Following the well-documented Japan disaster of March 2011, life carries on, and a month prior to the May 12th release of the Panasonic Lumix DMC-G3, we were invited to a preview and ‘talk through' of the new camera. Present at the meeting were the manufacturer's Osaka-based Senior Coordinator for the Digital Imaging Marketing Team Dai Mukai, hereafter abbreviated as ‘DM', UK Product Manager for Lumix G John Mitchell (JM), plus Steve Lucas (SL), Product Specialist.
Our discussion/introduction lasted an hour and a half. We kicked off with a scene setting discussion about the current market and the place of the compact system camera in it.
JM: “The factory is saying that the CSC (Compact System Camera) market will be bigger than the SLR market by 2013. I think probably in Japan that will happen by 2012 – but obviously this is a global view. That means the SLR market will contract, something like a 30% reduction. But we do see that, while the compact system camera will be a substitute for SLR, because it will bring in so many more customers the overall market will expand. [For the purpose of tracking sales] we've split mirror-less CSC into two categories: with viewfinder and without viewfinder. In Asia what they're finding is a real explosion of the [Panasonic] GF product, the [Sony] NEX product, where the miniaturisation of the camera is what's important. The fact that there's no viewfinder isn't as important to start with, whereas in Europe and America – and especially the UK – people still love shooting with a viewfinder. Where they're saying globally the smallest category will be viewfinder product, actually in the UK – and we've seen it in sales of our G1, G10, G2 and GH range – people still love shooting with a viewfinder.”
Question: At the moment you only have one CSC product without a viewfinder (the Lumix DMC-GF2). Does this mean that you will change that emphasis?
JM: “As a business this is clearly where we see potential. Every time we've brought a CSC product to market it's been very well received. We've got four cameras in our range at the moment – competitors with SLRs have up to eight or nine – so clearly there's scope to grow our range as and when the opportunities have been identified. But I think the factory has been spot on with the range so far: The GF1 was a huge success, the GF2 has started really well for us, and G1 and G2 have been big hits. In Japan I think the crossing point will be 2012. Already 40% of the market is CSC, which is pretty huge.”
Question: The original target market for CSC was people who wanted to upgrade from a compact to a DSLR. But there are now also a lot of people selling their DSLRs and buying a compact system camera instead?
JM: “I think that's definitely right. Every time we do a promotion in the UK we can capture customer data – we did a survey after our Christmas 2010 sales promotion and, of the 400 people that came back with a response, 50% of them classed themselves as a novice – as in they'd never had a SLR before – but the other 50% said I'm an enthusiast or pro and I'm either replacing or adding to my kit. So we've shaped our advertising in the UK around that too. With the G1 and the G2 we did target the first time user quite strongly, but with the GF1 the message was add it to your kit as a photo pro. That's what's very exciting with mirror-less technology: it can appeal to both camps. Global projections for 2013 are seven million SLRs, 1.5 million [CSCs] with viewfinder and 6.5 million ultra compact GF2-style products. If you look at the year just gone, you've got 1.2 million sales of ultra compacts, and 460,000 with viewfinder.”
Question: At one time [industry analysts] GFK were lumping SLRs and CSCs in together [in terms of providing sales figures] – is that no longer the case?
JM: “You can split all three now. Originally they had compact camera and DSLR. Then when compact system cameras came out they went to fixed lens and changeable lens. They've still got that but with an additional breakdown that goes: fixed lens, DSLR, compact system camera. I still look at both: the combined market with DSLR to see if the market's growing and then the individual markets to see which is the engine of growth, based on what is coming through. So it's good that there are now three tiers to the sales figures.”
Question: Do you think CSC could help to kill off the DSLR at the entry level?
JM: “I don't think they'll kill the DSLR off but they're giving a really exciting alternative option to people shooting with a mirror box and not having full time live view, not having continuous auto focus in movie mode, which these guys are used to having with a pocket compact. And it becomes a bit alien and strange that they shoot a movie with a DSLR and it's out of focus and they have to keep adjusting it. Plus the big, big thing is the size.”
Question: And by the same token there will be those who will stick with a DSLR because they find the GF1, GF2 or Olympus Pen or whatever too small for their hands.
JM: “In the photographic industry a lot of opinions have been formed over a very long time and people have these associations with a particular product. Five years ago there was a whole online campaign stating ‘we don't want live view in DSLRs because it's just terrible technology.' Now no one would dare bring a DSLR to market without it. We do actually do very well with the 40+ age group, people don't want the big and bulky lenses that they didn't mind lugging around when they were 30-something. They don't want or need to be flashy with the big kit. My target issue with the marketing is to increase our sales in the 30 to 40 bracket where that's a big opportunity. Those people have been shopping quite heavily based on trusted brands. Everyone will recommend a Canon or Nikon, just as with travel zoom everyone will recommend a Panasonic TZ because it's strongly established. It's recommendations that are driving the sales of DSLRs the same way they are with the TZ. The job is to get ourselves onto the shopping list with the G series and grow that awareness. We're having people say about the GF that it totally reinvigorated their street photography – especially with the 20mm pancake, so your types of shooting with a CSC can be totally changed as well.
‘And in the high-end amateur market we think we can seriously challenge SLR product there with the GH series. It has quite a broad appeal. What's totally important with our concept of the Lumix G is to create this new compact system camera culture in the digital era, be very focused on new innovations and technologies and always pursue high image quality. And I think the G3 is absolutely the best example of the technology at this moment being pushed to its absolute limit. We want to create a new market rather than simply replace DSLR because that's no good for retailers. We want an incremental growth – a bit like the phone market witnessed with smartphones. Everyone thought the phone market was slowing down and then – bang – the market's reinvigorated.
