New York Times Tackles Fujifilm

You don’t expect the New York Times to publish misleading statements (or at least statements that can be easily misinterpreted), but that’s what they’ve done in a recent article on Fujifilm’s X-series. Nonetheless, there is some real meat in the article, so let’s look at some of the statements in the article and evaluate them properly:

“Over the last decade, as Fujifilm’s erstwhile rival Eastman Kodak was descending toward bankruptcy — it recently emerged from Chapter 11 proceedings — Fujifilm was transforming itself from a maker of 35-millimeter film into a provider of a range of digital imaging technologies.” 

Actually, so did Kodak. They developed a sensor division, they designed and built digital cameras including the original DSLRs, they bought Chinon in Japan to have better access to Japanese design, supply, and manufacturing for digital cameras, and more. And both Kodak and now Fujifilm eventually lost a substantial amount of money in the switch from film cameras to digital. The difference is that Fujifilm was quick to reposition their film business for other industries (LCD panel production, for instance), and that Fujifilm had a very large, profitable business in document imaging that they acquired from Xerox, so any losses in their small camera business were and are absorbable.

The implication of the NYT quote is that Fujifilm’s transformation from 35mm film to digital cameras saved the company. It most certainly did not. First, it didn’t just transform from a film company to a digital camera company, nor did the change from some analog to digital products in one division create meaningful long-term success in terms of profit. Exactly the same as Kodak. 

“The X series is a different response [to sales declines].”

Not exactly. The first X camera was previewed at Photokina 2010 and appeared on the market in early 2011, before the big camera sales declines were in full gear. If you go back and look at their statements at financial results conferences, you’ll see that Fujifilm at the time was betting big on compact cameras for their future, especially selling into emerging markets. The X100 was a surprise hit at Photokina to Fujifilm, and it was rushed into production. But let’s put “surprise hit” in perspective. I believe that the first year’s run of X100 cameras was about 100k units. Remember, the market for digital cameras at that time was above 100m units. 

There is an element of truth to the NYT statement in that Fujifilm has now transitioned their focus to the X products because those are the products that they can see themselves able to grow and which have reasonable gross margins. But is it “a different response”? Different in that others aren’t doing the same thing? Not really. It’s only a different response than continuing to make a ton of poorly differentiated compact cameras in a market that won’t buy them.

“These cameras fit into a category called mirrorless, which has been a relative bright spot for the industry.”

A “bright spot” according to the NYT is a decline of 13% and a 5% increase in value of “shipped cameras.” I put that in quotes because shipped does not mean “sold to customer.” Moreover, the very next statement starts to make us wonder about the implications of bright spot statement:

“The company says it has sold more than 700,000 X-series cameras since the first model, the X100, was introduced in 2011.”

Eek. Let’s assume for a moment that only 300k of those are the X10, X20, X100, and X100s, none of which are mirrorless. I suspect that number is far higher, but let’s give Fujifilm and the NYT a little wiggle room here. That leaves 400k mirrorless cameras sold by Fujifilm over the course of two years. By contrast, Olympus expects to sell 660k this year. Sony and Nikon both have sold more than that. 

We now know what the word “smoothly” that Fujifilm keeps repeating in their financial reports about X series cameras means: not a lot of sales. 

Let’s further assume that Fujifilm sold 3/4’s of those mirrorless cameras this year. 300k units is less than a 10% market share for mirrorless cameras for Fujifilm. And that’s assuming that the numbers slanted towards mirrorless favor in X models, something I think unlikely. It’s more likely that Fujifilm sold far more compact X cameras than mirrorless, which will make the numbers look worse. So for this year, using this new number revealed (but not verified) by the New York Times article, I think it’s safe to say that Fujifilm’s mirrorless market share is in single digits, and likely between 5% and 10%. 

“Fuji kind of pioneered the high-end mirrorless niche,”

Okay, this is the Times quoting someone else, but the quote is left unchallenged by the article. The Leica M9, Panasonic GH2, and Sony NEX-7 preceded the Fujifilm X-Pro1, and the Olympus E-M5 was near simultaneous to the X-Pro1. Three of those other cameras outsold the X-Pro1, so I guess that it’s good that the analyst being quoted used the wiggle words “kind of.”  By the time Fujifilm came out with their second X series mirrorless camera, Leica had another high-end offering and the GH3 was being introduced (as was the NEX-6). I just wouldn’t have used the word “pioneered.” Moreover, with the X-M1 and X-A1, the X series can no longer be said to be just high-end. 

As for sale numbers, I think the leader at the high end is Olympus, though we only have two anecdotal numbers and unverified numbers on which to base that at the moment. 

The most interesting thing in the Times article is this: 700,000 X series cameras of all sorts sold in a bit over two years. This is the first actual sales marker we’ve seen from the company. It’s a low number, lower than I expected (I recently wrote that I thought they had hit at least 1m units). It shows just how tough the camera market really is. 

The X cameras are actually quite good, and I enjoy shooting with them. They’re well designed. Indeed, the one thing that the Times got dead on was the lead: shooting with an X-E1 is more fun than carrying around a D800 and the usual slug of f/2.8 lenses.  

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