



Today Olympus announced the long-leaked and long-wished-for E-M5 update, the Mark III. Not a particularly exciting announcement, but it does bring quite a few significant updates to the model.

For instance, the sensor has been upgraded from the old 16mp version to the 20mp sensor in the E-M1m2 and E-M1X. The EVF, though it has dropped slightly in size, is now OLED, so better in terms of presenting a less cheap TV-like appearance. The sensor stabilization now improves to 6.5 stops (CIPA) with lens IS, 5.5 without, from 5. The camera also gets better weather sealing with an IPX rating of 1 ("protects against 10-minute sustained dripping"), even though the body has been made slightly lighter.

4K video can be captured at up to 30 fps, and Cinema 4K (DCI 17:9) can be shot at 24 fps with a high bitrate. 1080P video has 120 fps slow motion capabilities.

As usual, the EM-5m3 has all the features you'd expect from Olympus: live composite, live bulb, pro capture (pre capture), focus bracketing, and focus stacking. Olympus shooters were wondering whether the high-res shot mode would be included. Yes, you can shoot 50mp high resolution images with eight sequential shots, but it does not support handheld shooting, as many had hoped.

The camera uses the BLS-50 battery and can be charged by USB. Unfortunately, that's USB 2.0. The single SD card slot is UHS-II.

The E-M5m3 will sell for US$1200 body only, or US$1800 with the 14-150mm f/4-5.6 II kit lens. Units should be available in November.

Along with the E-M5m3, Olympus also introduced the updated E-PL, now at E-PL10. Not much seems to have changed: and we have some minor changes to some Art Filters, some new colors, some minor updating. No price has been set, though availability is listed as late November. Update: The E-PL10 is currently only going to the Japanese and Asian markets.

All in all, the E-M5m3 seems to be a miniature E-M1m2 at a lower cost. There are very few compromises in picking it over its more expensive brother. Which now makes the E-M1m2 the camera that needs significant updating in the Olympus lineup, as it sits in small window between the E-M5m3 and the E-M1X.

All the reasons I liked the E-M1m2 for backpacking into the back country have now migrated to the E-M5m3, making for an even smaller and lighter kit (at least if you do a good job of choosing appropriate lenses). To that end, I applaud Olympus. Still, I have to wonder if the E-M5m3 and E-M1m2 are too close together in specs and capability. We've long had leap-frogging in these two Olympus models. The E-M5m3 doesn't really leapfrog this time, it mostly lands on the butt of the frog ahead of it. I worry about that because it's difficult for a camera company to sell cameras that are close together in capability these days.

Olympus has been in volume contraction for some time, a problem all the camera companies have been facing recently. Olympus management tries to place much of last year's decline on "reorganization of production bases..." Funny thing is, this year's sales forecast is about the same as last year's (+2.7% isn't really a change, and the first quarter's results say that it hasn't shown up yet, so the E-M5m3 is probably the key driver of that prediction).

Here's the progression that's important: 550k, 450k, 420k, 340k. That's the unit volume of m4/3 cameras that Olympus shipped over the past four fiscal years. Also, 29% of m4/3 sales for Olympus is in the home market itself, Japan.

Olympus is forecasting 330k units in the current fiscal year, though I'd be remiss if I didn't note that they've missed every such forecast they've made since 2012 (last year they overestimated by about 15%). The problem Olympus now has is that Canon and Nikon are also in their market space, while Olympus hasn't had a camera that resonates in any way with the overall market since 2016.

The E-M5m2 is now over four years old, so it's somewhat likely that there's potential for reasonable upgrading to the E-M5m3 among customers to happen (though I suspect a number of those potential upgraders went to the E-M1m2 or left m4/3). But here's the thing: Olympus needs more than one new model to resonate in order to stop contracting, and that resonation has to be for more than just existing current owners to upgrade. Put a different way: the E-M5m3 is not going to make a significant change in the economic dynamics of the Imaging group at Olympus.

Nor do I think the also announced E-PL10 is the answer. Yes, it will help to update that entry model, particularly in Japan, but I'm not sure that it, too, will generate enough upside to make a real change to Olympus' volume.

Basically, Olympus makes m4/3 bodies and Tough compacts these days. The latest Tough compact is 12mp, same as an iPhone 11 Pro, which is also waterproof. The Tough is 25-100mm f/2-4.9 as opposed to the iPhone's 13-50mm f/2.4-2 (yes, that's correct; the ultra wide is the most limited aperture, the wide is actually f/1.8, and the telephoto is f/2). Leaving aside the sensor equivalency issues for a moment, to customers those specs seem similar, not dissimilar. I kayak from time to time, and last time I did so I used a Tough, mostly for its waterproofing and raw file support. Next time? Probably the iPhone 11 Pro based upon my initial evaluation of that phone (yes, it too has raw file support, at least in the camera apps I use).

So erosion is likely not just in the m4/3 side of things for Olympus Imaging, it's happening in compact camera sales, too (down 20% last year for Olympus).

This, of course, brings up the age old question: is the continued decline enough so that Olympus will give up its camera business? No, not likely. But not because they'll manage to make the group recover in volume or make it significantly profitable ever again. Mostly they'll keep producing cameras because the parent company can cover the losses easily, and you simply don't close down businesses in Japan due to both cultural and legal issues.

