Why Bling May HAVE to be the Thing that Ensures the Future of the DMD

In a previous rant published on The Online Photagrapher, I hinted at the problems small volume manufacturers face competing in an open market.  In that context, Mike Johnston's Decisive Moment Digital will never be cheap.  Ever.  Cheaper?  Yes.  But in today’s dollars, a new DMD will never be cheaper than an entry level digital SLR.  

Why?  

Low production volume.  The market for the DMD is small. I’m guessing of course, but I believe the total market for a DMD is no more than 2% of equivalent DSLR sales.  The CIPA figures for 2008 indicate sales of approximately 9.7 million DSLRs.  That means sales would be a bit less than 200,000 units.  In a generous mood I might accept a figure of 500,000 units per year for the first year or so.  We might use as an example the Leica/LeitzMinolta/Minolta CL which sold approximately 85,000 units over three years in the mid ’70’s.  Given double the world’s population, and a wealthier world population, lets quintuple that figure, at which point we end up with 140,000 per year.  So the 200,000 figure seems reasonable.  The important point is that the DMD demand is really for people who want a DMD.  Many potential buyers will opt for high end compacts such as the Canon G11, the Panasonic LX3 or a superzoom.  And others will prefer an entry level DSLR because of it’s better image quality or a clearer upward mobility path for lenses or for simply the prestige value of using an SLR.  In sum, the market for the DMD is limited.

Lack of shared components across multiple product platforms. The GF1 shares some components with the G1/GH1(the Olympus shares none, or very few with its siblings), but cramming the same components into a smaller package is more, not less expensive, because a new, smaller, more highly “packed” design is necessary to accommodate the original components and special considerations must be made to effectively remove heat generated by those components.  Since the DSLR body is inherently larger, swapping components, or migrating technology down the product line, is easier due to fewer design constraints.

The current manufacturers of DMD type cameras lack high priced and high margin platforms that would otherwise make large contributions to the camera division’s bottom line.  Canon and Nikon can rely on higher profits from their upper end DSLRs to cushion the lower margins of their entry level products.  Conversely, Olympus and Panasonic must create higher profit margins with the EP-1 and the GF1 than might otherwise be the case if they had a larger portfolio of high margin products.  When Olympus and Panasonic fill a niche market, it cannot be done at a lower margin.  They cannot pad the product line with a lower margin item simply designed to enhance the overall brand image, the way a Nikon or Canon might be able to do.

So why may “Bling have to be the thing”?  Because the bling factor of the retro cool EP-1 and the color kaleidoscope GF-1 may attract a significant percentage of the 110 million buyers of compact cameras (2008 figure from CIPA), or even cellphone photographers, that want to upgrade to a better camera.  And if that happens, the production volumes of our DMD’s will be kept up. With that, the costs may eventually come down some, and perhaps the viability of the DMD will be secured.  It seems Olympus was wise to this issue, because the #1 feature listed for the EP-1 in their global press release was “A dignified exterior design”, and of course Panasonic has a variety of colors for certain markets.  So even if you prefer basic black for your DMD, be happy with those who feel bling is the thing.


Note: after writing this I found a press release from Panasonic that pegs GF1 production at 15,000 units per month, or 180,000 per year.