Nikon Q3 financial results: slow sales of KeyMission


Nikon announced their Q3 financial results (for the year ending March 2017, direct link to PDF presentation) here are the highlights from the report:

  • YoY increase in Q3 net sales and operating income as operating income decline in Imaging Products Business was offset by Precision Equipment Business
  • YoY decrease in Q1-Q3 net sales but significant increase in operating income
  • Key restructuring initiatives progressing according to plan. Voluntary retirement
    program received 1,143 applicants
  • Q4 net sales and operating income expected to decrease. Downward adjustment to 2017/3 forecast: Net Sales ¥50 billion, Operating Income ¥5 billion, Net Income ¥3 billion
  • Main causes for downward adjustments are reduced unit sales for Imaging Products Business/Industrial Metrology Business and canceled product launch for Imaging Products Business
  • We will adhere to the basic principles of restructuring, while accelerating implementation and considering additional actions


Next are the highlights of the forecast for the year ending March 31, 2017 for the Imaging Products Business:

  • Slow sales of Action Camera. Reassess R&D and sales strategy
  • Market slowdown exceed expectations across most product categories
  • Canceled launch of DL series of premium compact cameras to focus on “high value-add” and profitability

Yes, "slow sales of action camera"... is anyone surprised by this? The new KeyMission cameras were not what Nikon wanted it to be. Here are a few more numbers:

"Substantial downward adjustment of expected unit sales of initial assessment for “KeyMission” action camera series due to slow sales"

And finally the forecast for the year ending on March 31, 2017 (Imaging Products Business):

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  • animalsbybarry

    Sell Nikon to Sony before the value drops further

    • manattan

      Doubt Sony would buy at this point. Nikon is dependent upon Sony, but not the other way around.

      • Jeffry De Meyer

        Sony makes more money from nikon than sony makes from selling their own cameras

        • Chris

          10 times more sales and 3 times more profit. Larger indeed.

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        • Because his brain is not able for more attention span. 🙂

      • ITN

        Sony probably use Nikon equipment to make sensors and other semiconductors and in turn they sell a lot of sensors to Nikon.

        Sony has little to gain from buying Nikon unless they simply want to eliminate competition (and lose sales of sensors and give market to Canon). This would just lead Canon to a near-monopoly position which would be bad for everyone but perhaps Canon themselves (Canon users would likely pay increased prices for their products due to virtual monopoly).

    • Andrei

      Please don’t, we need Nikon on the market.

    • Sony has plenty of problems of its own.

      • silmasan

        I’m not following their news, but with Sharp being taken over by Foxconn, and now Toshiba too is in crisis, I won’t be shocked anymore… Not saying they’re related, but if big ol’ names are going to fall, then this decade seems to be the time.

        • It’s the same with tech companies. There are no legitimate new contenders anymore; you are either Google, Apple, Facebook, Amazon, or Microsoft, or you are a company that will go under or be bought by one of them.

    • VanHoff

      People come here just to make lumber of the fallen tree.

    • Giraffe

      People keep saying this, but I don’t know why Sony would ever do it. I can’t fathom it.
      What are people’s thoughts for this buyout? Would Nikon SLRs be rebranded as “Sony”? What’s does Nikon offer there that Sony doesn’t already have? Is there significant intellectual property that Nikon has that Sony doesn’t have the equivalent to? Why would Sony want the “F” mount? Why would Sony buy Nikon as a parallel camera brand to compete with the Sony brand?

      • animalsbybarry

        Nikon has a top lens collection and complete system that Sony lacks
        They also have a reputation, brand recognition, and pro customer base Sony lacks
        Sony would benefit by utilizing combined lensmount protocols

        • Giraffe

          First, I don’t think that Sony sees Nikon’s “top lens collection and complete system” as something it has to have. Sony years ago purchased the Minolta camera division and likely still has some of those people kicking around as well as its IP, in addition to its partnership with Carl Zeiss, which likely has a better reputation for pure optical quality than Nikon at this point. In a way, its a nice setup for Sony, as they use “Sony” branded lenses for their mainline lenses, some of which look suspiciously like tweaked Minolta legacy lenses, and “Carl Zeiss” as the upmarket variant.

          Second, I’m not sure that Sony thinks that Nikon’s (diminishing) reputation, brand recognition, and pro customer base is something that is worth splashing out for.

          Finally, I just don’t see synergies to be gained with even assuming a “fully functioning” F to E mount adapter that was reasonably priced and didn’t degrade optical quality or autofocus performance could be created. It sounds like a kludge, rather than something to be aspired to.

