Canon releases financials for the full year 2022

[David - Sydney]

It could, but I don’t think that makes sense in the context of financial reporting (i.e., statements aimed primarily at the investment community). Investors and analysts would not accept that top-line models likely to sell a relatively small number of units would ‘broaden the user base’.

That doesn’t mean we won’t see those cameras (although I doubt we’ll see the R1 until 2024), I just don’t think they’re the cameras to which Canon is referring here.

That is all true but halo models do drag the rest of the market.

Canon has stated that the R3 is not their flagship whereas Sony (based on previous lifecycles) is likely to update the A1 at approximately the same timeframe.

The R1 may jump the competition then but it will be good for all consumers.
It will be hard for the R1 to justify an expected price premium over the R3 vs the Z9 though.
The R5ii at the same price (if following the R6ii pricing strategy) would still be competitive.

 

[David - Sydney]

Agree that the line about broadening their base probably refers to more budget models. I don't think that is in conflict with what I just wrote. Canon has relied on the lower cost Rebel market for years. I see this as a market that has a lot of churn. People buy a "nice" camera in conjunction with certain life events (birth of a child, major vacations, kids starting sports, etc. etc.) Each year a certain number of this group moves on and another contingent moves in to replace them, so that overall demand remains fairly constant. These customers used to buy kitted DSLRs at Sam's or Costco. Canon wants to have mirrorless models available for that market. Again, it's not about growth, but about maintaining their dominant share of the market.

Agreed. Canon's budget DLSRs are still very cheap compared to the RP bundles and even the EF-M bundles in the past.
I can't see when a MILC with APS-C sensor will hit those price points though.
A lot of the current xxD/xxxD/xxxxD buyers purchase and then leave it on the shelf as they prefer their phones with filters and maybe some editing on-phone before sharing.

 

[David - Sydney]

My guess is that budget models will be mostly directed at vloggers - a huge market full of wannabe "creators" who want more than a smartphone can offer, but don't want the bulk, complexity and expense of an enthusiast-level hybrid MILC.

Agreed...
I believe that "vlogger" market is still growing but not necessarily at the Youtube level.
Making video for Instagram/FB starting from boomerangs to reels to tiktok is becoming more relevant to more younger people now.
Phone video is the simplest and creators are doing basic editing/sharing... then wanting better quality eg tripods, lighting and better editing tools and then move to more advanced bodies.
Replacing the Rebel level bodies with MILCs at that pricepoint is yet to be shown especially with the EF-M mount disappearing.

I was never a video guy but starting the learning curve for drone and gopro footage. Harder that I expected!

 

[John Wilde]

Royalties are not a myth, obviously.
But profits derived from selling own lenses are certainly more juicy than royalties obtained from 3rd party competitors.

I'm too lazy to look it up, but in a past Canon financial document they bragged about how highly profitable RF lenses are.

 

[SnowMiku]

In addition to this, to facilitate our aim of 2.9 million unit sales this year, we plan to
further strengthen our EOS R series lineup by, for example, introducing models that will
broaden our base of interchangeable-lens camera users.

To broaden the base of users, it could be a Vloging based model and an R series M50 replacement down the track which can sit below the R10. All EF-M lenses converted to RF-S especially the EF-M 32mm f/1.4. Also an RP replacement.

Sell the M50 replacement with the 32mm f/1.4 as a kit lens and sell the RP replacement with the RF 50mm f/1.8 as a kit lens, having primes as a kit lens is just my personal wishes and probably won't happen. I think all of this would broaden the user base.

 

[Skux]

Agreed...
I believe that "vlogger" market is still growing but not necessarily at the Youtube level.
Making video for Instagram/FB starting from boomerangs to reels to tiktok is becoming more relevant to more younger people now.
Phone video is the simplest and creators are doing basic editing/sharing... then wanting better quality eg tripods, lighting and better editing tools and then move to more advanced bodies.
Replacing the Rebel level bodies with MILCs at that pricepoint is yet to be shown especially with the EF-M mount disappearing.

I was never a video guy but starting the learning curve for drone and gopro footage. Harder that I expected!

It's crazy to me seeing kids edit the timeline for a TikTok video entirely on their phones, syncing multiple audio channels, adding effects and captions etc.

