The BCN EOS RP and A7 III report - A follow up

When we created this article we didn’t realize what a furor that would create around the internet.

Just about every site weighed in on what it means, and basically, “How badly Canon and Nikon” are doing.  DPReview released their article on the results, and the comments were fast and furious.  While none of this is too surprising, many of the comments or thoughts surrounding this article were to me, very surprising.

When the report came out and I originally looked at it, I thought it was much ado over nothing.  The EOS RP like every other camera would have a sales spike during initial launch when the camera started shipping, basically all the preorders and people waiting to buy it, and then a tailing off after that initial surge.  I wrote up our feelings on the matter, what we thought the report actually showed and didn't think much more about it.

Little did I know what would happen next..

There are a few points to consider (as with all our BCN derived data) and we’re going to go into some details that need to be summarized about this report, and any of the claims made about full frame cameras in general.

Japan is an important market, but a small one, and full frame is even smaller

Let’s put this into perspective, we have some hard numbers from both CIPA and also from BCN for the month of March.  For the sake of this analysis we’re going to assume that the shipped units in March are equal to the sold units in March.  While they are not, they should be close.  At least close enough for this math.

• We know that in March, the manufacturers shipped 48,397 units to japan for mirrorless cameras
• We know that in March the A7 III had a 3.5% marketshare of all mirrorless cameras in Japan
• We can then conclude that the A7 III sold around 1700 cameras in March.

Quickly looking at this list, we can put an assumption out there that notwithstanding the A7 III, we’re going to assume that out of the remaining 28.6% of the cameras not shown that 6.5% of them are full frame and that the total full frame units sold for March were somewhere around 10% of all mirrorless cameras in Japan.

This means the entire mirrorless market in Japan is around 4839 units for the month of March.

Compared against the overall mirrorless market, which saw a total of 360249 units shipped, we can then see that the full frame mirrorless market in Japan, which this report is talking about is around 1.3% of the total mirrorless market size.

So this is a pretty small look at the market.

The A7 III didn’t necessarily see an increase in sales during the reporting period

This one is just based upon what this graph is; which is a percentage of the total units sold for the week.  The A7 III could have had increased sales, it could have had declining sales through the month – or the sales could have remained consistent.  Consider our 1700 units per month and that if the sales were consistent, this is what it all would look like for the EOS RP and the Sony A7 III.

Consider just how small these numbers are.  The relative significance of this report really comes into the forefront when we look at these.  While these aren’t the exact numbers, they are very realistic numbers for the Canon EOS RP and the Sony A7 III during the period in question.  We have seen literally thousands of comments flying back and forth over what is the difference of 200 some odd cameras between the A7 III and the EOS RP.

Canon and Nikon are not failing

The only thing that Canon and Nikon failed at was the lofty expectations by some expecting complete dominance of the market by Canon and Nikon in an instant.  This of course just simply forgets the relative inertia of the users of Canon and Nikon products, one of the reasons most of them haven’t switched to mirrorless is that they like the cameras they are using right now.

It’s going to take a while before the user base of both Canon and Nikon switch, and that may be a slow process depending on lenses, and older cameras simply wearing out – especially if the user is in the last camera syndrome where they feel there is no actual need to upgrade to a newer camera from what they have.

Combining that problem is the relative newness of the R and Z mount for Canon and Nikon respectively, with limited cameras, lenses and accessories for the systems currently available.  More third-party products are announced almost weekly, but to build up these ecosystems takes time.

Myth: Sony is more profit based because they sell high end full frames and Canon sells cheap junk

I saw this narrative a lot over the comments flying around the internet.  There’s no real proof that Sony makes more profit margin on an A7 III than Canon makes on say an M50.  Looking at the March data, we see that the M50 sold at an 18.2% of the marketshare for mirrorless in Japan while the A7 III sold at 3.5%.  In Japan, the M50 sells for 52,000 Yen, while the A7 III sells for 206,927 yen. For every 1 A7 III sold at 206,927 Yen, Canon sells 270,400 Yen worth of M50’s.  Canon makes more of net sales on the M50 in Japan, and could quite easily make more profit selling an entry level camera than Sony makes selling a middle tier full frame.  This is especially true when you consider that Canon has spent 5 or more years refining automated assembly in its camera and lens factories, thus increasing the potential profit margin per camera and lens.

Some will point out that I skipped the A6400 here with its 15.2% marketshare in March.  While this is an interesting point, it’s also premature to use the Sony A6400 because it’s having its initial sales surge much like the EOS RP for the month of March.  As time goes on and the Sony A6400 settles to its more natural marketshare and its natural selling price then this will be a valid comparison.  But not now.

While this next part isn't an exact science, its sort of relevant.  Many people will look and compare the imaging departments of both Canon as some sort of "win" for either brand, so let's do the same here. We do know that the product mixes for these two companies are different in their respective divisions, but roughly in each division cameras and lenses,etc makeup around 60% of the sales volume. From the earnings reports from both companies we can say;

1. Sony for FY 2018 (March 2018 to March 2019) had a net sales of 670 billion yen and a profit of 84 billion yen for a profit margin of 12.5%
2. Canon for March 2018 through March 2019 had a net sales of 925 billion yen and a profit of 200 billion yen for a profit margin of 21.6%

As we can see, even in the divisions, Canon has a higher profit margin than Sony does.  While this is highly inaccurate, it does paint a picture against the narrative that has been used frequently.

Myth: The EOS RP is a failure

I think this is both a Maybe and a No. On the No side, I don’t think the EOS RP is a failure, because personally I always looked at it as competing against the low end of Sony’s lineup; the A7 and the A7 II.  While some will claim these are 5-7-year old camera bodies, why is Canon competing against them, they are ones in which Sony is continuing to sell to people wanting a bargain full frame camera.  Canon has always had cameras competing in the entry level space, full frame should be no different.  In this light, the EOS RP from this report is a success.  It is well ahead of the A7 II and the original A7 doesn’t even make it on the list.

On the flip side, the lack of a credible kit lens that keeps the size small, and the weight minimal I believe is hurting the EOS RP adaptation and sales.  Perhaps when the new Canon RF 24-240mm comes out we will see new kits and a bump up of sales volume.  But I don’t think the EOS RP comes into its own until it has a 24-70 or 28-70mm IS STM kit lens to call its own.  So this is why I think the EOS RP fails a bit, not because of the camera body, but what it’s bundled with right now in terms of kit lens.  Canon could have done a better job with this, but they know their lens priorities far better than me.

If anything the lack of a kit lens, potentially demonstrates that Canon isn’t looking at this as a short term competitor, but more in terms of filling out the ecosystem, basically a camera body they can get out there now into the market.  If this was truly an important camera for Canon and a very strategic one for the short term, in my opinion, they would have created a kit lens specifically for it.

In short...

The conclusions you draw are your own, and clearly, we touched on a sensitive subject dear to many different people when we started this off with our report.  We hope this injects a bit of sanity into the discussions that seem to be ongoing about this.