'm just guessing when I say that—I've never worked for a camera company and I'm not an industry insider.) I would venture to guess that it's also very serious business, especially with more major products, and I would guess that many heads, including some very high up in the company hierarchies, have to come together and burn the midnight oil in the run-up to new product launches in order to arrive at the magic numbers. So it's quite possible that when online forumers are happily predicting future prices of postulated but unconfirmed future cameras, the CEO and the CFO of the companies that are going to build them don't even know yet!

All of this is a pretty long-winded answer to the question, "what will the Canon 5D replacement cost?" The shorter answer, of course, is the first one: I don't know.

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*Yes, I'm aware that more pixels doesn't necessarily translate to better image quality. But that message hasn't yet trickled down to the market a whole.

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Comments

[Ben Marks]

$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

[Miserere]

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.

[Sam]

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.

[Mike Johnston]

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.

[Miserere]

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).

[Dennis]

"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" !

[Luc Novovitch]

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...

[Archer]

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?

[Archer]

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.

[davidb]

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?

[Mike Johnston]

"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.

[Scott]

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...

[Stephen Scharf]

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.

[Mike Johnston]

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.

[Stephen Scharf]

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.

[Paul Mc Cann]

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

[Adam Maas]

@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.

[Archer]

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!

[Mario Traversi]

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!

[Mike Johnston]

"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.

[Nate]

"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!

[Stephen Scharf]

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

[Mike Johnston]

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.

[Mario Traversi]

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.. :-)

[Stephen Scharf]

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.

[Eolake Stobblehouse]

"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.

[john]

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