Sony's “The first hit is always free” DSLR strategy

Many people may have noticed that the entry level Sony Alpha (properly α, the Greek letter Alpha) DSLR cameras are incredibly well priced for what you get, “highly competitive” some might say. I think we all know Sony don’t usually compete so heavily on price, but as it is now they’ve got a very small slice of the DSLR market share and they’re looking to build that. Sony’s business model seems to be built around reasonable margins on reasonable volume driven by lock in. Not high volume low margin or high margin low volume. Sony seems to be applying a long term application of their usual MO to their DSLR offerings as well. First they hook you, then they let you lock yourself in then they sell you the top of the line stuff at the same price as “the other guys” but without all that pesky profit killing competition.

Some people seem to think that there must be something wrong with the Sony α line of DSLR cameras, noisy sensors, bad software, you name it, the assumptions abound. Surely a DSLR with a lens for $375 can’t be any good, right? Well the truth is they’re just fine, pretty much as good as $375 point and shoot (though maybe not in all respects), the A100 with it’s 18-70mm f/3.5-5.6 is both inexpensive and versatile. But what it has that a point and shoot doesn’t is an upgrade path and accessories.

I happen to own a Sony DSLR-A200 which is the second lowest end model and the kit comes with the same lens as the A100. They list for $499, but I got mine for $399 and I can assure you, it’s not a trick, it’s a strategy and they really are a very good value.

I think that Sony is banking on the fact that the price is so outstanding many people will chose the A100 and A200 rather than a point and shoot. I suspect Sony loses money on ever A100 they sell. However that doesn’t mean Sony isn’t in the DSLR market for money (and a little Nikon/Canon blood).

There are only a few technical drawbacks to the A100 and A200 versus other entry level DSLRS

  • The that cases are a particularly cheap plastic which can also be a bonus because it doesn’t weigh very much.
  • The kit lens will never win an award for sharp focus, but it’s versatile
  • The CCD gets a touch noisy at ISO800 and is more or less useless at ISO3200, ISO1600 is pretty bad too

The plastic case really is very light and there aren’t mass reports of any kind of issue with it. The glass might produce a bit of a soft image but it’s a 18-70mm and costs about $170 on it’s own, compromises had to be made. That’s not exactly high end glass but it will provide you with virtually the entire range you need for casual shooting. The CCD is fine up to and including ISO400, and ISO800 is acceptable but in the shadows you’ll see some faint blue noise.

That brings me to the strategy. It’s all about the lens and the CCD. You see Sony was very wise when they bought Minolta’s camera business including the all important α bayonet lens mount. That’s the real trick here. The α lens mount puts the autofocus (AF) motor inside the body of the camera not the lens, that means lenses can be much cheaper to manufacture and much lighter, it also means that the entire range of Minolta AF lenses is available to the Sony DSLR user. Konica Minolta / Sony also put(s) the optomechanical image stabilization in the body of the camera so you get sharper images whatever lens you use. So while other brands have to put the image stabilization and autofocus into every lens, Sony (and previously Minolta) doesn’t have that expense.

That’s important because with the death of Minolta as a camera brand many people think their Minolta lenses are worthless and surly there is nobody looking to buy them. Minolta also had a impressive range of lenses, especially lenses which wouldn’t otherwise be autofocusing. For example Minolta / Sony have the only autofocusing catadioptric lens; a 500mm (f/8) unit (You can find them used for $350). The shrewd Sony owner will quickly find this out and start buying up old lenses for rock bottom prices. That means smart people interested in photography who buy the Sony for value will all of a sudden have a bunch of great lenses in their bag, which leads to more enthusiasm.

That leads me to the other half of this strategy, the CCD, you see Sony’s CCD isn’t full frame, like other entry level DSLRs it’s APS-C sized, specifically it has a 1.5 crop factor, meaning that a 50mm prime works like a 75mm prime. There’s no way to fix that without expensive reducing optics between the body and lens. So the average α buyer who gets into using other lenses is going to see the amazing results of these lenses and lament their lack of proper frame. I know I do. I have a wonderful 50mm f/1.7 AF prime which I picked up for $40 including a spiffy camera bag. However it’s much less useful than a 50mm would normally be because I have to back way up from the action at a party to get that perfect shot of the family having a good time.

So now you have thousands of people who bought the entry level α cameras and picked up a second lens and came to the realization the lens is critical and want to buy more, but because these are the kind of people who like to buy new things (after all they got a new α instead of a used professional camera) they will probably want new lenses for their more important ones. Lenses are competitively priced, that means lenses with similar picture quality and similar technical specifications generally have to sell for about the same. If they don’t, people might use adapters and deal with the crop factor, or buy a third party brand like Tamron or Sigma. But you can’t use Sony lenses on a Canon even with and adapter because there is no AF inside the lens, but the Canon lens can be adapted to the Sony. So Sony has all the more reason to keep their lens prices competitive. Remember that they don’t have put a stabilization or focus drive into the lens! Hellllooo profit! Even Tamron and Sigma are in on that game, they charge pretty much the same thing for their Sony lenses as for the same lens for a Canon or Nikon, meaning the Canon and Nikon ones must have lower margins.

Okay so now we have Sony and friends making more on their lens sales, big deal so they make $30 of pure profit on every lens they sell. That doesn’t sound like much until you consider that these are DSLR lenses, they go with you when you buy a new camera, provided it’s a Sony. That means people don’t mind buying them so much. More importantly that lens is investment, weather it’s a $65 macro lens fro some eBay seller or a new gee-wiz $1,200 telephoto from factory it is momentum for your next purchase’s brand selection.

As a result lots of people who have been point and shoot owners are now DSLR owners with maybe 3 lenses in their bags and they’re getting sick of that 1.5x crop factor.

Enter the Sony α DSLR-A850 the full frame big brother to the entry level α; well in reality the little brother to the A900, it’s more of a cousin to the entry level cameras. You see the A850 has a full frame CCD but it’s $2,000, it’s basically your only rational choice, you know your lenses aren’t worth squat used because the market is flooded with used Minolta lenses that work just fine and they can’t be adapted to any other brand. So you might as well pony up $2,000 for the A850, besides it’s a few hundred bucks cheaper than the Canon or the Nikon anyways, and buying value makes you feel good, and soothes the worry you might have had about spending $2,000 on a camera, when you’re obviously not a professional photographer in the first place or you would have bought a Canon or a Nikon “just to be safe”. Okay so some small percentage of professionals buy Sony, but I can’t imagine it’s anywhere near what their overall market share is.

There you have it, through leveraging a discount used lens market, high margins on lenses and providing a reasonably priced upgrade path Sony has got you for the long haul, and they won’t have to compete on price forever, just a few more market share points and they’ll be able to stick another $200 onto the price of the A850 (or whatever it’s replaced with by then).

« Previous post Next post »

If you would like to improve your photography skills Edmonton Photography Classes offered by The Canadian Photography Learning Centre (The CPLC) are excellent.