“Just looking at the UK sales situation from GFK, for the combined changeable lens market in volume, the year to 2011, 543,000 cameras – which is 17.5% up from 2010, which was 462k. Not many markets in UK electricals have seen double-digit growth, excepting smartphones and tablet PCs, so this is very encouraging. Compare that to fixed lens compacts which is 5.5 million down to 5.3, so we have reached a bit of a saturation point here where the majority if not all of the market is replacement product on a one to two year cycle. This is partly why we wanted to get into the CSC market three years ago – because we could see this trend coming.
“If we then split the market for changeable lens between CSC in the UK and DSLR, for CSC the market year on year is up 200% to 100,000 units, and I'm 100% sure when we sit down next year it will be 200,000 pieces, because this growth is forecast to continue. If we look at the DSLR market it's relatively flat – 434,000 pieces up to 424k. My feeling here is that whilst some of this business is substitution as you've said, a lot of it is incremental. Without the development of CSC the market would stagnate, as is happening with compacts. That's the landscape at the minute so we're looking at another strong year. A lot of these people getting into CSC are new and thirsty for knowledge and we want to give out the confidence that people are really using and enjoying the products.
“I thought I'd show you market shares for the UK as well. For the year 2010 annually we had 6.2%, and we've now grown to 8.9% share. For November and December 2010 – the biggest two months in the year – we had 10% and 11% share. Hopefully with the new products we're revealing today we can start targeting 15% market share. We are now strongly positioned as the fourth brand in the market [After Canon, Nikon and Sony] – there are huge changes in the landscape.”
Question: Sony seems to have done hugely well in Japan on the basis of just two NEX models.
JM: “Yes in Asia they like that smaller form factor and it's a funky little product. But we firmly believe that we can deliver the high image quality with a usable system, because we want people to experience lots of different lenses. That's the beauty of a DSLR and we want that in our compact system. So the debate needs to be about everything, not just sensor size. That's just one element and it's not the only one that's important as far as image quality. You'll see also the results that we've got from our latest sensor which is very much closing that gap; after reviews that we've had from journalists suggesting we should up our game on the sensor side. In terms of the compact system camera market in the UK, in 2010 it was only ourselves and Olympus who were in the market and we had 86% share with the G1 and GH1. If we look at the full year now we've got strong competition from Sony who have made a huge investment – the same as we launched the G1 – but we're very proud and pleased to maintain the number one position in the market with our range of products. Tough year ahead because we've got some strong challengers but also some good new product, but in terms of Panasonic's roadmap we have the GH2 launched at the start of the year and which has had fabulous reviews and that will continue all the way through the year. And then in our ‘G' range we had the G10 and G2 last year – the G10 we've now finished. The G2 production will continue throughout the coming year and we'll just drop it down as our entry-level product – that's very important for us and we feel confident with that because it will be only entry product in the market comparable to a DSLR, with a free-angle screen, a touch screen and a very high resolution touch screen.”
Question: With the G10 going I'm assuming that wasn't a great success?
JM: “Oh no, it was good – so good that we needed to continue with a product for that part of the market at the request of the dealers. In terms of price we'll bring the G2 down into [the G10's] price bracket. Obviously your average compact camera in the UK is £120, but these people who are looking to progress up they're into FZ or LX product and that is £399/£449 type product. One criticism of it was its EVF. Because it had the EVF from our FZ range, which is fine for a bridge camera, it wasn't good enough for enough people at the entry level. We've gone from QVGA up to 1.4 million dot equivalent viewfinder.”
Question: Part of the problem was also that the G2 was competing with it – especially if you compared them side by side in a shop.
JM: “True, that was a problem but a blessing as well because to those people we could sell upwards. For those people on a budget however it was a really good model for us, so we've continued the G2 in that role. And then the G3 will be a step up. Whereas last year between the G10 and G2 that step up was to a viewfinder, plus free-angle touch screen, actually with the G3 we've got a lot more to talk about. I think we will outsell the G2 with G3 because it is the ‘latest, greatest' and that's of course what we want to do. The GF2 has also had a good start for us – so that's the range going forward.”
Following John Mitchell's scene setting, Dai Mukai then took us through a summary the new features of the G3.
DM: “there are lots of new features of the G3, so maybe it will be hard to pick up them all. So I'd like you to remember three points: first is the improved image quality – it's almost close to the GH2 and very close to a DSLR. The second point is the G3 has advanced contrast AF, which is famous for accuracy and speed. And lastly the G3 has a sophisticated design. We use an aluminium body and there are different types of colour – red and white – and also the size and weight is one of the smallest to maintain a compact camera configuration.”
Question: The G1, G2, GH series had a metal body also?
DM: “No, a plastic body. Only the GF series has got an aluminium body and now we have incorporated it into the G line.”
Question: Those early G series models also had a very thin rubber coating to the body surface. Has that idea now been dropped?
DM: “Not dropped, but it depends on the product positioning. At the time those products were quite new and though the body of the G3 is aluminium the grip is the same rubber material. Comparing the G2 with the G3, in terms of volume we have achieved approximately 25% downsizing.”
JM: “I guess the G3 is now filling that space between the GF2 and GH2. We've got three sizes – all very small.”