The m4/3 Users are Nervous

(commentary)

Over the last few months I've gotten more and more emails asking about whether m4/3 is going to stay alive or not. Usually phrased like this: "if I buy an m4/3 camera now will the company still be in business in a couple of years?" This angst-driven question hit record heights this week when Lloyd Chambers started a series of comparisons between the states of APS and m4/3 mirrorless systems and wrote "there are no reasons that [m4/3] ought to survive, at least not at present."

I understand where Lloyd's coming from. We're getting a wide array of options, very few optimized within a system, and design decisions the Japanese companies are making often compromise the things that a system should be good at. That's an article for another day, though. 

The question at hand, and which I'm having to answer multiple times daily, is what's the future of m4/3? As in: is there a future in m4/3? 

Let's start with Panasonic. I start there because Panasonic as a company has been in dire straights financially and the CEO has instituted a "a foreseeable 5% ROI or we drop the product line" policy. That Panasonic didn't immediately add cameras to the list of businesses they were shutting down is a good sign, I think. A sign that they believe they can get cameras well above break-even. The situation in the retail market isn't helping them, as camera sales are dropping worldwide at the moment. Nevertheless, it appears that they believe that they can save the division. So short term, at least, Panasonic will slog on. Indeed, we should have another camera announcement shortly (GX7), and there are multiple pending lenses that will eventually be added to their lineup, as well.

What I worry about here in the US with Panasonic is sales and support. They're already mostly invisible in dealerships, and their support mechanisms seem a bit disorganized in the US, too. Most of Panasonic's problems with cameras aren't actually the products themselves; it's their sales, distribution, marketing, and support mechanisms. I'm sure they're much better at those things in their home market of Japan, and maybe throughout Asia, but we've seen a shrinking of Panasonic's presence in the US, and that erodes buying confidence. Such problems feed on themselves. If Panasonic doesn't fix its US public-facing presence, they'll get fewer sales, which will make them cut back on marketing and support even more and keep the vicious loop going.

Olympus is also an interesting case. Despite a healthy medical business, they're not out of hot water yet financially, as the recent surprise stock offering should indicate: almost none of the money being raised appears to be going into the running businesses. The cynical evaluation is that the existing Japanese bank stockholders forced the stock issuance on Olympus to keep those stockholders from picking up any tabs on the fraud litigation and to start paying them a dividend again. It doesn't really reduce any pressure on the day-to-day businesses to generate much-needed cash. 

And the camera group at Olympus is losing money. Indeed, as I've reported, even the mirrorless camera group at Olympus is losing money. They need to sell 1m mirrorless cameras a year to break even, but they'll fall far short of that this year. So some worry that Olympus will close down the camera operations rather than continue to lose money. 

The problem with such guesses is that we're talking about Japanese businesses, and they act differently in financial crisis than Western businesses. We actually have a very good example to look back upon: the end of the film SLR business. Film SLR sales actually peaked in the late 1980's, but that didn't stop everyone from trying to ramp up to take advantage of the big swing upwards of camera sales in the 80's (mostly driven due to the entrance of autofocus). In the 90's we had essentially two big profitable SLR companies that dominated market share: Canon at near 50% of the market and Nikon at about 25% of the market. That left slim pickings for the rest as SLR sales started to come down off their peak. But it didn't really stop any Japanese company from pursuing it, even if they lost money. 

Digital camera sales peaked at a far higher number than film camera sales. The reason why we have so many players is everyone wanted a piece of the growing pie. As I've written before, a rising tide floats all boats. We're now, however, in the same situation as with film: the tide is slowly going out again and we're seeing some of the boats struggle to stay afloat. 

So certainly Olympus and Panasonic, with their small market shares, are under high stress in the camera business. That doesn't mean they're going away any time soon. There are two important things to remember here:

  1. History tells us that as long as there's perceived opportunity across product lines, the Japanese will stick by their sunk investments in cameras/lenses. Both Panasonic and Olympus have related businesses that get some benefit from continued development of cameras and optics, too, which helps them justify the expenses. 
  2. If the camera is good today and it will last a long time (well built), then you need to evaluate it from that standpoint. It's not as if you're buying a new camera every year, and if you are, you really need to ask yourself why; today's cameras are excellent and can provide years of shooting satisfaction. See this article.

It's that second point that's most important here. If in your evaluation an m4/3 camera is the best choice for you today, I wouldn't hesitate to buy it. And yes, I've put my money where my mouth is: I use an m4/3 system in my backcountry work because it has a high enough quality for the work I do but gives me that with far less size and weight than either my DX (APS) or FX systems. There are already plenty of lens choices, and enough m4/3 lenses have already been made that we'll have plenty of choice on the used market in years to come, no matter what happens to the camera makers. 

The answer I usually give to those that email me is what I just wrote, and I would go a bit further: at the moment I see no reason to question m4/3 as a viable system. Perhaps the makers will have a change of mind in the future, but that does not appear to be on the table at the moment, and frankly, any of the camera makers of any system can (and do) have a change of mind at any time. Many of them seem to be scrambling about trying to find products that have some traction, even if they compete in some way with products they're already making (a really good case in point would be Canon, with the EOS M, SL1, and T5i, all of which are very similar at the image making core, but different in outward size, appearance, and controls; note that the EOS M seems to have been withdrawn from the US market entirely at the moment). 

Bottom line: buy what you think is best for you now and will last you for a few years of pleasurable shooting. If that's an m4/3 product, go for it.     

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