Why is Nikon Lagging Behind? Nikon’s Strategic Failures

why nikon is lagging behind

Nikon is a well known brand in the photography community. It is still the most preferred camera brand for wildlife and landscape photography for its ergonomic design and extremely weather-sealed characteristics infused with advanced imaging features. This century-old imaging company has kept us captivated with its top notch DSLRs and high-quality lenses. But as days went by, nikon started to lose its charm. Recently, It has lost a substantial amount of market share. Besides, it is no more a secret that Nikon has been suffering from lack of cash flow. Nikon also acknowledged that its imaging product business needs to justify its existence as a business unit by generating more profits. But why is Nikon lagging behind day by day? What went wrong with their camera business? Well, then you need to undergo its history.

A Brief History of Nikon

Nikon is undoubtedly a big name in the camera market. But how did it all start, and how did it get so much acceptance in the market? Well, there are numerous ways to gain market acceptance, but one of the most effective ways is to stay in the market for a long time and serve consumer-oriented products. Nikon also has a century-long pedigree originating from the merger of three optical companies in 1917. It started to manufacture lenses in the 1920s. It became a well-known organization when it produced optical equipment for the military in World War 2. In the later stages, Nikon came up with the F Series range of SLR cameras which brought them global recognition.

Nikon’s business grew further as it started offering light metering, lens indexing, strobe flashguns, viewfinders, electronic shutter control, and matrix metering. Nikon breezed through the 1960s and 1970s riding high on the back of a great system. In 1983 Nikon introduced F3AF which was its first autofocus camera and it is marked as a point where their dominance began to unravel. They also gained vast popularity with their DSLRs like D850, D610, D800, D7100 and D7200. Until 2010, Nikon was on the top of the camera market. But after that, it could not maintain its momentum. Now, Let’s take a look at the factors that caused their downfall.

Small Cap Company

Financial condition of a company plays a vital role for its future progress. Looking at the market capital of other big companies, we found that Sony has a market cap of $124.13B whereas Canon stands at $28.98B. Even the market cap of Panasonic is more than $30B. But unfortunately, Nikon ranked last on the list with a market cap of only $3.12B. Being a smaller company, Nikon has lesser opportunities to invest in its R&D and other strategic segments. Besides its imaging business, Nikon is also involved in businesses like healthcare, precision equipment, industrial metrology and others. However, as Nikon’s larger portion of revenue comes from the imaging business alone, the fall in the camera business has significantly affected Nikon’s growth. It reflected pretty well when Nikon laid off about 700 employees because of a drop in operational profit of camera business. When it comes to hiring experts, better employees will always go for higher organizations with better brand image. However, Nikon’s decreasing market cap shows that it’s future in the camera market is at stake. Moreover, its employee laying off tradition has deteriorated its brand image.

Less Diversification

There is an old saying, “do not put all your eggs in one basket”. To ensure future sustainability, most of the big businesses branch into other sectors so that if one business goes down, the overall profitability of the company can be maintained by the profits of other businesses. For example, the majority of Sony’s profits come from its insurance and financial products. As a result, there is a tremendous cash buffer available for Sony to invest in new projects as well as in Research and Development.

But Nikon has a problem since it has heavily invested in the photography industry and did not go for much business diversification. For instance, Nikon earned 68% of its total income from its imaging division in 2015, meaning they are dependent on their imaging division to a great extent and therefore vulnerable to shrinkage or loss in the imaging sector. The company is also a renowned supplier of semiconductor manufacturing equipment and sells those equipment mainly to Intel. But as Nvidia is taking over Intel in terms of market capitalization, sales of Nikon are hampered as well.

With the rise of smartphone cameras, the photography industry has faced a plunge in sales. However, big companies like Canon and Sony could still survive while maintaining adequate growth, thanks to their diversification policy. On the other hand, Nikon could not stay strong in the market as revenue earned from the camera sector was their leading source of profit. As a result, Nikon had to announce “Extraordinary loss” in 2017 and its stock plummeted 15% as well.

Lack of Interest in Cinematography

High-end smartphones are performing really well in capturing still images and videos as well. To cope up with the situation, imaging companies are also redesigning their cameras, making them a hybrid one to accommodate features for capturing top-notch videos and images. As more and more photographers are turning into hybrid shooters, video capturing abilities are becoming increasingly crucial for a customer to make a camera buying decision. But unfortunately, Among all the full-frame camera makers, Nikon is the only one that severely lacks in video-specific cameras. All the leading manufacturers have developed a decent line of cinema cameras except Nikon. Besides, major brands have also established a position in the market for their particular expertise in video-related features. For example, Canon is better for color reproduction and Sony has the best cameras for low-light videos. This has led to an increase in camera sales for Sony and Canon as compared to Nikon. However, Nikon is now putting more emphasis on incorporating better video recording features in their cameras. They have recently announced their Z9 model that is capable of shooting 8k videos. However, it’s more of a catch-up game now where others are way ahead.