          • Sandy Bartlett

            They have sales. Nikon sells many more cameras than Sony.

  • Giraffe

    I cannot believe that these Keymission cameras were ever greenlighted. Did Nikon really look at GoPro and say, “man we gotta get a piece of that action”?

    • manattan

      Probably what happened is that the Nikon executives were off doing extreme sports instead of listening to their customers and thought, “Nikon should be producing these GoPros”.

      • It could be much more simpler. All executives like Tim Cook for example are currently speaking about that Virtual Reality is the next big thing “blah blah”… i don’t believe it but it seems some parts of the industry want to start a new hype about this. From this perspective a KeyMission would make sense to cover 360 degree video.

        • Allen_Wentz

          Actually Tim Cook has indicated a preference for Augmented Reality (“AR”) rather than for Virtual Reality (“VR”).

    • ninpou_kobanashi

      Google “action camera market growth” and you can see the reason for investment. Unfortunately, the market tanked as did GoPro’s shares starting end ’15.

      Unfortunately for companies, its hard to kill products when you’ve already lined them up and the market moves on you.

      • Captain Megaton

        Yeah, everyone is looking at this with 20/20 hindsight, but in 2014 few people would have predicted that the action cam market would peak in late 2015 and then fall off a cliff.

        • Giraffe

          I guess; does anyone who greenlights these things actually own and use one? I’ve owned a GoPro since the GoPro 3 (2013?) and could have told you that it was a limited market. I do like the extreme videos that GoPro posts on YouTube, though.
          I will say that the technology behind the KeyMission 360 is interesting and perhaps has some potential in the VR world.

      • sportrunner

        The biggest issue for Nikon is that they took way too long to get the product to market. They simply can’t try to do the “Nikon” thing of taking 2 years to get a viable product to market.

    • ITN

      Nikon fisheye lenses and underwater construction seem smart ideas to me. The main problem is that they can’t get their mobile phone control software to work properly.

  • doge

    Nikon must have thought japanese people were getting into xxxtreme sports and everyone was going to start filming their attempts at conquering Mt Midoriyama. There’s no other explanation for cloning gopros.

    • Captain Megaton

      Extreme commuting. Extreme grocery shopping. Extreme Amazon delivery.

    • Mr_Miyagi

      That raises an interesting question about how Nikon went about doing its appraisal of the likely profitability of the DL cameras. Did they base that on surveys of the Japanese and Asian markets alone? Did they include the US and European markets? Perhaps other readers have specific marketing insights to offer, but I wonder if sales of the DL cameras might have proved much more successful outside rather than within Japan and Asia, but were discounted in Nikon’s eventual decision to abandon that product line.

      • Nikon’s big problem with the DLs is probably Sony which is using the classic Commodore approach in both the APS-C mirrorless and 1″ spaces — when version n of product X is released, version n-1 is dropped to below the competitor’s less well-known product, and n-2 is dropped to zero margin leaving no oxygen in the market for anyone else. Like Commodore, Sony is succeeding in killing its competition while not actually making much money themselves.

        Maybe their plan is to kill all credible competitors in the sensor space and then start charging monopoly rents.

        • Mr_Miyagi

          Possibly true, but while the current price of a new Sony RX10 Mk I undercuts the Panasonic FZ2500, a direct competitor, the prices of both the Mk II and Mk III models of the RX10 are higher and much higher, respectively, than that of the FZ2500. I was interested in the DL24-500 to replace my RX10 Mk I, but now I’ll have to choose between the Mk III and the Panny FZ.

      • Hans

        I think is more like the other way around. They did market research based on US and maybe a little on Europe, just like the KeyMission 360. Do you recall them saying 72% Americans have tried it and more than 90% wanted it? How can such a good and wanted product not make money?
        The truth is the market now is in Asia where more than 2/3 of the global population reside. North from Russia down South to Australia, East from New Zealand to West in the Middle East. To make matters worse, the island disputes and war time history has also caused them to loose some sales because of buyers restraint this couple of years.
        Next is the way it is being transacted. In the US is mostly by credit, where there is a very high chance of return within the first 14 days because people just wanted to try new toys out, and incur restocking fees and having to sell the product at a discount. While in Asia the transaction are mostly in cash and final. Even people from relatively poor nations pay cash to buy products to bring home after their work contract ends.
        Finally, their DL are late to market with so many options here in Asia from branded to no brand. Sales of action cameras didn’t really flat out in 2015, but rather Gopro was being replaced by relatively unknown brands that sells for around $50-$200 instead of $300-$500 and still have 4k video (so called because most are between 10-60fps and not 120-240fps).

