Nikon sales are down, but profits are up. Study suggests this pattern will continue

Nikon have released the financial results for the Image Products Business for the first quarter of the year. The report mentions that sales have dropped 8.9%, although net income has increased 176.2% over the same period last year.

Another report by Credence Research suggests that this may be the beginning of a trend. They cite smartphones and tablets as the biggest threat to both fixed lens and interchangeable lens cameras.

Credence believe that digital cameras will continue to prop the market up for the next few years. What exactly they class as a “fixed lens camera” isn’t clear from the summary. Is it just larger sensor cameras like the Fuji X100T? Or do they include all cameras that don’t function as something else like phones? Does it include 360° VR and action cameras? Both of those are definitely on the rise.

If sales are going down, it does make one wonder where all the extra money will be coming from. I can’t see too many people ditching their DSLRs or mirrorless in favour of cellphones and tablets. But those DSLR and mirrorless users might be the few that remain in the above graph.

It could simply mean that the lower end of the market is being phased out. When was the last time you actually bought a point & shoot or bridge camera? I quit looking at them when I got an iPhone 4S several years ago. These days, a point & shoot would have to be pretty impressive to tear me away from my iPhone SE.

With sales going down, and revenue so high, it does make you wonder how expensive the cameras will get. Perhaps they just expect more people to jump straight from their phone to a Nikon D5 (or whatever the current high end models are at the time).

I don’t think it’s too unreasonable to assume that camera buyers, whether mirrorless or DSLR, are becoming more discerning. They’re buying higher end gear sooner in the hopes of growing into it. Or, they just don’t want to have to replace something entry level after a couple of years and waste money.

If you want to read the full report, and have $4,325 burning a hole in your pocket, you can get it here.

How do you see camera sales going in the future? Let us know your thoughts in the comments.

Brad Connolly

maybe they’re charging more than they should for their product.
pandacongolais

If they continue to :
– make defective products (D600 -> D610, D750, D500 …)
– mess with my workflow (no forward nor backward compatibility between Capture NX2 and NX-D, and a lot of work at risk because of that)
– raise lenses prices when logic would dictate lower prices

then, I predict that sales will continue to go down, but revenue will end to go up one day.
I just hope to migrate to Canon/Sony/Pentax before it happens.
Vortex

the real question here is, is the profit up because of nikon earning more money or is the profit up because nikon spends less money?

nikon was restructuring the past years and they droped support to a bare minimum.
i have not looked at the numbers.. i wait for thom hogan to explain them to me.. :)
Fred Smith

The author is not an expert regarding financial analysis. If fact, NIKON is having a rough time. Without writing paragraphs about analysis consider this:
1) Cash flow from operations continues to decrease.Whenever CFFO drops while reported income rises, you have to ask: Why? How?
2) Nikon did change accounting methods (you have to read the footnotes) http://www.nikon.com/about/ir/ir_library/result/pdf/2017/17_1qf_c_e.pdf . On a percentage basis the combined profits are up by a large percentage, but that is unlikely to continue. The change in accounting goosed reported revenue and profits but not cash flow.
3) The segment in question continues to do poorly due to the rise of the smartphone. You no longer see the dentist on vacation lugging a DSLR, do you? Most people now use a smartphone.
4) One better financed competitor, Ricoh, is underpricing Nikon by 30%-50% with similar offerings (actually, the Pentax brand gives more features). So far, Pentax still has a very low market share outside of Japan. Should Pentax, SONY and others start predatory pricing that actually gain market share Nikon will be hurt the most.
Matthew Whited

“this will pattern continue”?
pincherio

“Fixed lens” cameras refer to cameras whose lenses aren’t interchangeable. These include the segment we know as “point and shoot” but does not include smart phones. I am not quite sure whether action cams are also included in this segment or whether they have a whole ‘nother segment to themselves.