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Thom Hogan: the camera industry has started teaching customers that big discounts are the norm.

Submitted by Roland on Wed, 2012-11-21 00:03

Thom Hogan writes on ridiculous discounts on cameras from companies like Olympus and Panasonic, what he calls the JC Penney effect:

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This is not just a Panasonic problem. Olympus has the same problem, so does Nikon, so does Canon, so does Sony, so does everyone. They all overproduced to demand, had lingering inventory when new products hit, and thus now have to discount the old product to get rid of it, eroding margins and teaching customers that the actual value of the product is far lower than the initial list price, which then devalues the new gear.

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I'll repeat, the camera industry has started teaching customers that big discounts are the norm.

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This is happening at every level of camera sales now, from lowest compact to FX DSLRs. We have a global oversupply of camera gear

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Yet the Japanese companies still overproduce. Worse still, they overproduce when the yen is worth less against the dollar and Euro, then complain when they are still trying to sell those products at discounts later when the yen is worth more. 

From a customer standpoint, this is great (other than the fact that the gear you bought last year is worth less than 50% of its cost now, so you won't be getting much back on selling used gear). We're getting supremely good new gear at very low prices. But it's also bankrupting the camera manufacturing industry

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I am loving my $200 Olympus E-PL ($250 included the kit zoom which although bulky is a decent lens; check out my E-PL1 pics on flickr!) and the VF-3 EVF and the Panasonic 20mm f1.7 prime lens. Still a great camera even though it's 2 years old and obsolete. I am buying into the Micro 4/3 eco-system not into the E-PL1 itself and I am banking on the price of what I really want, the weather sealed OM-D going down to $600 from $1300 in a couple of years!

Is this sustainable for the camera manufacturers? I guess not.

Does this leave them open to disruption from somebody who can produce a truly social camera with apps, sensors and connectivity? Definitely!