  • Get rid-off these key mission products. They won’t generate better sales in the future and only cost too much money which Nikon could invest in better imaging products at the sophisticated cameras for enthusiasts.

  • Carleton Foxx

    Here’s the counter argument: 360° video/VR is going to devour the entertainment and imaging industries, and probably others. But to do real 360 video takes multiple cameras and massive processing horsepower.
    But here comes Nikon making a pretty good showing, may not be perfect, but it’s not awful. Canon and the others are nowhere to be seen. It’s their party for the time being.
    Are they supposed to just roll up into a ball and die?

    • manattan

      I seriously doubt VR and 360 video is going to devour anything. Perhaps you made the same argument about 3D some years back 😉

      • Anyone still seeing BluRay Movies with 3D glasses at Home using a 3D capable Television? My impression is that was a hype that nobody cares anymore about.

        • Max

          No we’re seeing VR everywhere now

      • Carleton Foxx

        About 1985 I saw “Creature from the Black Lagoon” at a revival house in its original B&W 3D and it was mindblowingly wonderful.
        When I left the theater I knew that 3D was dead because no matter how hard they tried, Hollywood could never again equal the greatness of that 1954 classic.

      • Oculus demo setups in Best Buy are being removed because customers didn’t even want to try them. I actually tried a PS4 VR demo which was very impressive (best VR experience I’ve ever had, and my wife used to run a VR lab…) but you can’t actually find one to buy.

      • Ineedmy Bobo

        Agreed. VR and 3D are cool technologies in limited doses with limited profitability (amusement park rides, some video games, movie theaters, etc.). But most people watch TV and look at photos while doing other things. We don’t want to put on special helmets or glasses just to watch Bob waterskiing on his last Florida vacation. 🙂

    • masterac

      it is awful.

      they took action cam and 360 and tried to splice it together, they end up having an abomination.

      something that was filming in 24p and bad stiching, and that could turn on by the press of a feather.

      again i hope the genius that got this idea or help greenlight it commited seppuku if he was japanese

      • When you suggest someone kill him (or her) self because a product doesn’t meet your expectations, I think you’re going a bit far.

  • RC Jenkins

    I think I’m starting to see why they called them the ‘KeyMission’…

    https://img.washingtonpost.com/rf/image_1484w/WashingtonPost/Content/Blogs/the-fix/201407/Images/1012203.jpg

    • Yeah, THAT was just about as successful. Not quite as costly, though.

  • Allan

    The increases in net sales and, especially, in operating income of business equipment is striking. They made more money here than from imaging. If this is a sustainable trend, I would spend my R and D money in business equipment and not imaging products. At this point, Nikon might feel that spending resources on imaging products is too risky.

  • this is a tremendous surprise

  • Wesley

    They should have killed off the Keymission and kept the DLs.

  • thundrrd

    My hope is Nikon will figure out their imaging business – not holding out a lot of hope for great things in the near future, but I do hope they show a sign of life sometime this year.
    It is too bad they keep stepping on their own toes over and over, but they have done great things in the past and it will only serve camera enthusiast like me if they can once again get back on their game.

  • Mohd Shamsul

    After sticking to crop sensor for such a long time and finally relenting with the D3, I thought 2007 onwards would be the big come back for Nikon. It was then gifted with the 1D MkIII AF problems as well. It was a gift from the Gods. How the hell did they land up in this position?

    • fanboy fagz

      Actually they made a big comeback for quite a few years after 2007 when they released the 24-70 and the 14-24. Things were looking good. After 2011 they had thw flood in thailandia and shit went downwards from smartphones kicking in high gear, & bad qc issues

  • animalsbybarry

    I was planning to upgrade this season
    Either to a new D850 with 70-80 mp and fast burst rate and fast focus
    To a good FF Nikon mirrorless
    Either of which I can use with my current Nikon long lenses
    Or to the new Sony A9 and a new Dony supertelephoto lens

    It is now seeming less likely Nikon will produce anything new in time for me

    • RC Jenkins

      How much were you willing to pay for a D850 with 80MP + a fast burst rate? How fast & how many seconds did you want the buffer to last?

      Simply matching the D810 for buffer performance is a lot of buffer, processor, & power with an obviously higher resolution sensor–some of the most expensive parts of the camera.

      This would probably be in or beyond the D5 price territory.

