Mid-tier camera makers under threat
'Selfie' generation using smartphone devices shatters hopes of mirrorless format success
Panasonic and Japan's other mid-tier camera makers have a battle on their hands to win over a smartphone "selfie" generation to mirrorless cameras that held much promise when they were launched about five years ago.
Panasonic, like peers Fujifilm Holdings and Olympus, has been losing money on its cameras since mobile phones that take high-quality photos ate into the compact camera business.
This year, compact camera sales are likely to fall more than 40 per cent to fewer than 59 million, according to researcher IDC.
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.
A 40 per cent drop in Panasonic's camera sales in the April-September period left the imaging division vulnerable as the company's mid-term plan to March 2016 demands unprofitable businesses turn around or face the axe.
"If you look mid-to-long term, digital camera makers are slipping and the market is becoming an oligopoly," said Credit Suisse imaging analyst Yu Yoshida.
Panasonic held 3.1 per cent of the camera market in the September quarter, down from 3.8 per cent a year earlier, according to IDC. Canon, Nikon and Sony Corp controlled more than 60 per cent 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.
Canon and Nikon dominate the SLR camera market, while Sony could survive thanks to its strength in making sensors for a number of camera manufacturers as well as collaboration with its smartphone division.
Panasonic, Fujifilm and Olympus are trying to fend off the smartphone threat by cutting compacts and launching higher-margin mirrorless models.
The mirrorless format promised mid-tier makers an area of growth as Canon and Nikon all but shut them out of SLRs, where Sony is a distant third. Neither Panasonic nor Fujifilm makes SLRs, and Olympus stopped developing them this year.
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.
"SLRs are heavy and noisy, whereas mirrorless are small and quiet. While some people say SLRs still have better image quality, mirrorless (cameras) have improved to the point where they're equivalent, if not superior," said Hiroshi Tanaka, director of Fujifilm's optical division.