Sans Mirror — mirrorless, interchangeable lens cameras  

Nauticam this week announced the NA-GH3 underwater housing for the Panasonic GH3 camera. As with most Nauticam housings, this one is engineered to withstand 100m depths and pretty much provides access to all the controls of the camera (which on the GH3, is a fairly large selection). Most controls are designed to be used even with thick gloves on. Support for the Inon and Sea & Sea underwater strobe lights is also included, as are Nauticam's usual 180° and 45° viewfinders.

Nauticam site

Pretty much everyone has reported their fiscal year (or in the case of Canon, first quarter) results now, and it's interesting to look at how the various camera companies positioned those. 

Panasonic had their second biggest loss, and such a big one that cameras really didn't come up much in their presentations and discussions, as the camera business isn't all that large compared to the rest of the company and its problems. Hidden away in some of the comments to the business press were indications that Panasonic might want to back away from low-end consumer cameras, plus they re-iterated their commitment to higher end products, but other than that they didn't say much that was useful in understanding how imaging is currently performing or will perform in the future.

Sony's financial presentation had a bit of good news: now that they've re-aligned divisions so that all the pro video and consumer still cameras are in the same imaging division, that division is (barely) profitable. Some of the rumors you're hearing about changes in Sony's future camera lineup plans are surely due to the reorganization and a renewed effort to bring the profit margins of that group up. What those mean in terms of actual products is still unknown though. Still, it's nice that Sony can now say that the group is profitable, as it takes a little of the pressure off and it makes Sony one of only three camera groups in Japan to show a profit for the year (Canon and Nikon are the other two). 

Of course, the big news on Sony is that they now have a major Western investor asking them to spin out their media and insurance businesses. The idea is that the cash raised by doing so would make for a good investor payout (;~) and provide much needed cash to reinvigorate the consumer products businesses. My take is that this isn't going to happen, but it certainly has shook up the Japanese investment community as they consider the implications of what will happen as more Western money continues to pour in and starts trying to shake things up. 

I've dealt with the Canon results earlier, and the Nikon's results are on the bythom.com site. Nikon, in particular, seems to be defying gravity, as it had the lowest readjustment downward of camera unit sales that I've seen so far. They missed their estimates, as did everyone else, but not by much. For the mirrorless crowd, the one nugget in Nikon's presentation was their goal by 2016 to have 25-35% of the mirrorless market and 45% of the DSLR market.

Olympus Full-Year Results

Which brings us to this week's main presenter: Olympus. 

Olympus blamed an "unexpected degree of compact camera market contraction" on missing their goals, but remember, Nikon made their numbers in compacts and gained market share during that same period. But even mirrorless wasn't exactly hitting it out of the park for Olympus: their original estimate for the year was 42.5b yen in sales, and they ended with 37.8b yen in sales. That's an 11% miss. Olympus' original goal was a 1b yen profit, and instead they lost 23.1b yen, or about 21% of sales. True, reducing expenses and trimming staff and resources were part of what contributed to that loss, but remember, they thought they would make a profit, and they didn't. It isn't because they trimmed more than expected, it's straight out that they sold less than expected.

I should also point out that several analysts mentioned to me the same thing: the Olympus comments on the imaging group seemed like deja vu: it wasn't us, it was the market, and we'll just cut expenses and be okay. That's been a common theme in Olympus' reporting on their imaging business for three years now.