The cameras and software are only getting better and faster and easier to use. And it's all they need for the content they want to make: TikTok, Instagram Reels and YouTube Shorts. I could only see them wanting a MILC if they wanted to get into longer form YouTube content or vlogging.

 

[EOS 4 Life]

with hubris regarding prices

I am not sure we can attribute it to hubris.
When prices of making things go up then prices go up.

 

[EOS 4 Life]

But profits derived from selling own lenses are certainly more juicy than royalties obtained from 3rd party competitors.

It is not a certainty at all.
Third-party lenses have no R & D and production costs.
They would be purely profit for Canon.
Canon will do whatever they think makes sense.

 

[davidespinosa]

Canon talks about "units", presumably meaning cameras.
So a $500 camera and a $5000 camera are each "one unit".
IMO that doesn't make much sense.

A businessman only cares about profit.
But to increase profit, Canon needs more detailed market analysis.
Which they surely have, but they're not putting in their report.

 

[EOS 4 Life]

Licensing revenue is a drop in the bucket for very large companies. Canon is a $35 billion a year company. Licensing would bring in, what, a couple of million a year? How does that compare to the possible loss in revenue from their own lens sales? Sony has a lot of deals going, but they needed them as they had almost no modern lenses and couldn’t produce them with any speed, so they allowed others to do it for them, notably Zeiss. Does Canon really need that? Yes, there will always be a few who say they won’t buy some product unless some other product is available. But that’s a small number. We don’t see Canon’s market position declining as a result of that handful.

Sony sells pretty much the same amount of lenses as Canon does and they also get royalties.
On top of that they are also part owner of Tamron.
It makes sense that Sony would be losing lens sales but it is not showing up in the numbers.
Let's not forget that Canon is competing with third-party EF lenses.
There is no world where people need to buy native lenses.

 

[EOS 4 Life]

I think these bottom-end models will be targeted mainly at vloggers rather than stills shooters.

That is surely what Nikon and Sony have done and I am sure Canon could do a better job.

 

[EOS 4 Life]

a MILC if they wanted to get into longer form YouTube content or vlogging.

That is the opportunity for Canon to attract a percentage of those people.

 

[EOS 4 Life]

A businessman only cares about profit.

Canon also cares about market share as do a lot of business people.

 

[Del Paso]

It is not a certainty at all.
Third-party lenses have no R & D and production costs.
They would be purely profit for Canon.
Canon will do whatever they think makes sense.

I don't fully agree.
No 3rd party alternatives means you sell more OEMs, thus R&D costs can be amortized quicker, and profits raised.
Let's think of an absurd situation. If Canon relied exclusively on royalties, not having one single own lens, I guess they would be bankrupt within a fortnight.
Where 3rd party lenses make sense, that's in specific niches, where Canon and co. couldn't amortize their R&D. But certainly not as 1,4/14, 1,4/85, 1,8/135, 1,4/35, 24-70, 70-200 etc...All the Sigma Arts, in the end, were missed sales for Canon.
And look at Sony: they are developing more and more OEM lenses, no longer relying on Zeiss, for instance. Even if it would be so easy to rely on 3rd parties, guess why...

 

[KirkD]

I don't think Canon's failure to permit 3rd party lenses has hurt them much in 2022. Rather, it will hurt them over the next five years (unless they reverse their decision). Here is why. I'm a professional who has used Canon equipment for the past decade and am heavily invested in the RF system and am totally satisfied with their quality and performance. But because of their policy against 3rd party RF lenses, I have already begun recommending Sony to all those beginners who ask me for input, and it is the lack of 3rd party lenses that is the reason. So, in 2023, there will be 20-40 new users who I would have suggested start with Canon but who will instead be going with Sony. New users can be pretty enthusiastic about their new equipment and if they recommend to only two persons to go with Sony, and I continue influencing only two per year (major underestimate) that will make 60- 120 fewer Canon users after one year, 180-360 after two years, 540 to 1080 after three years, 1620 to 3240 after four years, and 4860 to 9720 after five. And this is only from just one professional photographer giving recommendations to all the beginners entering the market. If there are only 1,000 professionals who begin to recommend to those just starting out to go with a manufacturer that welcomes 3rd party lenses, that will make 50,000 to 100,000 less Canon users in five years and 50,000 to 100,000 more Sony users than otherwise - a market share difference of 100,000 to 200,000 units. And I think I'm being conservative. Worse still ... there is a tipping point where once the 'word on the street' is that there are excellent 3rd party lenses, except for Canon cameras, it becomes what they call 'common knowledge' and even if Canon reversed their decision in three year's time, it is awfully hard to overcome 'common knowledge' and other urban misconceptions. So if it were me, I'd permit 3rd party lenses with the long-term view in mind which translates into selling more cameras, as well as royalties from each 3rd party lens, not to mention still selling a ton of their own lenses simply because people often prefer the brand name lens.

