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Sliding Mirrorless Camera Sales Could Be the Final Straw for Nikon

The technology was supposed to lure in 'prosumers

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It’s no secret that the rise of smartphones has done a good deal of damage to the feature phone industry — and thus to companies like former cell phone giant Nokia (NOK) that were caught napping.

But digital cameras have taken a serious beating at the hand of smartphones as well — especially pocketable point-and-shoot models. Now we’re starting to see the same erosion of sales in mirrorless cameras — a new category of “prosumer” devices that manufacturers hoped would fill the gap between those smartphone cameras and bulkier, professional DSLRs.

That dropping demand for mirrorless cameras is hurting companies like Nikon (NINOY), which just cut its full-year profit forecast.

Personally, I feel sorry for the camera industry in a way. It went through a massively turbulent period when digital cameras took over from film — and some companies failed to make that transition. Others took the technology in stride, with Canon (CAJ) and Nikon in particular becoming even more dominant players. Together they now sell 44% of all cameras worldwide.

But just as it seemed camera-makers had things more or less under control, along came smartphones — and Apple’s (AAPL) iPhone in particular. Point-and-shoot digital cameras were knocked reeling within only a few years as those smartphones gained increasingly sophisticated built-in cameras. Sales in the pocketable digital camera segment dropped and have continued to shrink, going from 144 million in 2010 to an expected 102 million this year.

Dealing with competition and new technology is one thing, but having a seemingly unrelated product — the mobile phone — zoom in and eat your lunch is a tough reality to swallow.

Companies like Canon, Nikon and Olympus (OCPNY) that offer high-end DSLR (digital single lens reflex) cameras aimed at professional photographers have relied on increased demand from consumers for higher quality photos to help offset the decline in sales of their compact cameras.

And that brings us to mirrorless cameras. They are compact, use a much bigger image sensor than inexpensive cameras and offer the flexibility of interchangeable lenses, just like DSLRs.

With fewer moving parts, they are sturdier and smaller than DSLRs, but can still take pictures that rival DSLR quality —  perfect for “prosumers.” Manufacturers charge a premium for these cameras, with many models being priced higher than their entry-level DSLRs.

So it’s really bad news for camera makers that even that mirrorless segment is showing signs of slowing too. According to the Camera & Imaging Products Association, sales of mirrorless cameras are down 18.5% compared to last year.

What’s changed in that time? Well consumers aren’t any more willing to lug those full-sized DSLRs around as their daily-use camera and they sure as heck aren’t buying point-and-shoots instead. What has happened, though, is an arms race in smartphone cameras.

The latest generation of flagship smartphones include built-in cameras capable of taking pictures good enough to convince consumers they don’t need a mirrorless camera either. While a 5 megapixel smartphone camera was a big deal a few years ago, current models are sporting 13MP cameras with advanced features like image stabilization, LED flash, panorama mode and smile detection.

Article printed from InvestorPlace Media,

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