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Brand Licensing and the Nikon Phone



By this point, the crippling blow dealt to compact cameras by the rise of smartphones is old news, but camera manufacturers are now mounting counterattacks. They’ve certainly suffered for long enough. Sales for compact cameras fell by 30% in 2011 alone, and kept on falling. They’re at 102 million units for this year, compared to 144 million units just three years ago.

Very soon, we’ll be seeing some of the first substantial responses to this falling demand by camera manufacturers. A lot of recent buzz has focused on the Sony “Lens Cameras,” a combined zoom lens and sensor meant to be plugged into a smartphone.

While it will likely improve on your existing phone camera, it won’t be that revolutionary. After all, consumers are ditching their compact cameras specifically because their phones are already good enough for day-to-day snapshots. Plus, while it is pretty neat to share shots taken on your lens camera directly through smartphone apps, that’s already pretty easy to do with WiFi-capable cameras like the Canon N.

The Nexus 4, precursor to the upcoming Nexus 5

Nikon, however, might respond to the situation in a different way: by cashing in on its brand. Last March, rumors started to surface that the upcoming Google-made Nexus 5 smartphone would feature a Nikon branded camera. These are still only rumors, but many sources are convinced of their validity nonetheless.

Keep in mind, a lot of people also thought that the recently released Lumia 1020 would feature a Canon branded camera, but it did not.

So let’s call this a hypothetical question: would it be a good idea for Nikon to work with a phone manufacturer to produce a phone with a Nikon branded camera?

There would be some definite benefits. Licensing a brand basically amounts to renting out one’s reputation. Nikon is known for its fantastic cameras, and consumers would likely assume that a phone emblazoned with the Nikon name would take some great pictures. This could in turn boost sales, and Nikon would then share in the profits.

Plus, there’s virtually no R&D costs, and Nikon probably won’t be the party dealing with manufacturing. Consider the recent partnership between Hasselblad and Sony to produce a line of luxury consumer cameras: Hasselblad didn’t need to worry about building a new camera system from the ground up — the company simply applied its brand name and some luxury touches to a line of already-built cameras.

But there are potential hazards as well. Licensing out your brand only works as long as people associate your name with an excellent product. If this hypothetical phone camera didn’t meet expectations, Nikon would risk cheapening its brand, which could create a ripple effect that would negatively impact the business in other sectors.

And because the phone would necessarily be the product of a partnership, Nikon would have a tougher time maintaining quality control.

On top of that, Nikon won’t be able to replace its lost compact camera sales by slapping its name on a bunch of phones. For starters, the move would only rake in a small portion of the profits given the relatively small role that camera quality plays in the smartphone package.

Plus, even if the Nikon phone revolutionized the mobile photography world with an 80 megapixel camera and negligible noise at ISO 128,000, they’d just be convincing more and more people to make the shift from compacts to smartphones, exacerbating the initial problem.

Bottom line: brand licensing may serve as a loss-minimization strategy for camera companies, but it isn’t a substitute for innovating in existing markets and exploring new markets.

Nikon understands this well, and its FM10 film SLR exemplifies this understanding. This simple, fully manual camera is built by Cosina and based on the Cosina CT-1 chassis, but it bears the Nikon name and is sold by Nikon. In this age of digital dominance, it is one of only two film cameras still sold by Nikon (the other being the Nikon F6).

It’s a place holder, a minimal offering with low manufacturing costs meant to satisfy those few people still looking to use a classic SLR. It’s not meant to make up for the decimated film camera market. In a similar way, a branded phone could keep the Nikon name relevant for snapshooters without requiring significant investment on the company’s part.

So if Google’s Nexus 5 features Nikon branding — or Pentax or Canon or Olympus for that matter — the company would do well to put whatever royalty payments it receives into R&D, because it’ll take something more substantial than a smartphone with a Nikon-branded camera to halt sliding profits.

Image credits: Photographs by developer.android.com and Joe Ravi