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Cameras

For camera makers, hope lies in pricey devices for the few

As smartphones replace point-and-shoots, companies from Nikon to Fujifilm are scrambling to build premium product lines. That's great news for photo enthusiasts.

Samsung's camera ambitions are most visible in its new NX1, a mirrorless camera shown here with a new 50-150mm f2.8 lens.
Samsung's camera ambitions are most visible in its new NX1, a mirrorless camera shown here with a new 50-150mm f2.8 lens. Stephen Shankland/CNET

COLOGNE, Germany -- There's never been a better time to be a photo enthusiast. For that, you can thank the crater that smartphone photography blew in the middle of the camera industry.

With most consumers gravitating toward their phones when it's time for a snapshot or video, it's been hard to convince anyone to buy a regular point-and-shoot camera. As a result, camera makers have concentrated their resources on the smaller but still sizable market for higher-end products. They're chasing after the advanced amateurs and professionals who'll still pay for top image quality, for lens flexibility a phone can't provide, for the pleasures they derive from photography's marriage of artistry and technology.

"For digital photography, the direction is to cope with the smartphones," said Toshiyuke Terada, manager of Olympus' product planning and marketing, in an interview at the Photokina show here earlier this month.

The result has been a bumper crop of gear for discerning, well-funded photographers. There are SLRs that can shoot even in the dark, sharp new lenses ranging from ultrawide to supertelephoto, and an emphasis on rugged designs that can withstand bad weather and punishing travel. Another surge of competitive vigor comes from new "mirrorless" cameras that have put giants Canon and Nikon on the defensive.

"The market for people who just say 'I want to take a good picture' is already being addressed by the phone," said Jim Malcolm, Pentax's executive vice president overseeing North American operations. The high-end market, though, is feistier than it's been for decades.

Hard times

How bad has it been for camera makers? Very bad.

In 2010, the crest of the market, the industry shipped 121 million digital cameras, according to the Camera and Imaging Products Association. In 2013, that had plunged to 63 million, with revenue dropping from $15.1 billion to $10.8 billion. So far 2014 looks to be another big step down.

Digital camera sales have plunged in the last four years, but higher-end cameras with interchangeable lenses have been spared the worst.
Digital camera sales have plunged in the last four years, but higher-end cameras with interchangeable lenses have been spared the worst. Camera and Imaging Products Association

But a closer look shows things aren't so bad for premium products. CIPA separates its statistics into two categories. First are cameras with fixed lenses, chiefly the point-and-shoots that are fading away. Second are cameras with interchangeable lenses, which includes the familiar bulky SLRs and their smaller mirrorless rivals.

As the overall market shrunk, the interchangeable-lens camera category actually grew from 12.9 million units shipped in 2010 to 17.1 million in 2013. Revenue rose from $4.6 billion to $6.2 billion.

Sigma CEO Kazuto Yamaki at Photokina 2014
Sigma CEO Kazuto Yamaki at Photokina 2014 Stephen Shankland/CNET

In the view of Kazuto Yamaki, CEO of lensmaker Sigma, the market isn't collapsing, it's just reverting to a more natural state. "In my opinion, it expanded too much, and now it is coming back to the normal situation," Yamaki told CNET. "The people who like photography stayed the same. It was a bubble economy for the digital camera market."

Interchangeable-lens camera sales peaked in 2012. Although figures for 2014 so far show little cause for optimism, it's no surprise that the camera industry is galloping toward these higher-end products.

Among the important cameras arriving in this category at Photokina:

  • Nikon's $2,300 D750 , a high-end SLR with a large 24-megapixel full-frame image sensor for top image quality. It's got improved autofocus, weatherproofing, and video.
  • Canon's $1,800 7D Mark II , an SLR that sets a new high-water mark for the company's SLR line that comes with the smaller APS-C sensor. It's got better image quality, a new 20-megapixel sensor, burst-mode shooting, autofocus, low-light performance, ruggedness, weatherproofing, and video features.
  • Samsung's $1,500 NX1 , the Korean company's highest-profile challenge to a Japanese-dominated industry. The NX1, a mirrorless model, has a 28-megapixel sensor, advanced autofocus, and weatherproofing, and works with a new $1,600 50-150mm f2.8 lens.
  • Perhaps most unusual is the Panasonic CM1, an Android smartphone with a slim but high-quality camera. Its estimated price of €900 would translates to about $1,170, but Panasonic plans to sell it only in France and Germany.
The Panasonic CM1 is an unusual marriage of Android smartphone and slim, higher-end camera.
The Panasonic CM1 is an unusual marriage of Android smartphone and slim, higher-end camera. Stephen Shankland/CNET

Interchangeable lenses are nice for photographers who relish a variety of views -- telephotos for distant wildlife, wide-angles for landscapes, something in between for on-the-street photography, macros for close-ups. But they're nice for camera makers, too, because they help keep customers coming back, first for new lenses, then for new camera bodies.

That's also why Canon, Nikon, Samsung, Sony, and Olympus introduced new high-end lenses at Photokina.

Poster child for the high-end shift

One company embodies the shift well: Fujifilm.

