"Oh crap, we've got all these old 7D bodies lying around that aren't selling (because of the 5D2 getting cheaper, or the D3200, K5, NEX-7, or whatever), and we need to get rid of them before the 7D mk 2 is announced in a few months".
"I know, let's take the firmware from the new 7D2, it won't cost us anything much to port it to the 7D, demand for the 7D will pick back up again and help us clear stocks before we drop the 7D2."
Or am I too cynical?
Canon doesn't sell items on consignment and there is no stock. They take orders from vendors, most of them pre-paid, then they produce the items and ship them off. Canon doesn't have to get rid of anything. That's on the vendor and the vendor orders want their customers want regardless of current stock.
Vendors get special pricing that they later mark-up. This margin allows them to reduce prices when a new model--aah! Do I actually have to explain this?
And how do you know this?
How do you NOT know this? Where did you go to school?
Well, I for one have both an Electronic Engineering and
Economics degree. (not that I've used the economics degree for everyday work, engineering is more interesting).
Anyway, yes, you're right. Manufacturing on-demand and letting the vendors take the stockpiles is one way of running a manufacturing business. Maybe Canon have no warehouses whatsoever besides how much it takes to load up a truck and then off it goes. It's possible, some companies do it.
But do we know that's how Canon works? Unless anyone here is a Logistics officer for Canon, all of this is speculation.
Maybe they wait until they've got orders for 10,000 units, then they do a run of 10,000. The next 1 unit that gets ordered has to wait for another 9,999 orders before they'll start another run. (which is what you seem to be suggesting).
Maybe for every 10,000 units they make, it costs them as much as the proceeds from 9000 (for example) sales. So as soon as they get 9000 orders, they'll do a run of 10,000, the last 1000 is pure profit that can tide them over to fill orders until they've got another 9000 orders to justify a new run.
Both of those first two options presume a few things: that they are a fiscally very conservative company. In these economic times, it's possible. It guarantees no losses. But it constrains profits. More likely, most companies operate under the next scenario:
Say they still have to sell 9000 units to make the same money back as making 10,000 units. At some point between 1 and 8999 units, there's going to be forecasting, a gamble. If they wait until they've got 5000 orders, then do a run of 10,000, they're taking a gamble that they can sell the other 4000 to break even. In more optimistic times, if they're risk-takers, or if forecasters can see that those 4000 extra will sell 'eventually', maybe they'll lower their point to doing a run of 10,000 when they have 3000 orders, and take a gamble on selling 6000. If they're pessimistic, risk-averse, if the economy is forecast to shrink, they may wait for 8000 orders, do a run of 10,000, hope they can sell at least 1000 more to break even, and they've got another 1000 as buffer stock.
More extremely, they take more gambles and risks, they produce their run of 10,000 before they've even got 1 order. That's what they do for new models, certainly. It's less likely for higher-end models and for older models, the 7D is a bit of both. Maybe they've taken that gamble a few times, and they've got boxes piling up they need to shift. Maybe the 5D3 has killed 7D sales, maybe it was the K5 or D7000 or just another recession. Either way, maybe this firmware is a way to shift those boxes.
And even if it's the first option, that they don't produce those 10,000 until enough vendors have made orders and prepaid for 10,000, and those 10,000 are now sitting in the vendors' warehouses, as you suggest. You don't think those vendors will happily sit on the stock and keep dropping prices in a hope that someone will eventually buy it? Those vendors should know when new models are coming, they have to make room.
Imagine a salesman for Canon, talking to a vendor, "Hi, thanks for ordering those 10,000 7Ds last week, oh by the way, you're going to have to sell them below cost because the 7D mk2 is coming out next week, too bad".
That vendor is not going to be happy. They're going to be more conservative buying the next model, or indeed anything else from Canon. Sure, they'll have to still buy them because the customers want them, but you have to keep your vendors happy, it's called building up a good business relationship.
Imagine then, if Canon annoy someone with real clout, like B+H, too much. B+H may just start putting more and more ads for Nikon on their site, put them up higher when you search by 'most relevant', put Nikon on sale more often, whatever. It happens. You don't make profit in this world without selling to consumers, and if your distributors are much happier selling the competition's product, you won't make much profit.