With cancelled cameras, layoffs in recent months of over 1000 staff, and its stock falling off a cliff after the revelation of an "extraordinary loss" during the last months of 2016, all does not currently seem well at Nikon. How did it get here, though, and what does its future hold?
Mention to someone that you're a professional photographer, and in most cases the first question they'll ask is, do you use a Canon or a Nikon? (For the record, I use Sony. An A7R to be precise.)
In spite of that, Nikon is laying off 1000 workers and canceling its high end mirrorless system camera line. Share prices have plunged 15%.
What went wrong?
First off, Nikon hasn't really been keeping up with the competition in terms of technical specs. The image quality has continue to be stellar, and the optics, build quality, and ergonomics of Nikon's professional line of cameras, lenses, and accessories continues to be excellent. Its flagship DSLRs haven't seen a refresh in two years though.
Since the SLR industry went digital, Canon and Nikon have dominated it. For a long time, they were the only two professional choices, and the rest were generally regarded as consumer gear.
Things started looking very different when DSLR video became popular, largely by accident when Canon enabled a video recording feature on the already popular 5D line. Sony and Panasonic have since then made video first-class features as a way to gain market share.
Around that time, Sony introduced the Nex mirrorless system camera line, which was more compact than even the Micro 4/3 bodies at the time, yet incorporated a larger sensor and extremely broad lens compatibility via adapters. Nikon released the Nikon 1 line, which had a small one inch sensor, leading professionals and serious amateurs to avoid it, but it was priced high enough that it was also not particularly popular with consumers.
Being a backpacking nature photographer and a climber, I was one of the ones that the Nex line enticed over to Sony, because the Nikon 1 was simply not good enough for print work, and couldn't even use the same lenses. The Nikon 1 was doomed from the start, and in spite of that, Nikon held onto its market share.
One area that Nikon has been falling flat on is marketing. It's held onto its professional customer base because the professionals are only concerned with what will enable them to do their job better; they don't tend to upgrade their kit only when new products offer compelling new features or to address changes in their needs.
It is however very telling that even with minimal marketing, to the point where Nikon hasn't put much effort into promoting even major new features, Nikon has been able to maintain the loyalty of its professional customers.
Even though professional photographers as well as DSLR filmmakers generally prefer a full 35mm frame, the crop sensor cameras are very popular with the enthusiast market. They cost significantly less than 35mm format cameras, they're smaller and lighter, and equally critically the lenses are smaller, lighter, and less expensive as well. Nikon has some cameras in this market, but not much by way of lenses, hindering Nikon's ability to sell to the much larger enthusiast market.
The margins in the enthusiast market are smaller than for the professional market, but the volumes are much larger, especially since enthusiasts are far more prone to upgrade just to get new features which in turn leads to more repeat sales. Those tendencies also lead to enthusiasts' fickleness, since they generally would be happy to ditch their 24 megapixel Nikon for a 36 megapixel Canon next Christmas, and a 42 megapixel Sony the following.
One side effect of this half-hearted marketing campaign is that Nikon cameras offer features and image quality that in many cases are best in class, but only the loyal Nikon users know about them. That doesn't entice new customers on board.