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Nikon
Global
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Imaging Company

Japanese

As of August 29, 2008

Overview

Main Products

Digital cameras, film cameras, interchangeable lenses, speedlights, film scanners, accessories, software

Market Environment and Business Trends

We expect the digital camera market to continue to expand, but with the spreading economic slowdown stemming from the subprime loan crisis in the United States. we also anticipate that growth will be sluggish, average prices will fall, and competition will intensify.

Shipments of Digital Cameras, Shipment Units of Digital Cameras by the Number of Pixels
Sales Results and Forecasts for Cameras, etc.

Consolidated Financial Results

Consolidated Financial Results

Business Strategy

  1. Nikon seeks to maintain its position as the leading pioneer in the digital SLR camera market. Going forward, it will combine various outstanding features with other elements that win the hearts of customers and ensure long-lasting loyalty.
  2. The timely introduction of new products is imperative to secure profitability in the compact digital camera market. Achieving this requires the swift development of products that directly satisfy customer needs. Besides strengthening marketing capabilities, Nikon will bolster ties between product development, production, advertising and sales to facilitate sharp response to market trends.
  3. Nikon will invest heavily in fast-advancing digital technology with the aim of releasing appealing and unique products.

Business Strategy



An Interview with the Company President

Q1:How are sales in the Imaging Products Business?
A1: Sales of digital SLR cameras grew steadily as the result of lineup expansion. New models included the D3, the Nikon FX-format flagship model with the in-house developed large CMOS image sensor, providing superior picture quality, wide sensitivity range and high speed performance; the D300, the top-of-the-line Nikon DX -format model with even more advanced features and functions; and the D60, offering plenty of features such as advanced built-in dust reduction technologies and a comprehensive set of creative options. Sales of existing products also rose considerably, including the mid-range model D80, the entry-level model D40, and its sister model D40X. Sales of interchangeable lenses were also steady with sales of digital SLR camera kits and high-priced lenses. Production figures for NIKKOR SLR interchangeable lenses, surpassed 40 million in July 2007.

Meanwhile, Nikon aggressively launched a total of 17 new models of COOLPIX series on the market for the year ended March 2008, including the COOLPIX S510 launched in September 2007 with the world's fastest power-up response time*1 and smallest body*2

Notes:
1. Among competing 8 effective megapixel class compact digital cameras equipped with optical vibration reduction as of August 30, 2007 (according to research conducted by NIKON CORPORATION), when set to "Response priority" mode.
2. Among competing models with optical vibration reduction as of August 30, 2007 (according to research conducted by NIKON CORPORATION).
Makoto Kimura
Q2:How is the market for digital SLR cameras?
A2:Nikon had a 40% share worldwide of shipments of digital SLR cameras during the year ended March 2008. We recognize that this is the result of our efforts to meet customer expectations with a wide variety of products, from high-end to entry-level models.

The entry-level model D40, launched in December 2006, was the trigger for Nikon's gain in momentum, as it provides more people to enjoy photography with digital SLR cameras. The D40, with its affordable price, has helped expand the market due to its popularity among those who use digital SLR camera for the first time. In November 2007, Nikon launched the D3 and D300. The "full lineup" product strategy is to strengthen the Nikon brand with flagship models, while also broadening the market and new customers with greater sales of entry-level models. Nikon is expanding in both directions, maintaining its position as the leading imaging company. In July 2008, we launched the D700 employed Nikon FX format, a compact and lightweight model with good cost-performance. We plan to continue to develop attractive products, and strengthen our lineup further.
Q3:What are your strategies for compact digital cameras?
A3: Brand awareness for COOLPIX still lags behind that for digital SLR cameras. One of the issues involved in increasing this awareness is generating a premium for the COOLPIX brand. To accomplish this requires novel and innovative ideas for each product category, and the development of unique features. Nikon will continue to develop new products with advanced basic performance and original functions, such as models equipped with a wireless LAN (Wi-Fi) feature to link the camera to the Internet.
Q4:What is Nikon's basic policy regarding product development?
A4:Nikon creates project teams for digital camera planning and development that cut across the design, marketing and production departments. We categorize customers throughout the world into detailed segments, drawing on sales data and customer surveys from around the world to develop products for each segment, or to quickly determine the segment for which a product is best suited and commercialize it.
Q5:How is Nikon working to make pictures more fun?
A5: The way people enjoy images and photography has changed radically with the transition from film to digital, technological advancements such as the Internet and large-screen flat-panel televisions, and shifts in lifestyles. Nikon has been continuing to develop products aimed at allowing more people to easily take beautiful photos.

In August 2007, Nikon launched "my Picturetown," an image storage and sharing site that allows users to enjoy digital images anytime and anywhere. The platform integrates storage, viewing and transmission of user photographs, and provides for greater enjoyment. We intend to utilize both current and future technology to design cameras based on new and innovative concepts.

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© 2008 Nikon Corporation