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TODAY’S STORY
12 Sep
,
2022

The curious case of Canon

Professional photography is an expensive affair, there's no doubt about it.

Traditionally, selling stock photos has been a good source of return on this investment for photographers trying to make a career in photography. And traditionally, cheaper third-party lenses have always come to the rescue of young photographers who were working with a limited budget and only had the option to spend on a great camera body or a great camera lens, but not both. They have offered many photographers the opportunity to buy incredible professional-grade lenses that rivaled first-party options at a fraction of the cost. If it weren't for the likes of third-party lens manufacturers like Viltrox, Sigma, Yongnuo, Samyang, Tamron, and others, many budding photographers would be priced out of high-quality lenses.

Sadly, now, this might be changing, no thanks to Canon.

But first, let us understand how third-party lens makers collaborate with camera manufacturers. Generally, the way this works is:

  1. Camera manufacturers have their proprietary and patented lens mounts. Canon has its RF, RF-S, EF, EF-S and EF-M mounts, Fujifilm has its XF mount, Nikon has its S, F, and Z mounts, Sony has its E and FE mounts, etc.
  2. There are two ways third-party lens manufacturers can make lenses for these mounts: either the camera body manufacturer provides mount information to third-party makers who are interested in it and makes them sign a license agreement (licensing) or the third-party manufacturers themselves reverse engineer the mounts to make lenses for these cameras.
  3. Reverse engineering a lens mount to make a third-party lens for it has never been stymied by camera manufacturers, and they generally have been open to third-party lens makers reverse engineering their mounts to make lenses for them.

From a consumer behavioral standpoint, allowing third-party lenses makes total sense for companies like Nikon, Canon, Fujifilm and Sony as it is generally not the camera bodies that create ecosystem lock-in but the lenses a photographer amasses throughout their career as a photographer.

The cost of lenses soon surpasses the cost of the camera body, and lenses are generally seen as investments in the photography community because lens mounts rarely change and a good lens can last multiple decades over multiple camera bodies with the same lens mount. A camera body has a limited lifespan that is primarily determined by usage. The more a body is used, the sooner it needs to be replaced. That’s because any moving component inside a camera will step that much closer to its failure point every time it is actuated. Lenses, on the other hand, if properly cared for, can be used literally for decades. Sure, there are autofocus and aperture mechanisms — moving components in a lens that fit the same aging profile as those in a camera — but most of these moving components have manual fallback functionality so they retain their utility even if they’re fairly old.

Therefore, controlling a product line that has the support of many third parties is much more profitable than trying to build and sell every product yourself.

Canon and Nikon don't just sell cameras and lenses, they control platforms that enjoy the support of hundreds of other companies selling third-party accessories for these camera bodies. It makes them market leaders and establishes them as the best choices for most consumers, who want to know that the cameras and lenses that they buy now will be supported in the marketplace for a long time to come.

This means that they sell more cameras, which translates to selling more lenses and accessories.

And when you have bought many lenses of different focal lengths and capabilities for a single lens mount, you naturally get locked into that mount and manufacturer's ecosystem. Any camera body you buy has to work with your existing collection of lenses. Hence, photographers are generally locked into say the Canon or Nikon, or Sony ecosystem with huge sunk cost in lenses and equipment that keeps them moving out of the ecosystem.

But now, it feels like Canon might be taking advantage of this fact, at the expense of its users.

With the advent of the new RF mount — the new mirrorless camera lens mounting system for Canon — the company has started throttling third-party manufacturers from reverse engineering its mount to make third-party lenses, citing patent infringements. This has come much to the chagrin of Canon mirrorless camera owners, who are now limited to buying lenses manufactured by Canon itself.

Take a look at this conversation between a customer and the Chinese lens manufacturer Viltrox:

This is not just the case with Viltrox, but even other third-party lens manufacturers like Sigma and Tamron, who have been asked by Canon to stop making lenses for their new RF mount for mirrorless cameras. While at the time of this conversation, Canon declined to comment, it now confirms that it did so for violations of its patents.

In a statement to Photografix Magazine, Canon Germany confirmed the reports that it issued a cease and desist order to third-party lens manufacturers for violating its patents:

“SHENZHEN JUEYING TECHNOLOGY CO.LTD, manufactures auto focus lenses for Canon RF mount under the brand name “Viltrox”. Canon believes that these products infringe their patent and design rights and has therefore requested the company to stop all activities that infringe Canon’s intellectual property rights.”