It mainstay film business of course collapsed, and bigger players mostly pushed aside its early digital camera efforts. But in 2010, Fujifilm introduced the X100, an unusual model that combined a fast, fixed lens with a large image sensor and retro rangefinder look. It caught photo enthusiasts' attention, and since then has been followed by interchangeable-lens models like the Fujifilm X-T1 with broader appeal and have fleshed out the system with 15 lenses so far.

The $600 Fujifilm X30 doesn't have interchangeable lenses, but it embodies the shift toward high-end compact cameras.
The $600 Fujifilm X30 doesn't have interchangeable lenses, but it embodies the shift toward high-end compact cameras. Stephen Shankland/CNET

"We knew compact cameras were going to decline. We sensed that. We wanted to get back into serious photography," said Yuji Igarashi, Fujifilm's director of business and product development. "We decided to develop the X100. We needed to prove we could make a high-quality camera."

And it worked. The company's products are critically acclaimed, a major player in the market for mirrorless cameras. "They've carved themselves a nice niche," said InfoTrends camera analyst Ed Lee.

The interchangeable-lens camera market powerhouses remain Canon and Nikon, whose SLRs are used by new parents, art students, advanced amateurs, and professionals. But they've been slow to move to the new mirrorless camera technology from Fujifilm and others that offers smaller camera bodies and lenses.

Mirrorless rise

The "R" in single-lens reflex stands for the reflex mirror that reflects light traveling through the lens into an optical viewfinder. The reflex mirror pops out of the way when a photographer shoots the photo, letting the light travel instead onto the image sensor. It's a tried-and-true technology, refined over decades, but image sensors offer a different, mirrorless approach.

With the mirrorless cameras, the light travels directly to an image sensor all the time. Instead of composing shots with an optical viewfinder, photographers look either at the camera's screen or at a smaller electronic viewfinder. With no mirror between the lens and the image sensor, the camera lenses and bodies can be made more compactly.

The OM-D E-M1 is the flagship of Olympus' mirrorless camera fleet.
The OM-D E-M1 is the flagship of Olympus' mirrorless camera fleet. Stephen Shankland/CNET

It hasn't been easy. Mirrorless models have struggled with slow autofocus, short battery life, and electronic viewfinder displays that have coarse resolution or are slow to refresh when a photographer is moving the camera around.

But the mirrorless movement has been commercially successful. It gave camera makers a new way to challenge Canon and Nikon. First came Olympus and Panasonic, allies whose Micro Four Thirds technology lets customers share lens designs from both companies. Next came Sony and Samsung, which used a somewhat larger image sensor -- the same "APS-C" size as are used in low-end to mid-range SLRs. That's the size Fujifilm picked, too. Next was Pentax, with its diminutive Q series, and then last to the mirrorless market were Nikon with its 1 series and Canon with its EOS M series.

"Nikon and Canon are really strong -- they're kind of dominating the market. It's really tough to open up the market beside them," Terada said. "But for mirrorless, there is a lot of opportunity."

One useful attribute of mirrorless camera design is that it can be adapted for different camera styles. In Olympus' case, that means the OM-D line, which looks like a compact SLR, and the Pen line, which is slimmer and more consumer-friendly.

"Our resources are now a little concentrated to professional lineup," Terada said, which is why the company just announced its high-end 40-150mm telephoto zoom with a fast f2.8 aperture. Next on the list are a 7-14mm f2.8 ultrawide zoom and a 300mm f4 supertelephoto.

Slumbering giant awakes

In some ways it was easier for Fujifilm to make the mirrorless switch: its earlier failings meant it didn't have much to lose, and it didn't have to support a huge customer base as do Nikon and Canon, with customers who keep coming back for more traditional SLR lenses and camera bodies.

"If we had had that type of business, it would have been a tough decision," Igarashi said. "We are in an easier position to be aggressive."

Canon's 7D Mark II debuted at Photokina along with this compact 28mm f2.8 pancake lens.
Canon's 7D Mark II debuted at Photokina along with this compact 28mm f2.8 pancake lens. Stephen Shankland/CNET

The SLR leader isn't about to scrap its SLR business -- indeed, Canon is expanding its SLR lens line and just cut prices on high-end lenses to be more competitive. "From a value standpoint, SLRs remain a leader," Canon technical adviser Chuck Westfall said.

But it's evidently got higher hopes for its mirrorless line, too. At Photokina, Canon said it will to fleshing out its EOS M lens family, too. The mirrorless EOS M cameras have been a dud in the US, with Canon not even bringing the second-generation model to market there, but Westfall said Canon is "committing to the future of that system."

Room for so many?

It's likely there will be consolidation as customers gravitate to one camera-lens system or another. Right now there are a dozen separate interchangeable-lens systems: two each from Canon, Nikon, Pentax and Sony, and one from Panasonic, Olympus, Fujifilm and Samsung. On top of that are four more from the even higher-end medium-format market, with systems from Mamiya/Phase One, Pentax, Leica and Hasselblad.

It's an embarrassment of riches, as long as you're embarrassingly rich -- or at least willing to spend hundreds of dollars to get started. With all the choices, you could be forgiven for sitting on the sidelines to wait for the dust to settle a bit. And taking more pictures with your phone.

The camera makers are OK with that. Smartphones are as good as anything to get people hooked on photography.

"We're getting more and more photo enthusiasts as a result of the mobile phone," Pentax's Malcolm said. "At some point they hit a wall and say, 'I want more.'"