The Wall Street Journal: Smartphone exposure Camera market flaws

[Reading] Smart-phone cameras are basically making pocket digital cameras more and more obsolete. Smartphone maker faces crisis (Tencent Science and Technology map) Tencent Science and Technology (snow) Beijing time August 13 news, for camera manufacturers, there has been little good news recently, because smartphones are leading to the camera manufacturers once the core business of the Pocket digital camera business is facing a crisis. Worse still, the camera maker had hoped that the high-end camera business would compensate for the loss of the Pocket digital camera business, but it now looks like it will be dashed. Sales of Canon and Nikon's pocket digital cameras have fallen rapidly, according to data from market research firm IDC. Last year, the two camera companies accounted for 44% of the total global sales volume. Camera business accounted for 40% of canon revenue, while the company's pocket digital camera sales fell 26% from a year earlier in the previous quarter up to June 30, compared with 78% of Nikon's revenue. The company's last-quarter pocket digital camera sales fell 30% from a year earlier. This sales performance is not surprising because smartphone cameras have basically made pocket digital cameras increasingly obsolete. The camera maker had previously placed its hopes on high-end camera business with a swap lens, and the high-end camera market was a smaller market than a pocket-sized digital camera, but its profit margins were much higher than that of a pocket-sized digital camera. Some analysts have pointed out that the profit margin of high-end camera products is about 15% to 25%, while the pocket digital camera's profit margin is only a few percentage points. But the worry is that, in the last quarter, sales of high-end cameras also fell, including Canon's decline of 4%, Nikon 5%. The two companies said their high-end camera sales were adversely affected by the slowdown in China's economic growth. For now, China's economic outlook remains uncertain. But even in markets outside China, the sales of high-end camera products are not strong enough. Nikon said it had failed to meet its camera sales targets in the Americas, Europe and beyond Japan, thus lowering its operating profit forecast for the current fiscal year up to March next year by 23.5%. For the future development potential of the high-end camera market, the camera manufacturer's current expectations may be unrealistic. Canon predicts that the company will sell 9 million units this year, down from 9.2 million previously expected. But according to Nomura's forecasts, Canon's camera sales could reach only 8.37 million units this year. Moreover, if the camera industry responds to lower-than-expected high-end camera sales, taking measures to cut camera prices, leading to lower margins in the business, camera makers will face deeper dilemmas. Both Canon and Nikon's shares have been badly damaged. Canon's share price has fallen by about one-tenth per cent so far this year, and Nikon's share price has fallen by more than one-third per cent, a trend that reflectsPocket digital camera is a hopeless sales prospect. According to FactSet, a financial information provider, the Nikkei 225 has a 12 times-fold P/E ratio, based on earnings forecasts for the next 12 months, which is 11.3 times times the price-earnings ratio of canon. If high-end camera sales continue to slide, the price of the camera maker is likely to fall further.