In contrast, Sony, Fujifilm, and Nikon have realized that to entice new content creators into their ecosystem, they need to create a budget-friendly ramp for them by promoting third-party manufacturers to build lenses for their mounts.

Sony has been licensing its E-mount for some time and it appears that Nikon is doing the same with its Z-mount. Fujifilm also has declared that they no longer want a closed ecosystem and the XF mount has now been opened up to third-party lens makers.

So, the natural question that arises is: What the hell is Canon thinking?

The most straightforward answer to this might be: one third-party lens sold for a Canon camera is one less lens sold by Canon itself.

This is further supplemented by the fact that with the constant innovation in smartphone cameras and computational photography, companies like Canon and Nikon have seen their total revenues go down over time, while Sony has seen an uptick in its revenues, simply because it also manufactures lenses for smartphone cameras, while Canon and Nikon do not.

Among camera manufacturers, Sony dominates not only as a supplier to other manufacturers but also as a leading supplier of smartphone sensors. It is a Sony module in the iPhone, made exclusively for Apple to their spec.

One more interesting thing to note in the graph below is that the proportion of revenues made from lenses has steadily gone up over time in comparison to revenues made by selling camera bodies, although the market size for both has steadily gone down — thanks to smartphone cameras.

So, the proportion of revenues that stand to be impacted positively if a company were to stop third-party manufacturers from selling lenses is also now higher.

Perhaps, Canon felt that third-party lenses were cannibalizing the sales of their own lenses.

But isn't this short-term thinking on Canon's part?

Wouldn't a lack of third-party lens options keep budding photographers and content creators from entering Canon's ecosystem in the first place? While this remains to be seen, we can reason about this from multiple perspectives.

1. Reduced innovation pressure due to a stifled competition

If you artificially force third-party lens manufacturers from building for your ecosystem, that increases your pricing power but at the same time might make the business complacent and deliver less value to its customers.

2. Forcing lock-in not via value, but via regulation

There are good ways to create customer lock-in and there are bad ones.

Learning lock-in:

When the time spent learning your product is so high that customers get naturally locked into your ecosystem.For example, AutoCAD's go-to-market strategy was targeting engineering colleges. Students learned AutoCAD as a part of their engineering course and these students then moved on to the professional environment, where they pushed their organizations to adopt AutoCAD as everyone new hire was well-versed in it. Naturally, companies were inclined to adopt AutoCAD as their modeling software of choice.

The same goes for other tools with steep learning curves like Adobe Creative Suite, Figma, Microsoft Excel, Tally, etc. When a tool becomes a skill, it creates its own lock-in effects.

Compatibility lock-in:

When all the equipment you have is compatible with only a certain kind of product made by a certain company, you're naturally locked into that ecosystem as moving to another ecosystem would mean buying all equipment anew.

Institutional switching costs:

When you're using a certain tool institution-wide and your institution has thousands of employees worldwide, it's hard to move to another tool without incurring significant switching costs in terms of the implementation and the learning needed.

Regulation lock-in:

The kind of lock-in that happens when companies artificially restrict access in some way. Take the example of Netflix, where they're now trying to incentivize subscription longevity by artificially restricting the launch of new releases with one episode per week, instead of releasing the entire season at once. Or Canon, who is preventing third-party lens manufacturers from eating into their own sales.

Parting thoughts

Purchase decisions in the photography industry rely heavily on marketplace support for products, as the list of accessories for camera bodies is quite high. So, consideration is not just limited to the specifications of the camera body one is buying, but also to the kind of third-party support available for a given manufacturer.

In line with this reasoning, this recent move by Canon does seem to be a bad decision in the long term, especially when its competitors are taking the exact opposite route.

Have any thoughts on why this might be a smart decision for Canon? Do write back to us.

References:

Canon Confirms It's Going After Lens Makers for Patent Infringement

Where does the camera industry go from here? - Macfilos

What About Third Party Lens Support?

Viltrox: "We have been told by Canon to stop selling all RF mount products"

Nikon offers support to third-party lens makers; Canon shuns them

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