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Why would they try to compete with smartphones? Dropping product differentiation when the competition comes from "a whole different market" doesn't really make

by tpeo 9y ago

Why would they try to compete with smartphones? Dropping product differentiation when the competition comes from "a whole different market" doesn't really make sense. This seems more like an issue of quality control.

jamesrcole 9y ago
They're not choosing to compete with smartphones - smartphones are eating into their market thus forcing competition. As smartphone cameras have improved the more they've eaten into the market. Note that this argument does not require that all users of their cameras would ever consider using a smartphone instead.
- wjnc 9y ago
  Indeed. 'Big corp' would find it very hard to react when a profitable segment of their portfolio drops out (smartphone vs. simple camera / so you're struggling financially), while competition or complexity ramps up in another part of their portfolio (high end camera / I figure a new market structure is needed, but never before tried out). Snarky: It's just not thaught that way in business schools. Lookup Nikons financial trouble. Canon has no financial trouble, but seems to be quickly moving to other markets that are profitable (medical supplies). So perhaps they will just drop out of this market in a few years.
- tpeo 9y ago
  What market? Smartphones and high end cameras aren't really comparable. They compete in the sense that they're both able to take pictures, but they don't compete across all possible dimensions. I mean, I could be wrong, but these don't look like substitute goods. Smartphones and crappy cameras certainly are, but not not smartphones and high-end cameras. But using cheaper parts does make cameras crappier, so doing so in order to engage in price competition is choosing to compete with smartphones. Which is what I don't understand. Because, as far as I know, firms should engage in product differentiation as long as it's possible.
  - noselasd 9y ago
    > What market? It's a great question and I don't know. What I do know is that I have not bought/used a dedicated camera since about the time smartphones came along. Nor have any of my family members - they all used to have dedicated cameras used to take holiday photos, photos of their children, birthdays and so on. Now they just use their phone. This must have an effect on the camera manufacturers.
  - jamesrcole 9y ago
    Camera makers do or have produced cameras with lesser or comparable qualities (for at least certain classes of use, such as for everyday users). These compete against smartphones. Another case is the users who might buy a higher end camera but now find that decision hard to justify when for their purposes smartphones are at least adequate. A third case is there being less of a demand for professional photographers these days, in part because of smartphones, which also is a kind of competition that higher end cameras have to deal with. The bar of what smartphone cameras are capable of doing keeps rising, keeps eating into the territory of what previously required a standalone camera. All these things are competition that eat into profits, which in turn may affect those companies' abilities to produce high end cameras. Eg they may only be able to use cheaper components compared with what they could afford in the past.
  - dagw 9y ago
    but these don't look like substitute goods I know lots of people who used to carry DSLRs everywhere but who now only carry their iPhone.
    - ghaff 9y ago
      As I wrote the other day in a different context, when prices got low enough, a lot of people bought DSLRs with cheapo kit lenses, turned the control dial to Auto, and lugged them around to take snapshots for posting to Facebook. For the most part, smartphones have gotten good enough that, if that's how you use a DSLR, you should mostly leave it at home. Many people do have a number of lenses and use DSLRs for creative control but they may not even be a minority. Heck, I'm a relatively serious amateur photographer and I often don't bother carrying a dedicated camera today if I know I'll just be doing some occasional casual shooting.

by tpeo 9y ago

jamesrcole 9y ago

They're not choosing to compete with smartphones - smartphones are eating into their market thus forcing competition. As smartphone cameras have improved the more they've eaten into the market. Note that this argument does not require that all users of their cameras would ever consider using a smartphone instead.

wjnc 9y ago
Indeed. 'Big corp' would find it very hard to react when a profitable segment of their portfolio drops out (smartphone vs. simple camera / so you're struggling financially), while competition or complexity ramps up in another part of their portfolio (high end camera / I figure a new market structure is needed, but never before tried out). Snarky: It's just not thaught that way in business schools. Lookup Nikons financial trouble. Canon has no financial trouble, but seems to be quickly moving to other markets that are profitable (medical supplies). So perhaps they will just drop out of this market in a few years.
tpeo 9y ago
What market? Smartphones and high end cameras aren't really comparable. They compete in the sense that they're both able to take pictures, but they don't compete across all possible dimensions. I mean, I could be wrong, but these don't look like substitute goods. Smartphones and crappy cameras certainly are, but not not smartphones and high-end cameras. But using cheaper parts does make cameras crappier, so doing so in order to engage in price competition is choosing to compete with smartphones. Which is what I don't understand. Because, as far as I know, firms should engage in product differentiation as long as it's possible.
- noselasd 9y ago
  > What market? It's a great question and I don't know. What I do know is that I have not bought/used a dedicated camera since about the time smartphones came along. Nor have any of my family members - they all used to have dedicated cameras used to take holiday photos, photos of their children, birthdays and so on. Now they just use their phone. This must have an effect on the camera manufacturers.
- jamesrcole 9y ago
  Camera makers do or have produced cameras with lesser or comparable qualities (for at least certain classes of use, such as for everyday users). These compete against smartphones. Another case is the users who might buy a higher end camera but now find that decision hard to justify when for their purposes smartphones are at least adequate. A third case is there being less of a demand for professional photographers these days, in part because of smartphones, which also is a kind of competition that higher end cameras have to deal with. The bar of what smartphone cameras are capable of doing keeps rising, keeps eating into the territory of what previously required a standalone camera. All these things are competition that eat into profits, which in turn may affect those companies' abilities to produce high end cameras. Eg they may only be able to use cheaper components compared with what they could afford in the past.
- dagw 9y ago
  but these don't look like substitute goods I know lots of people who used to carry DSLRs everywhere but who now only carry their iPhone.
  - ghaff 9y ago
    As I wrote the other day in a different context, when prices got low enough, a lot of people bought DSLRs with cheapo kit lenses, turned the control dial to Auto, and lugged them around to take snapshots for posting to Facebook. For the most part, smartphones have gotten good enough that, if that's how you use a DSLR, you should mostly leave it at home. Many people do have a number of lenses and use DSLRs for creative control but they may not even be a minority. Heck, I'm a relatively serious amateur photographer and I often don't bother carrying a dedicated camera today if I know I'll just be doing some occasional casual shooting.