Growth Returns To d-SLR, Hybrid Cams

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NEW YORK —

Last year, one of the shining stars of U.S. camera business was the d-SLR, as consumers in increasing numbers looked to advance the limited shooting experience they enjoyed using smartphones and highly automatic point-and-shoots with more elaborate models allowing creative flexibility.

Come 2011, a combination of sustained economic doldrums and the shock of the tragic tsunami in Japan limited last year’s impressive growth rates somewhat as a number of factories struggled to get back online.

But several recent positive indicators has two leading U.S. camera market analysts bullish on improved growth for the interchangeable-lens camera segment (known as d-SLRs and mirror interchangeable-lens cameras) in the second half of this year.

The NPD Group’s senior imaging industry analyst Liz Cutting told TWICE, “Supply, more so than the economy, does seem to be impacting d-SLR sales. Detachable-lens camera sales were delivering consistent double-digit year-on-year increases since March of 2010. Then in May 2011 we went to a sudden decline of 6 percent.”

She pointed out that the week of Mother’s Day, which is typically a great sales week for camera sales, “still saw d-SLRs in decline, but Father’s Day week brought us back into positive d-SLR unit momentum as a whole, even at higher price points, even with continued supply constraints.”

Similarly, IDC world digital imaging solutions research manager Chris Chute said softness in the d-SLR business this year “looks like a combination of the tsunami effect on distribution in April and May and the continued soft economy.”

Still, Chute said IDC expects camera vendors to offer interchangeable-lens cameras as compact-camera alternatives this year, at “attractive price points below $500” to spark demand.

IDC predicts more than 4 million d-SLR units shipping to the United States this year, and mirrorless interchangeable-lens camera sales to top 1 million units, assuming either a Nikon or Canon entry this year “at those low price points.”

Despite significant percentage sales growth, the mirrorless interchangeable-lens camera segment seems to be a minor factor” on the weaker d-SLR business, Chute added.

Cutting said “mirrorless hybrids grew from next to nothing in May year to date (YTD) 2009 to 8 percent of the detachable-lens camera market YTD May 2011, and 5 percent of revenue, but that pales compared to the share they are establishing in Japan.”

According to NPD, U.S. d-SLR sales YTD in May 2011 were up 6 percent in units and 8 percent in dollars while mirrorless hybrids grew at well over 100 percent in both units and dollars.

“However we don’t believe the hybrids are eroding growth of the d-SLR market,” she said. “NPD’s `Next Camera’ study conducted at the end of 2010 revealed that those most likely to buy a mirrorless hybrid camera were current d-SLR owners looking for a smaller second camera to carry along.”

The primary attractions to compact mirrorless models, she said, are less shutter lag, higher performance in low light, and ease of portability.

Consumers “want the capability of a long zoom, but lens interchangeability isn’t necessarily at the top of their list. They want function without complexity. For this audience a higher-end compact camera may well fill the bill,” said Cutting.

Awareness rates of mirrorless hyrid cameras in the U.S. are still quite low, she said, “and it takes time to build not only awareness but desire among a compact step up audience like young women. I think these cameras are going to need a stronger share of voice in the marketplace to drive that desire, but the potential is there.”

IDC’s Chute said he expects camera manufacturers to continue adding more options to both the d-SLR and the compact interchangeable-lens (hybrid) camera segments this year.

“I predict that as we saw with [the recent] Olympus Pen announcement, vendors will position low-end d-SLRs and mirrorless models as point-and-shoot alternatives at $400 and below price points,” he said.

Chute pointed out that in the interchangeablelens camera business, two key trends are now playing out:

“One is from Panasonic, Sony and Olympus, who are seeking to gain share in the interchangeable lens camera space. The other is Canon and Nikon seeking to fend off these competitors and maintain share. This is happening on a global level, so Canon and Nikon are likely looking at offering mirrorless cameras, which provide a smaller footprint, as competitive offerings to those from the former vendors,” Chute said.

As for retail channels capitalizing on the mirrorless interchangeable- lens camera space, Chute said “mirrorless seems to be gaining some traction in Best Buy, as we see Sony and Olympus end caps and special displays at the camera bar feature this type of product.”

As for other channels, NPD’s Cutting said that “in the early days of the mirrorless hybrid cameras, it was the photo specialty channel that sold the majority, and despite a more mainstream distribution for mirrorless hybrids we continue to see the specialty channel take a big piece of the action.

“Photo specialty dealers should welcome mirrorless hybrid cameras with open arms,” she continued. “The opportunity for the specialty dealer is to use and build the compact system camera buzz to introduce and educate consumers on how to use them and how to outfit them.”

For the holiday selling season, IDC’s Chute said he is looking for manufacturers to step up promotions and advertising around the d-SLR and mirrorless interchangeable-lens camera categories.

“Not necessarily Black Friday promotions, as deals around that one day tend to be more door-buster in nature,” Chute said. “Still, for that weekend into Cyber Monday, I would expect price drops, rebates and more for the interchangeable- lens camera segment.”

As for the impact of the new interchangeablelens camera activity on the advanced point-andshoot camera market, NPD’s Cutting said one of the price point ranges “with the least decline in the compact arena has been $300-plus cameras, where primarily d-SLR manufacturers own the space. So we’re seeing growth in d-SLRs, a slighter decline than average in higher-end compacts and the rise of the mirrorless hybrids.”

At the entry end of the point-and-shoot market, Cutting said that despite the constant talk of the smartphones cannibalizing compact cameras, “we have seen recent success within the sub-$100 camera space, where bigger brands are playing more and consumers are replacing existing cameras with those they consider “good enough.”

“What consumers are also telling us is that the more money they are willing to spend on a camera, the more brand loyal they are going to be. As we know, most d-SLR sales are Canon or Nikon. Either’s entry into the hybrid market could prove the catalyst to the next growth spurt.”

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