Thoughts on Mirrorless Cameras

Reuters had an article a month ago where they reported that sales of mirrorless cameras are “sputtering”.

This phenomenon is interesting for several reasons. Before we go into that, let’s look at what the article is saying;

Meanwhile, sales of mirrorless cameras – seen as a promising format between low-end compacts and high-end single-lens reflex (SLR) cameras – are sputtering as buyers put connectivity above picture quality.

Panasonic held 3.1 percent of the camera market in July-September, down from 3.8 percent a year earlier, according to IDC. Canon Inc, Nikon Corp and Sony Corp controlled over 60 percent between them.
“Only those who have a strong brand and are competitive on price will last – and only Canon, Nikon and Sony fulfil that criteria,” added Yoshida.

Mirrorless cameras such as Panasonic’s Lumix GM eliminate the internal mirrors that optical viewfinders depend on, so users compose images via electronic viewfinders or liquid crystal displays. This allows the camera to be smaller than an SLR, while offering better quality than compacts or smartphones due to larger sensors and interchangeable lenses.

From a high level, mirrorless cameras have the following characteristics;

  1. They are technically simpler than SLRs.
  2. They are smaller and more convenient than high-end SLRs.
  3. They are a middle category sitting between low-end compacts/smartphones and high-end SLRs.

In regards to the 3rd point, mirrorless cameras targeted a speculative market that was hoped to exist between the low-end and the high-end. In reality, that market did not exist or was much smaller than expected. Furthermore, due to technical advancements in sensor and processing technology, the low-end cameras became more sophisticated and more capable of taking good photos. Thus any middle market that did exist became narrower and narrower with time.

It is also interesting that Canon and Nikon seem to be relatively immune to the onslaught of smartphone cameras. This is simply because the high-end SLR market was never about convenience or taking simple snaps, but has been for a long time about taking really good pictures. Smartphones with their tiny lenses are severely limited by their optics and are not capable of taking artistic level photographs. You could say that the high-end is serving a very different market or that the jobs-to-be-done are very different from smartphones.

With this perspective, it is relatively straightforward to predict the future.

  1. For casual photos that most people want to post online, smartphones will evolve to be more than enough. As smartphone penetration increases, low-end cameras will continue to be squeezed out.
  2. Mirrorless cameras will find a niche for consumers who want something a little better than smartphone cameras. This niche however will shrink with time. Connecting mirrorless cameras to the Internet so that you can easily upload photos will shortly extend the life of this niche. However this feature alone cannot save this category because ultimately, the jobs-to-be-done is in direct competition with high-end smartphone cameras.
  3. High-end SLRs will continue to do just fine. Smartphones cannot touch this market due to optical limitations. The lower-cost SLRs may be more vulnerable. Connecting to the Internet may help sales, but a more desired feature is probably to effortlessly transfer photos to iPads etc.
  4. Price erosion may further happen in the low-end, but not in the high-end. Companies from Korea and China may try to enter the high-end but will easily fail. This is firstly because Nikon and Canon have a very high professional brand, and secondly because the expertise in optical mechanics is not something that the Korean and Chinese entrants are likely to possess. Korean and Chinese companies have high-level expertise in digital electronics and this allows them to compete in the low-end. However, without expertise in analog optical mechanics, you simply cannot create a good high-end SLR.

If it somehow becomes possible to take better pictures than a high-end SLR using a different technology, then it will become possible to disrupt the duopoly of Nikon and Canon on the high-end. That is after all, how Nikon and Canon disrupted the German camera makers which had been using range-finder optics (Leica, Contax, etc.) with the then new SLR technology in the mid 20th century.