      • animalsbybarry

        The next Sony sensor is widely expected to be 70-80 mp with unlimited buffer and very fast frame rate…as well as a new much faster autofocus system

        This will probably have a 3 layer on sensor processor made possible by Direct Bonding Interface (DBI)
        This process has been licensed by Sony from Zyptronix (now Tessera)

        I was hoping Nikon would use this same sensor ( likely to be in the new A9) or that Nikon would utilize thier own patent for a 2 layer sensor with 2 layers of dual pixel PD pixels running in opposite directions forming cross point for every 4 pixel unit, and it has 6 colors in 2 layers for full color data at every pixel location
        YMC. RGB

        I will post links below but they will go to moderation

        • animalsbybarry
          • RC Jenkins

            That link is for a 20MP smartphone sensor, and it says nothing about buffer–just the fastest speed that the sensor can capture and record an image. After capture, the image then needs to be processed / compressed, and written to memory, which is where buffer comes in. Buffer isn’t cheap.

            I’ve also read rumors about the A9 being very high megapixel….I remember as early as last year. The same rumors point to the price as being in at least the $6,000 range, putting it in the same range as the Nikon D5. Which is exactly what I said.

            I don’t think many photographers want to pay that much for a D810 successor.

            • animalsbybarry

              This is the 3 layer processing (DBI) technology
              Sony is now set up to utilize this tech which makes possible much faster processing, lower noise and less heat

              This will be extensively used in Sony’s next (current) generation of sensors

              The next flagship sensor will have fast fps and unlimited buffer because the processing speed will exceed the capture speed

              The next flagship camera will also have dual XQD memory card slots

    • ITN

      Nikon is likely to produce a D810 replacement soon (this year, certainly). However, those numbers do not seem realistic. A moderate increase in pixel count, dynamic range at base ISO, and perhaps 1fps increase is more realistic. The biggest improvement will be in the AF taken from the D5, and that alone will sell the camera in large numbers if they don’t make serious manufacturing errors. Fast bursts in a high resolution camera from Nikon? Not very likely. 8fps may be within the realm of possibility but I would guess 7fps tops for full size images. XQD slot could mean the possibilty of long bursts beyond what Sony A99 II can do, but because of the moving mirror there probably isn’t going to be as fast fps rates.

      • animalsbybarry

        The dilemma is
        Sony wil likely make a camera like that…. but Sony has no long lenses
        Nikon has the long lenses but not a camera with high res and fast burst and fast focus

        I do not owe Sony or Nikon anything….so I will upgrade to the system that meets my needs

        Both Nikon and Sony the opposite half of a really good system
        But because they are so proprietary they will not work together and so neither one has the really top notch system they could have if they combined forces

        That hurts both of them and helps Canon
        Canon does not have the best available sensors….but they have everything else…that is why Canon is clobbering Sony and Nikon in market share…..and that is why Sony and Nikon need to combine forces

        • Barry, I have to ask you to stop this Sony buying Nikon nonsense. You should know by now that this was all fake news/clickbait started by a site known for spilling BS.

          • animalsbybarry

            Yes I realize the rumor was not true… my comments are what I believe should happen, not necessarily what will happen
            But I will honor your request and move on to a different topic

            • thank you!

            • Harry Manback

              @animalsbybarry:disqus @NikonRumors:disqus It’s a pity the Admin at SAR aren’t so keen on telling you to STFU.

            • You know there is a better alternative to SAR – it’s called SonyAddict.com – give it a try 🙂

    • fanboy fagz

      If you goto nikon and give them a signed empty check, they will make it for you. Any mfr you would goto and give them a signed empty check will make you what you want providing you pay what they ask. Sigma made a 200-500 2.8 as a special order I believe. They made a few of them

  • New Yoko

    KeyMission 360 IQ looks good as flat video when view on Mac Safari and 170 has better IQ than my GoPro HERO5 Black but the app didn’t work easily on iPhone while their accessories were too pricey. I returned them but kept GoPro HERO5 Black. Nikon needs to invest in good software engineers. Otherwise, I’m satisfied with the 105E and sold the 85 1.4G

  • Captain Megaton

    Part of the fall in operating income are trends Nikon can do nothing to influence, it can only accept the new realities and downsize.

    On the other hand part of these results must be blamed on a string of bad decisions and execution failures Nikon made while developing new non-dSLR products: Nikon 1, Coolpix A, DL, Keymission, (Snapbridge). None of those are in and of themselves terrible product concepts, but none of them were exceptionally good products either – they were either not what the market wanted, or they were not delivered while the market demand was there, or they were outshone by Nikon’s competitors.

