Canon Says Q1 Profit Hit by Weak Printer, Camera Sales

[Loswr]

Canon's mistakes are rather evident. No matter how many cameras they (claim to) have sold. Kodak sold gazillion rolls of film ... and still went under. As with Canon, past success made them arrogant and disconnected from their client base and potential new customers.

Ahhhh, so removing the mirror is as paradigm-shifting as film to digital. Thanks, I just knew you'd have a good explanation for why MILC sales have grown so rapidly that they might even regain the levels they reached in 2012 in a couple of years.

 

[Maximilian]

Oh dear, statistics are great.

[snip]

Why indeed.

http://www.dslrbodies.com/newsviews/cipa-stress.html

DSLR to mirrorless is now approaching—for the first two months of the year—2:1 (down from 3:1). If that trend continues through the year, I think it pretty clear that Canon and Nikon will try to move in and dominate mirrorless. They will have no choice in the matter.

Proportionally, it would seem that MILC is taking an increasing share of the ILC market (of which DSLRs are a part.)

I never would refer to a statistic based on only 1/6 of a year, especially when those two month are the ones after the x-mas season (satturation of the overall market) of the last year and after some important releases on the MILC market (increase of sales in one specific segment).

That's the same as if you were trying to make a forecast in the German building industry just from the two months of December and January (incl. x-mas holidays (in Germany), winter, bad weather allowance, etc...) :

 

[Maximilian]

[snip]
To reduce its reliance on cameras, Canon agreed to buy ...
[snip]

Oh, how I love that reaction like Pavlov's dog.
If you can't achieve your goals alone, try exogenic growth, buy another company to increase your numbers and
find out a few months later that the price was extortionate for what you got.

*lol* :

 

[Hesbehindyou]

Mirrorless sales will be driven by supply rather than demand

Seems clear that Canon needs to reduce costs. Mirrorless greatly reduces manufacturing costs over DSLR... but Canon's mirrorless offering isn't yet competitive with their DSLRs (AI Servo AF speed, EVF performance when panning). We'll see them go prime-time on this when they've got the tech that equals DSLR performance... this will be EF and EF-S mount mirrorless.

Be interesting to see how long they keep a shuttered model for the niche battery-life & ultimate-viewfinder-responsiveness crowd and whether they attempt to introduce a new lens mount for FF... have we seen any FF lens patents?

Summary: cutting costs always preferable than cutting prices. It is this that will be the driver for mirrorless sales (ie Canon will force it on us) and the higher margins from mirrorless will be one of the key factors in return to higher profits.

 

[Maximilian]

The longer term trends also agree with the proportion of ILC sales becoming (at least) equal parts MILC and DSLR.

I suppose you are 100% right with that statement, if you just put the time span long enough.

In Germany for example the sales numbers for 2015 show MLIC sales are stagnating for the last two years while the DSLR is dropping.
(http://www.photoindustrie-verband.de/_files/data/artikel/269/src/DSLR-KompakteSystemkameras_Menge_2015.jpg , in German)
They also say something about the prognosis for 2016 and here they state that overall imaging market will recover and while DSLR will stagnate MILC should grow something. We'll see if they're right. I am more sceptical.

So maybe that mantra of becoming equal in share becomes true as soon as everybody is buying cell phone cameras only and the two numbers meet close to zero. I hope not so, because that really would be the death to photo industry.

 

[Takingshots]

Revenue weaker partly becoz of Yen/US dollars and partly also the shift of some consumers for competitors quicker to market smaller format FF camera with "better" sensor/DR etc capabilities . (Did Canon 5ds/sr sells alot with higher mp? )

 

[Wizardly]

Are we missing the point of how this will impact you?

31% of the loss of profit came from an unfavorable exchange rate.
How can Canon correct this, is simple.
The cost of cameras and lenses will be going up.

Glad someone FINALLY read far enough down in the financials to notice this.

Except your conclusion is wrong; it is not so simple. It's a multi-variant problem with the goal of maximizing the profit. Revenue is gained at the selling country but production costs are at the exporting country and reported at the home country. Fixed costs have to be amortized at the exporting/home country per unit. In the end, raising the price can result in a higher fixed cost per unit than the additional revenue gained which reduces the per unit profit. A reverse situation can also be envisioned - a lower price to increase unit sales to maximize profits. The 1DX.2 seems to be priced a little lower than expected.

 

[takesome1]

Are we missing the point of how this will impact you?

31% of the loss of profit came from an unfavorable exchange rate.
How can Canon correct this, is simple.
The cost of cameras and lenses will be going up.

Glad someone FINALLY read far enough down in the financials to notice this.

Except your conclusion is wrong; it is not so simple. It's a multi-variant problem with the goal of maximizing the profit. Revenue is gained at the selling country but production costs are at the exporting country and reported at the home country. Fixed costs have to be amortized at the exporting/home country per unit. In the end, raising the price can result in a higher fixed cost per unit than the additional revenue gained which reduces the per unit profit. A reverse situation can also be envisioned - a lower price to increase unit sales to maximize profits. The 1DX.2 seems to be priced a little lower than expected.

Canon moves slow when it comes to price changes. But if you look at the Yen vs Dollar chart over the past five years you will notice in the last few months that the dollar has been getting stronger and stronger against the Yen. Also you might have noticed that certain lenses and bodies have dropped in cost, and the 1Dx II does have a very low entry point compared to some former Canon flagship cameras, and also that the Yen has been getting weaker over the last few years. The Yen is now getting stronger yet we still have the lower prices on your camera gear.

Canon was caught out of position when the Yen became stronger. There are ways to hedge this, yet apparently Canon didn't.

