Sony new Alpha DSLR and their future plans

Now that the Sony Alpha has finally been announced, can Sony really make a dent into the DSLR market currently dominated by Canon, Nikon and other established brands? The Alpha does have great specifications behind it, however the brand Sony name is not strong in DSLR.

Here is an interesting article by businessweek on the Alpha.

The announcement marks Sony's first foray into the lucrative high-end segment since the company spent $180 million for Konica Minolta's 100-year-old camera business in January. "We think the camera will be popular with entry-level users," JP Morgan's Hiroshi Takada wrote in a June 7 report.

For Sony, it's a giant step toward becoming a bona fide camera maker. Sony's strength lies in image-processing chips, which it has spent billions developing for its compact digital cameras. Before the deal with Konica Minolta, Sony had almost no lens-making expertise. Its compact digital cameras, for instance, came with custom-ordered Carl Zeiss lenses. (Carl Zeiss also supplies lenses for Sony video cameras.)

CROWDED HOUSE. But now that Sony will have its own lenses -- 21 will be rolled out over the next year -- it can go toe-to-toe with the likes of lens specialists Nikon, Canon, Olympus, and Leica. And Sony is trying to elbow its way into a very lucrative market segment. SLRs offer profit margins in the 20%-30% range vs. 5%-10% on compact digital cameras. A sizable chunk of SLR profits comes from making and selling lenses, says Standard & Poor's John Yang.

Still, it's not easy to stand out in the crowd in this business. About 30 digital camera makers are competing globally, and some Japanese makers -- such as Konica Minolta and Kyocera -- have had no choice but to throw in the towel. The shakeout is occurring because many consumers already own a digital camera and sales gains are slowing. According to Japan's Camera & Imaging Products Assn., shipments of digital cameras from Japan are expected to rise by just 4% this year, down from 8.4% growth last year. With so many competitors in the field, last year camera makers had to slash prices by 10% to 20% in Japan, and that trend shows no signs of letting up.

SHAKE STOPPING. Besides Sony, others are gearing up to enter the SLR market. Matsushita Electric Industrial, maker of the Panasonic brand, will build on the success of its Lumix lineup with the DMC-L1, which it developed jointly with Germany's Leica Camera and plans to launch this year. Meanwhile, Canon and Nikon, which control more than 81% of the SLR market, are adding new tech features and rushing out their own models. Canon is broadening its EOS single-lens reflex series, while Nikon has incorporated wireless technology into its latest models.

Sony's Alpha100 won't be for everyone. At around $1,000 for the body and a standard lens (or $900 for the body alone), the SLR will attract only the least cost-conscious of amateur shutterbugs. They'll have to shell out a premium over comparable models offered by Canon, Nikon, Olympus, and Pentax.

Sony thinks it can attract former Konica Minolta users, whose old lenses -- 16 million have been sold to date -- will be compatible with the Alpha100. One nifty feature that could help the Alpha100's chances is its antishake mechanism, which prevents blurry photos when shooting in dim lighting.

GOOD CONNECTIONS. Sony execs aim to sell 500,000 Alpha100s in Japan, the U.S., and Europe in the first year. They're hoping for 10% of the SLR segment -- and 20% of the overall digital camera market -- vs. around 15% last year. That's bad news for rivals such as Canon, which had 17% of the camera market, according to market research firm IDC.

But Canon still has the manufacturing edge and a more widely recognized brand. A recent Nomura Securities report estimated that Canon could adjust its factories to eke out a profit even if SLR camera prices fell more than 40%. Sony's best hope of success may be to stress the SLR's easy connectivity with other Sony gizmos. But it's too early to say whether Sony can market itself as a serious camera maker. The company will probably have to sell the brand as much as the product.

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