So I believe we're left with "more of the same" for Olympus. And indeed, the E-M5m3 and E-PL10 feel a lot like "more of the same." Olympus is a small fish getting smaller in a pool that's also getting smaller. They probably won't breed (produce new and upgrade existing models) as often as before, and they likely won't evolve much (pioneer completely new features). Frankly, I see them as a three-model ILC company (entry, enthusiast, prosumer/pro). They'd be more successful making sure those three models were dead-on perfect than they would proliferating models and updating models that overlap too much.

Which brings us to image sensors. When you sign up to use a sensor with Sony Semiconductor, your pricing is variable based on your volume commitment level. Because large sensors—1" and bigger, which includes m4/3—are generally the highest cost part in a camera, everyone commits to higher volumes to bring the cost down. Olympus made a number of strategic errors in Imaging. One was that they didn't create a compact camera (and these days that would be a Tough model) that used that m4/3 sensor. The XA equivalent with a 4/3 sensor never appeared.

Yes, that would have sent their compact cameras up-market (higher cost), but that's exactly what Olympus needs to do across the line: minimum number of models, all upscale from competition, sold at a small premium. Of course, now the problem is whether a camera with a 20mp m4/3 sensor can actually be seen as premium. Fujifilm and Canon are selling low cost APS-C cameras now that outperform the 20mp m4/3 sensor in a number of ways. Nikon just entered the crop sensor market below the E-M5m3 price point.

That's why I wrote "Olympus made..." strategic mistakes. The problem is that if you make mistakes in tech you generally don't get a re-do. You can't just reverse your decision, because the world around you has moved by the time you do.

Here's the world as it will be soon: serious cameras bought by well-heeled customers only. Full frame is going to sit in the US$1000-2000 pocket for entry level, and that entry level is remarkably sophisticated and performance-oriented. APS-C is going to sit mostly in the <US$1000 position, and it, too, is turning out to be sophisticated and performance-oriented. There's literally no traction point for a US$3000 m4/3 camera (E-M1X). The traction point for the E-M1m2 (and eventual m3) is also probably now down to US$1000, certainly not anywhere near the list price of US$1700 (current sale offer is US$1500, still on the high side).

So what I expect from Olympus is more "withering." Much like Pentax, Olympus will continue to make cameras. Updates will get farther apart with fewer new features, model availability will drop, and the whole market for Olympus will become "how many current owners can we get to upgrade?"

When that happens—your market changes from new and existing customers to just existing customers—your sales and distribution should probably change, too. Too bad Olympus doesn't really know who their still active owners are. (They're not alone in that: camera companies are notoriously poor compared to other tech companies at getting customer registration and then engaging that customer well enough to understand and delight them. You might note, for example, that any Apple product you buy pretty much requires an Apple ID to be fully functional, so Apple knows who you are and if you're active; even though Apple isn't aggressive about using that data by promoting back at you they have a wealth of statistics they can aggregate anonymously that help them understand their customer.)

Finally, there's this question: why doesn't Olympus just make a full frame camera?

Again, I wrote that Olympus made a number of strategic mistakes. Not making an OM4-like full frame camera with small primes was probably one of those. The problem with full frame mirrorless is this: you could easily predict that the Big Three that dominate ILC sales (80%+ market share) would go there. For all three it was just "slide over from DSLR to mirrorless." Sony did it first, and now Canon and Nikon in are in full swing with that. Note that Canon took the full frame entry price all the way down to US$1300, which is US$700 below where Nikon and Sony really want it to be. (And we're going to have some massive sales coming up this holiday season, which will pressure all price points.)

m4/3 and full frame would have been a natural fit for Olympus: m4/3 for price and size advantage, full frame for high-end practitioners still looking for something smallish. Those sensors, all else equal, are two stops apart (as opposed to the one-stop apart of APS-C and full frame, which leads to a lot of "which should I buy questions").

Moreover, Olympus could have probably targeted size with full frame, too, had they gotten there early enough. An OM-4 was 139 x 87 x 50mm and 540g. While that's very near where Sony ended up with the A7, there's a lot Olympus could have done to bring that size down some more (the 139mm width was mostly dictated by getting film flat between the two reels, for example). And the real Olympus advantage in the film SLR world was small, discrete primes. The 35mm f/2 was 240g and only 42mm in length, for example (still shorter than the Sony 35mm f/1.8 FE even if we add the additional mirror box dimension).

Now, of course, not only is Sony there with smallish full frame bodies, so is Nikon. Third party lens makers, such as Samyang, are also bringing compact primes to market, as well. So entering the market last with full frame mirrorless Olympus' original SLR size advantages wouldn't actually have a lot of traction now: they'd be competing fairly closely with the Big Three, and they won't win that game.

You'll notice I keep using the word "traction." To avoid contraction, you must have traction. Sony clearly has traction in the mirrorless market at the moment. They believe size/weight and technology are their traction points, though I don't think those will hold up to time for Sony.

To get re-established and reverse decline in the ILC market, you have to have something new that starts a new traction engagement, not just iterate old models with existing sensors. And that's Olympus's problem: they're currently only iterating older models with existing sensors. No real traction.

Even with iterating Olympus gets it wrong. The E-M1X shouldn't exist. Just add the extra processor and create an E-M1m3, not a new model (let alone try to charge US$1200 more for it).

Thus, I don't have a lot positive to say about Olympus' position in the market these days. Sure, the E-M5m3 looks like the upgrade it needed to be, but it's likely to seriously cut into E-M1m2 sales if people are rational. Plus it's not a model that feels as competitive these days as it once did. Olympus will get a small, temporary blip from postponed upgraders, and I think that's about it. After that blip goes away, it's back to the contraction game for Olympus I fear.

Corrected the IS and E-PL10 information.