 

[neuroanatomist]

I don't think Canon's failure to permit 3rd party lenses has hurt them much in 2022. Rather, it will hurt them over the next five years (unless they reverse their decision).

Apparently, Canon thinks differently. Who do you believe knows more about making and selling cameras and lenses...Canon, or you? I'll go out on a limb (a very sturdy one) and suggest it's Canon.

 

[Del Paso]

I don't think Canon's failure to permit 3rd party lenses has hurt them much in 2022. Rather, it will hurt them over the next five years (unless they reverse their decision). Here is why. I'm a professional who has used Canon equipment for the past decade and am heavily invested in the RF system and am totally satisfied with their quality and performance. But because of their policy against 3rd party RF lenses, I have already begun recommending Sony to all those beginners who ask me for input, and it is the lack of 3rd party lenses that is the reason. So, in 2023, there will be 20-40 new users who I would have suggested start with Canon but who will instead be going with Sony. New users can be pretty enthusiastic about their new equipment and if they recommend to only two persons to go with Sony, and I continue influencing only two per year (major underestimate) that will make 60- 120 fewer Canon users after one year, 180-360 after two years, 540 to 1080 after three years, 1620 to 3240 after four years, and 4860 to 9720 after five. And this is only from just one professional photographer giving recommendations to all the beginners entering the market. If there are only 1,000 professionals who begin to recommend to those just starting out to go with a manufacturer that welcomes 3rd party lenses, that will make 50,000 to 100,000 less Canon users in five years and 50,000 to 100,000 more Sony users than otherwise - a market share difference of 100,000 to 200,000 units. And I think I'm being conservative. Worse still ... there is a tipping point where once the 'word on the street' is that there are excellent 3rd party lenses, except for Canon cameras, it becomes what they call 'common knowledge' and even if Canon reversed their decision in three year's time, it is awfully hard to overcome 'common knowledge' and other urban misconceptions. So if it were me, I'd permit 3rd party lenses with the long-term view in mind which translates into selling more cameras, as well as royalties from each 3rd party lens, not to mention still selling a ton of their own lenses simply because people often prefer the brand name lens.

Science Fiction at its best...

 

[neuroanatomist]

Science Fiction at its best...

Reality. Just a different sort of reality.

 

[Del Paso]

Reality. Just a different sort of reality.

View attachment 207431

Or maybe just a Sony subsidized Ponzi scheme?

 

[melgross]

Sony sells pretty much the same amount of lenses as Canon does and they also get royalties.
On top of that they are also part owner of Tamron.
It makes sense that Sony would be losing lens sales but it is not showing up in the numbers.
Let's not forget that Canon is competing with third-party EF lenses.
There is no world where people need to buy native lenses.

We don’t know how many lens sales Sony loses to third parties, so you can’t say that. It’s been many years since Sony bought Konica/Minolta, and it’s taken them many years to get their own lens offerings close to what Canon and Nikon had. Since Sony couldn’t manage to sell DSLRs, they came up with the idea to try to sell to a new market, which was the ILC mirrorless market. They were the first, and built up a good advantage. In that area, they could offer a small lens line of their own, supplemented, officially, with Zeiss, and then other third parties. That was pretty successful, and they had the entire market to themselves.

but then, Canon and Nikon, at the same time, busted their bubble. Sony went from about 100% to about 40% now. I expect that number to either remain the same, but more likely to continue to shrink. Nikon, right now, is in a not very close third place, and is, by far, the smallest of the three. So Sony lens sales may equal Canon right now. But three years ago, Canon had no mirrorless sales, including lenses. But they have made more mirrorless lens designs in that three years than Sony did in ten. Canon is claiming that, I forget which, they either now have 33 mirrorless lenses, or they will by the end of this year. I think that outclasses what Sony has done over a much longer time.