I read on PhotographyBlog that Nikon posted record profits from February to September 2005. The D70’s sequel the D70s and the surprising D50.

I know this sounds like cheerleading, but remember that half of my decision to purchase a D70 was based on which companies would be around after the expected fallout from the impending dSLR smackdown.

More on why cameras are not computers

Computers often favor monoculture. Why? Because there are very few things for a computer that work without software—even peripherals often require a driver—and software is specific to the operating system. This explains why Microsoft can naturally achieve a monopoly in the operating system.

Photography isn’t this way as much. Once I have an the arca-swiss bracket, my ball head and tripod don’t care if it is connected to a Nikon or Canon. My Hoya filters only care if the threads are the right diameter around, not if they are filtering for a Canon or Nikkor optics. Neither do any lighting tripods or backdrops care about my brand preference when I set up a bunch of lights, nor does the sun when it rises or sets.

There is a little pressure however. For dSLRs, the lens selection favors certain mounts and some adapters. Once investment is sunk in the lens, it adds an activation energy to switch models. Familiarity in one particular set of design conventions and philosophies breeds contempt for competing ones.

So we’ll take it granted that dSLR camera economics can support more than one brand, but how many beyond that? I didn’t know and based on my previous experience with “activation energy” I didn’t want to risk it again.

How many now?

I still don’t know. But one compelling choice at the time I purchased my D70 was the Olympus 4/3 system. As I mentioned earlier, I don’t think it is looking so compelling now. I want to expand on that.

The Olympus 4/3 system had a lot of things going for it. The lenses were smaller because the format was smaller. The system had more robust support of CPU contacts that would allow future growth without destroying backward compatibility. Most importantly, the system was open to all vendors of bodies and lenses (normally vendors make their standard a moving target.

It was designed around a 2x multiplier. But that isn’t it’s most crippling factor. The main problem is the system is too new. While it has an excellent selection of zoom lenses (if you have the money to afford them), it lacks an existing library of primes that other systems give you. Primes don’t make money because nobody buys them, even though most photographers are better served by a cheap prime than the kit zoom lens that they purchase with their camera body. This means that the most likely vendor of primes is going to be your primary supplier.

In this case, your primary supplier is concentrating on the more lucrative high-performance zooms.

That would be okay if you could get a lot of vendors like Panasonic, which Olympus got to sign early on. I assumed Sony and Samsung would do the same because of the technical advantages of a new system.

What happened?

The Canon EOS Rebel (300D) and the Nikon D70 happened. Their sequels: The 350D, D70s and D50 effectively closed the options on those who wanted to sit on the sidelines—they had to choose an existing system over an unproven one.

The net result was Sony chose Minolta and Samsung chose Pentax and Olympus is starting to look a bit uncomfortable between all-in-one bridge cameras and APS-C dSLRs that take existing 35mm lenses. As mentioned in the article: “Olympus saw a sharp decline in net profits as its digital camera sales fell.” Not exactly unexpected, but sad nonetheless.

What else can be learned from this?

First note that Nikon’s digital compact sales went up also (13.6% vs. 20% from the dSLR). There appears to be a significant trickle down effect people purchasing the same camera brand as the high end pros (even though there is no advantage to this).

Next, since only Nikon and Canon were profitable, the death-fest is finally about to start in the digital compact race. Since the quality is now so good, I thought the distinguishing factor in this market would be style. Brand identity seems to be playing a larger role than I thought. The Canon SD500 is an eyesore camera compared to the SD400, but they’ve reved it recently with the SD550. Nikon has great sales despite have unremarkable designs—the most innovatitve ones being trumped by the Sony T-series.

Next, it appears that Nikon is worried about the potential commoditization of the SLR market. Because of this, they aren’t revising estimates upward and are downplaying the Christmas sales.

Finally, there is a hint of a D70s sequel (D90?) for 2005. Nikon is projecting a 60% increase in dSLR camera sales next year. There is no way the D200 can account for that.