Canon and Nikon have seen a decline in market share in their native Japan after strong sales in the mirrorless compact system camera market.
According to a research by BCN Inc, a research firm, the combined market share of Canon and Nikon has fallen by 35% while big rival Sony has increased its share twofold.
Other major camera brands, including Olympus, Sony, Pentax, Panasonic, Ricoh and Samsung already have compact system cameras in the market, but Nikon and Canon have so far neglected to join.
In Japan, where compact system models are taking off the most, compact systems accounted for more than 40% of interchangeable lens cameras in July, compared with just 5% in 2009.
Globally, sales have climbed to 2.1 million units in 2010, a five times increase. Shares of the overall market are likely to hit 23% in 2011, up from 16% in 2010, according to estimates from Macquarie Group Ltd.
Last month, Sony announced two new mirrorless models for its NEX range, including the Sony NEX-7 which features a 24.3 megapixel APS-C sensor and an advanced electronic viewfinder.
Traditional cameras are still a good moneymaker for Canon, which earned 114.8 billion yen in profit last year by selling 5.9 million units, roughly four times the amount it makes from compact cameras. Similarly, Nikon earned more from SLRs and lenses than from any other product.
According to Sony, although mirrorless cameras are extremely popular in Japan, they have failed to reach the same level of popularity in Europe and the U.S. because "the big camera makers" still haven't entered the market.
Keep following TechRadar for more on any potential compact system cameras from Canon and Nikon.