Olympus' (mostly old ;~) goals in imaging are simple: 

1. Minimize risks in the compact camera operations (hmm, sounds like Panasonic)
2. Focus resources on high-margin mirrorless cameras (hmm, sounds like Panasonic)
3. Improve responsiveness to market changes (hmm, sounds like last year)

The problem I see with what Olympus presented is that doing these things seems to still keep them in the red. They're cutting in half their compact camera sales, mostly by dropping the V line, which reduces their net income. It's unclear how much that lowers their expenses. Back-of-the-envelope calculations tell me that even if they could increase mirrorless sales 20%, the 50% expected drop in compact sales still means they'd probably have to figure out how to reduce their SG&A expenses by over half. Curiously, they are only listing a 21% reduction. How they achieve that 21%: close three of their five plants, cut R&D expenses by reducing models, reduce the imaging group staff by 30%, and consolidate overseas sales groups. At least two (and probably three) of those four will likely cause further write downs in the current year and produce a loss, though Olympus is predicting no profit and no loss for the coming six months and for the coming year, basically a 0 on the profit line. Long-term, a leaner organization they say will produce a small profit with no gain in sales. 

There's also the "achieve strong growth in conjunction with mirrorless market trends." Uh, the mirrorless market isn't really growing at the moment and it actually shrunk for Olympus last year. The only way to grow at the moment is by gaining market share, but in the last quarter it appeared Olympus lost share again. Even more curious is that Olympus seems to be planning flat sales for all four of the next years (stuck at 100b yen). How that lines up with the term "strong growth" I don't understand. The "Medium- to Long-Term Direction" they reported looks mostly like a wish on the candle's of a kid's birthday cake: "we wish for flat sales but also that we figure out how to sell a mix of compacts and mirrorless that makes a small profit."

The bottom line on Olympus is simple: they're doubling down on mirrorless (which is good news to this site's visitors), though they don't think that's going to bring them any growth in overall imaging sales revenue over four years. They do think it will return them to some form of weak profitability. But we've got a new claim to remember: Olympus says they won't lose money on cameras in the first half of this fiscal year (April through September). So we've got a very near point at which we can measure whether they're managing what they say they will.   

Coupled with the recently announced E-P5 and Olympus' stated upscale goals, my guess is that the OM-D E-M6 will be more expensive than the current E-M5. At least that's what I'm reading between the lines.

Overall, the medical sales continue to drive Olympus. It's their main business, it's profitable, it drives their cash flow, and it is the future of the company. Whereas Nikon has become more and more a camera company (now 75% of their sales), Olympus is going the other way: cameras are becoming less of their sales (currently 14.5%, and projected at 11% in 2017). One analyst put it this way: a healthy medical supply company with a small, unprofitable camera venture that creates financial drag. Even under Olympus' optimistic 2017 forecast, the camera group wouldn't provide real ROI or profit growth for them.  

We've known about the 32mm f/1.2 for the Nikon 1 system for quite some time, as Nikon first gave us a development announcement on the lens last year. Today, it's been pre-announced. In June, it'll arrive. It's the old tell 'em what we're going to tell 'em, remind them what we're going to tell 'em, tell 'em marketing scenario. 

The 32mm is a much awaited lens, as it's the equivalent of an 85mm portrait lens (35mm equivalent) and fast. This should finally give Nikon 1 users the ability to clearly separate subject from background, though at a longer distance than the larger sensor format cameras can do it. Given how good all the recently introduced Nikon 1 lenses have been optically, we're all waiting to see just how well the 32mm performs. At US$900 with nano crystal coating, our expectations are high.

As always, I've created a database page for the new lens. 

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As part of their presentations in Japan to launch the new E-P5 camera, Olympus updated their "mirrorless market share" document a bit and offered a new statistic.

First the mirrorless market share graph:

While it's a little difficult to interpret from this quick screen grab, the overall sense is still there: mirrorless' portion of interchangeable lens camera sales has grown over time. Well, true. It started as zero, after all, so any sales at all would be seen as growth. Note that there was a spurt in many of the Asian markets in 2010. That was the year of the E-PL1, the NEX-3, the GF2, and lots of end-of-life sales on the E-P1 and GF1. I suspect that much of the acceptance then was based upon the confluence of low price and small package.  

Olympus still hasn't stated exactly what these numbers are based upon—and given the Korean market's relatively flat results since the Samsung NX was introduced, I have to wonder if Olympus is even counting the Samsung mirrorless cameras—plus the numbers only seem to extend through the first quarter of 2012, which is also curious given the things I've been noting about mirrorless growth recently.  