Limited Range of Lens

Imaging companies need a wide range of native lenses to support their existing camera lineup. Nikon was suffering as it was a small-cap company, and its investment in research and development were decreasing almost every year, starting from 2013 to 2020. They have numerous F-mount lenses but those lenses are not as technologically advanced in comparison to its competitors’ lenses in terms of autofocus and other performance criteria.

Later on, Nikon put more focus on bringing new lenses for its mirrorless series. It also created hype in the market but Nikon couldn’t turn this hype into their turning point. At present, Nikon has some exorbitantly priced prime lenses with an aperture of 1.8 along with a new 24-70mm with 2.8 aperture. On top of that, Nikon has also come up with 58mm which has an aperture of 0.95 recently. However, that’s more of a mantelpiece ornament to most consumers because of its price. Besides, Nikon’s current lens roadmap has nothing interesting that may contribute in gaining attention in the market.

On the other hand, all the other major players in the market have an adequate number of lenses to support their mount. For example, Canon has a wide range of RF lenses and gained immense popularity in the market. Sony has also created a good image with their mirrorless lenses and also they are leading in the mirrorless lens sector. As a result, Both Sony and Canon have beaten Nikon with lens sales in the market.

The Single Card Slot Mishap:

As companies were integrating video capturing features in their camera bodies, the requirement for larger memory became evident. Consequently, all the major camera manufacturers were revamping their cameras with dual card memory slots. On the other hand, Nikon stuck to their single card slot which turned out to be a huge marketing blunder. Though Nikon was able to create a buzz in the market with the announcement of their new mirrorless cameras, once it was released, the single card slot was the first thing people noticed. Moreover, Z7 came with a price tag of about $3400. A Single-card-slot camera at this price tag that high was obviously disappointing. With that blunder, Nikon’s image in the mirrorless market further deteriorated.

Late Adoption of Mirrorless Technology:

After 2010, the camera industry was changing radically. The rise of mirrorless cameras created a shift in preference of the consumers. More and more people were adopting mirrorless cameras as they were more compact yet more powerful than DSLRs in terms of capturing stills and videos. Sony with its new technological innovations in mirrorless cameras gaining substantial growth in the market while others were also catching up. Meanwhile, Nikon decided to keep up with their DSLRs instead of focusing on building a mirrorless lineup. It wasn’t until 2018 when they realized they needed to invest in mirrorless cameras and came up with the Z series with limited lens support. But by then, the mirrorless market was largely captured by Sony and also by Canon to some extent. While these two giants had years of experience in the mirrorless market, Nikon was just starting out.

Other Bad Business Decisions

There are a number of bad business decisions that have not only hampered Nikon’s growth but also tarnished its brand image in the market. Let’s catch a glimpse of it. It is important to branch in different sectors of businesses to keep a business going. But again, a lot of factors have to be analyzed and evaluated in order to ensure success. A strategic failure in addressing those factors thoroughly may result in a disastrous future for a business. This is exactly what happened when Nikon decided to step into the action camera market. Nikon launched its keymission 360 action camera at Photokina 2016 while the market was already captured by GoPro. And this product was a big upset in the market. It was fairly expensive and had a pairing issue with other devices. It’s 2.5 rating on amazon and the furious comments of the users clearly show how frustrated users were with this product. On top of that, the android app for this camera, the snapbridge 360, wasn’t user friendly at all, resulting in a 2.7 rating on google play. Another Strategic mistake was the announcement of the DL series, which was Nikon’s high end compact camera lineup with fixed lenses. Nikon didn’t have the entire technology in their grip, consequently, they faced problems with image processing circuits and ultimately had to cancel the entire lineup. This led to disappointment and lack of trust among the consumers towards nikon.

Final Verdict

Once Nikon was leading the market with its fantastic cameras. But their strategic failure, lack of business diversification, and slow adaptation of newer technology have caused them to fall. Though they are now rectifying their decisions. They are now investing more in Research and development, and also focusing on bringing more mirrorless models. But the real question is, can Nikon overcome this situation and regain its position in the market? What do you think? Let us know in the comment section.

Avatar photo

Nafiul Haque

Nafiul Haque has grown up playing on all the major gaming platforms. And he got his start as a journalist covering all the latest gaming news, reviews, leaks, etc. As he grew as a person, he became deeply involved with gaming hardware and equipment. Now, he spends his days writing about everything from reviewing the latest gaming laptops to comparing the performance of the latest GPUs and consoles.