    Crucially, Nikon bet on them all being far more successful than they were, which is the most damning indictment I can level at any company: Hubris.

    • Sandy Bartlett

      In that same time frame they also updated almost their whole lens line up, and made the D7200, D500, D750, D810 and D5. The most potent DSLR line up in the industry. Almost all gold award winners and hi sellers. Nikon may have to settle for being a smaller company. So will everyone else.

  • Fly Moon

    focus on “high value-add”

    Why don’t you start by firing your App and software developers.

    I am not joking. Nikon’s software is horrible!

    • sportrunner

      They need to realize that software is not one of their core strengths and farm it out to someone else. They need to go back to their core strengths and hire out the rest. Get a real marketing strategy, look at ergonomics, focus more on support and get your product lineup sync’d up (it looks like a game of whack-a-mole right now). There is a ton of low hanging fruit for them to work on in each product they currently have.

  • jonebize

    Nikon should have listened to me and made a digital FM2 a long time ago. Then I wouldn’t have to cry myself to sleep every night, and neither would they. =(

  • AYWY

    They have been speaking about focus on “high value add” products in at least 3 financial press releases starting with the FY 2016 report which preceeded the restructuring announcement. But what does it even mean to the corporate goons who remain after the restructuring?

    I’ve spent 6 years in a similar type of company: >20k employees doing business in multiple sectors from hardware to software. All Nikon’s symptoms remind of this ex-company. Root problem is the same – problem in management don’t know their own business or choose the complacent path of least monetary risk – which always bites them eventually. There are smart people in R&D but engineers always follow management instructions.

    It does not matter what Nikon chooses to do from here onwards if people in important decision-making positions are not replaced. There will always be something in their offering that frustrates the customer.

    If you dig through recent history of other imaging companies, you will notice something really changes when management changes to the ‘right person’. This has happened with

    Fujifilm – a guy who steered direction away from film, laid off many people and started this digital initiative.

    Sigma – a guy who changed the biz strategy from ‘cheap and good enough’ to ‘premium’. (Darn heavy though…)

    Sony – funny, he’s an ex-Nikon employee. Whoops!

    Nikon is sliding into irrelevance if people who don’t understand imaging stay at the helm of the imaging biz.

    Now i just hope “high value products” does not mean all they are going to do now are expensive f/1.4 lenses and constant f/2.8 zooms. I gotta jump ship….

    • silmasan

      …Or f/1.8 ~ f/2 zooms… oops.

      Btw, who’s this “ex-Nikon employee” Sony executive?

      • AYWY

        Could be my mistake – i can’t find the reference anymore but remember reading about it twice. Original post amended.

  • Tom

    Time for Zeiss to take over Nikon and go into the camera business….Sony would’nt make sense.

  • Care

    If their management wouldn’t change their protectionism and unwilling to provide users with more convenient (including using legacy lenses), Nikon will definitely fail; the fail of Nikon 1 is a live example good enough to be used as teaching material !

    • Yes, their management is their main problem. You can’t have stubborn or arrogant people there which don’t have an open mind. This is a technology business – you need to be agile and flexible.

  • sandy

    These are not good numbers, but they are not failing numbers either. They are still profitable, more so than anyone but Canon. They need to get there act together. Put Mr. Hogan on the board. Not joking.

    • MonkeySpanner

      What? I thought they are reporting a $79 million loss for last year?

  • Allan

    Nikon’s troubles are not going unnoticed by the other manufacturers.

    Canon appears to be in a relatively strong position.

    If I was Canon, I would race to improve each of my product lines.

    I would then point out to each audience that are potential new customers for each product line, the following:
    1) Our products are as good or better than our competitors.
    2) Our customer support is as good or better than our competitors.
    3) We are financially strong and will be here for a long time.

  • Narren Rot

    So they csnceled DL but KeyMission was a good idea

  • Adam Fo

    Is the sports optics division making money ? Nikon make a wide variety of scopes and by the far largest range of binoculars than anyone.
    They make for example, six different 7×50 binoculars alone, which is a niche size.

  • Julian Solomons

    One of the main reasons the Key Mission cameras are not selling is that the retailers have given up trying to demo them with the software. The instructions suck, and the process to link the camera to the iPhone etc. is much too complicated. Consequently, salespeople in the stores have given up on evening mentioning them, in case they look like idiots when demonstrating.

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