Along with that chart was another statistic: "90.2% of DSLRs are left at home." Again, no details were given about this claim other than it was from an Olympus survey. But note that we don't have an analogous figure for mirrorless cameras. It might be that 89.8% of mirrorless cameras are left at home, it might be 10%, but we don't know. This is an old reliable tactic: using an isolated statistic to apparently damn something. But in isolation, the statistic actually doesn't tell you anything. You have to know the context, and how alternatives fare to make any conclusion from it.

The overall context of Olympus' presentation went something like this:

1. We invented the mirrorless market (and Instagram!*)
2. Mirrorless is taking market share away from DSLRs
3. We have the biggest market share in Japan
4. People don't use DSLRs
5. The new Pen works with your smartphone and you'll carry it

What's the sub-tone here? Olympus probably won't be making any DSLRs in the future ;~). If they do, then they have the age old back-tracking marketing movement to make, a practice I call Crabbing (not moving the direction you're facing). 

What I was looking for in the Japanese presentations was something that told me how Olympus saw the E-P5 differently than the OM-D E-M5. The tag line for the product probably is the answer to that: Share Beautifully. In other words, the WiFi to smartphone connection. (I'll have a lot more to say about all these WiFi to iOS/Android app attempts soon.) Of course, the E-M6 is likely to have it, too, so other than the built-in flash and external EVF versus external flash and built-in EVF, I'm still not quite feeling the model differentiation. 

* Art filters. A bit of a difference, though. Generally you need to take a photo when it happens: it's the moment that counts. If you risk taking that photo with a pre-applied effect, you may not get the photo you want. The whole Instagram thing was more discovering a style that fits the photo you took, not take a photo in a particular style. It's a subtle distinction, but an important one. As I write on bythom.com: for me a camera is a tool to capture "optimal data." I very well may manipulate that data down the chain, but I want the best possible data capture to fuel my manipulations. Heck, I may layer a manipulation on top of a manipulation, and I'll want to start both from a base set of data. I've personally never found the Art Filters all that useful, as they force me into a very specific manipulation in the original data capture, leaving me fewer choices downstream. That's not to say I never use them. They are certainly useful for examining spontaneous creativity. 

Today is the 50th anniversary of the original Pen F, and Olympus has used that occasion to launch several new products and variations: the E-P5 and E-PL6 (Japan only) cameras, the VF-4 electronic viewfinder, and black versions of their prime m4/3 lens set that hasn't had that option before (17mm, 45mm, 75mm).

The big news, of course, is the E-P5 and VF-4 EVF. Essentially, the E-P5 is an OM-D E-M5 without the built in EVF, styled slightly more like the original Pen F. There are a few changes from the E-M5, with a number of the subsystems getting small tweaks (focus, stabilization, LCD upgrade, etc.). One such change is the addition of WiFi. The imaging sensor and basic UI is basically the same as the E-M5, though, including front and rear command dials. The E-P5 is available in black, silver on black, or silver on white body styles. The E-P5 body only will sell for US$1000, the kit with the 17mm f/1.8 lens and VF-4 EVF is US$1450. The products should ship in mid-June.

The VF-4 is a 2.36m dot 1/2" LCD with eye detect capability that sits in the hot shoe and gets power from the accessory slot just underneath that. Like previous optional EVFs, it also tilt up to vertical. By itself, the VF-4 is US$280. As you can see from the above photo, the VF-4 makes for a substantial bulk above the E-P5 body, an even more pronounced hump than is on the OM-D E-M5.

The E-PL6 is a slightly tweaked E-PL5 that is only available in Japan. Only minor changes were made, including a shorter shutter release lag (on touch AF), a new ISO Low (100) setting, interval shooting from 1 second to 24 hours, time-lapse movie capture, and a built-in level function. 

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