Sony recently put up an a commercial going after DSLR users with an interchangeable lens camera. You can see it here:
Some reacted that they felt this was a dumb move on Sony’s part since the are insulting DSLR users and downselling DSLR users who are willing to pay a premium to a lower priced camera. I’m a Canon user and by no means a Sony user of many things, but being in Marketing, I thought it would be fun to put myself in Sony’s shoes, and show my thought process in the matter.
According to the global IDC numbers for 2010, Canon had a 44.5% global market share versus 29.8% by Nikon and 11.9% by Sony in the DSLR. If those numbers still hold true today, Sony is still a very small player compared to the Big Two. Switching DSLR brands is no small task given the investment in lenses and other peripherals that customers have. While Sony may be eroding value for the industry as a whole by moving average price points downward, they are acting well in the own best interest. Sony seems to calculate that it will be easier to move more dollars in the almost 88% market share they don’t have in DSLR to less expenseive NEX cameras, than to move them to their high end DSLR Alpha brand cameras.
Let’s say the NEX camera ASP is $500, and a DSLR ASP is $1000. And let’s say the commercial has a generous success rate of 5% – turning a prospective DSLR user into a NEX user. So out of a 1000 customers, Sony should turn 50 of them into NEX camera users resulting in $25,000 revenue. Out of those 50 customers, 5.95 of those customers were converted from an Alpha camera buyer to a NEX camera buyer at a total loss of $2975. So the net revenue gain is $22,025 in this example. (Margins of course will probably be lower on the NEX camera than the DSLR, but it’s not like the NEX camera is an entry-level low margin camera so I am assuming that they are healthy. Or Perhaps Sony is playing for pure market share and is willing to give up some margin?)
So even if you disagree with my numbers, you can adjust them up or down within reason and I think you will still likely see that Sony brings in more revenue then they lose in their own customer base. Furthermore , I’m not even factoring in that the NEX commercial may actually up sell point and shoot users to this camera saying that they do not need to buy a DSLR to get DSLR quality.
As for the argument that DSLR users would feel insulted by Sony? Maybe. But if it is true, why would they find it so insulting?
Let me know your opinion.
I think this is quite a clever commercial and its target audience is really point and shoot camera buyers converting to SLR.
The point and shoot market is going to be (some say already is) crushed by the smartphone as each successive generation of phone has a better and better camera and with instant network access for Facebook, photos sharing etc. however there will be a significant portion of the market (not done my research yet …. But see it anecdotally) that will still want “better quality” pictures that can only come with bigger sensors and bigger lens (which rules out smartphones). They are the big group throwing away their small point and shoot and moving up the ladder. (I have fielded 5 emails from friends doing exactly this in the past few weeks …. I am a serious slr user and my friends come for shopping advise).
There has been significant (need to find source data) growth in the entry level SLR market as prices come down (NEX is actually about same price as a canon rebel xt) and this conversion from point and shoot happens. Sony wants a big piece of that pie and think the micro 4/3 solution is differentiated enough to win the day. This commercial is merely highlighting their strengths.
I think it is pretty clever
Good point, and I agree that Sony’s primary target audience are P&S Shooters considering the move to DSLR. For Sony, they are up selling and improving their ASPs into this still developing midrange market which for Sony is great since they own the low end market, but could do much better in the high end. And I like your point on that the traditional low-end market could all but disappear.
I concentrated my point of view to those who were concerned about eroding Sony seemingly eroding the DSLR segment. In any case, it’s a win for us consumers.