But to the name of this thread "Canon Says Q1 Profit Hit by Weak Printer, Camera Sales" by Canon's own report it is obviously false and misleading. Canon's big drop in profits had little to do with those two items and mirrorless had no significant impact and was not mentioned either way.

People are responding to the title of the thread and they have no clue that they are debating something that is for the most part inaccurate.

 

[takesome1]

Are we missing the point of how this will impact you?

31% of the loss of profit came from an unfavorable exchange rate.
How can Canon correct this, is simple.
The cost of cameras and lenses will be going up.

Then Canon is bad at hedging on the exchange rates.

The exchange rate was ~120 Yen to $1 for most of 2015 and has dropped less than 10% in 2016.
https://au.finance.yahoo.com/echarts?s=JPY%3DX#symbol=JPY=X;range=2y

Rinse and repeat for the Euro.

That is true. But in 2013 and 2014 when the Yen was dropping in value we didn't see a price change for a year and a half. We would have to go back to see if Canon mentioned in their financials that there bottom line improved because of their slow movement to lower prices.

Bad hedging it does sound like.

 

[LDS]

Apple profits are also down 26%, it surely means Apple is doomed and iPhones (down 16%) too - even if they don't have a mirror.

They can only survive making more AppleWatch (which sell like mirrorless, more or less), and probably iFridges and iThermos for the IoT madness...

Let's face a couple of things. Economy is still suffering in many areas, including Europe and China. Prices in Europe are "deflating", mostly because people don't buy and vendors try to lure them with discounts. This is evidently impacting sales of a lot of "non-essentials" items, including phones and cameras. I would have been surprised of strong results.

There are surely market changes that will stay - compact cameras will become a niche market, and this trend is being accelerated by phone makers now trying to use picture taking capabilities as a differentiator, for lack of alternative for now. But even the phone market shows sign of saturation - and I wonder how much they can push photo/video features within the form factor and storage/battery size, especially in models without expandable storage and replaceable batteries.

Inkjet printing may follow the same path - as more and more services are available online, less need to print (and scan/fax, but in the company I work for, it looks..). Color laser printers are affordable enough now to become the choice for "heavy printers", but they also last longer too, usually.

Home photo printing will become also a niche for those who prefer to master the art (and sustain the costs) - printer capable to achieve quality results are available, but it's not (and never was) a "you print the button, we do the rest" process - and it's far too easy now to compare a bad print with the original on a portable screen (which could be anyway more contrasted and saturated, and thereby "pleasing" to untrained eyes).

It's clear Canon and others have to realign their product lines, but IMHO the DSLR line is where there are less worries...

 

[WillT]

Apple profits are also down 26%, it surely means Apple is doomed and iPhones (down 16%) too - even if they don't have a mirror.

Nice straw man.

Canons leadsership seems out of touch..

[quote author=Masaya Maeda - Managing Director and Chief Executive] There's nothing in particular that we learned from Nikon or Sony, but as I said before, we had many demands from photographers all over the world not to sacrifice image quality, so that's what we placed emphasis on and our main priority (during the design process of the EOS 5DS and 5DS R) was to satisfy those photographers. [/quote]

 

[Loswr]

They can only survive making more AppleWatch (which sell like mirrorless, more or less), and probably iFridges and iThermos for the IoT madness...

Samsung has clearly out-innovated Apple in the iFridge market...

 

[Loswr]

Canons leadsership seems out of touch..

[quote author=Masaya Maeda - Managing Director and Chief Executive] There's nothing in particular that we learned from Nikon or Sony, but as I said before, we had many demands from photographers all over the world not to sacrifice image quality, so that's what we placed emphasis on and our main priority (during the design process of the EOS 5DS and 5DS R) was to satisfy those photographers.

[/quote]

Listening to their customers means they're out of touch? Maybe they should learn how to release then recall defective products from Nikon or how to sell insurance from Sony?

 

[WillT]

Canons leadsership seems out of touch..

[quote author=Masaya Maeda - Managing Director and Chief Executive] There's nothing in particular that we learned from Nikon or Sony, but as I said before, we had many demands from photographers all over the world not to sacrifice image quality, so that's what we placed emphasis on and our main priority (during the design process of the EOS 5DS and 5DS R) was to satisfy those photographers.

Listening to their customers means they're out of touch? Maybe they should learn how to release then recall defective products from Nikon or how to sell insurance from Sony?
[/quote]

Sure they are...

 

[slclick]

Canons leadsership seems out of touch..

[quote author=Masaya Maeda - Managing Director and Chief Executive] There's nothing in particular that we learned from Nikon or Sony, but as I said before, we had many demands from photographers all over the world not to sacrifice image quality, so that's what we placed emphasis on and our main priority (during the design process of the EOS 5DS and 5DS R) was to satisfy those photographers.

Listening to their customers means they're out of touch? Maybe they should learn how to release then recall defective products from Nikon or how to sell insurance from Sony?

Sure they are...

[/quote]

Photo catfishing

 

[AvTvM]

hehe, Canon Defense League in full swing again ... flapping ... slapping ... with smoke .. and *mirrors* ;D

 

[Loswr]

Canons leadsership seems out of touch..

[quote author=Masaya Maeda - Managing Director and Chief Executive] There's nothing in particular that we learned from Nikon or Sony, but as I said before, we had many demands from photographers all over the world not to sacrifice image quality, so that's what we placed emphasis on and our main priority (during the design process of the EOS 5DS and 5DS R) was to satisfy those photographers.

Listening to their customers means they're out of touch? Maybe they should learn how to release then recall defective products from Nikon or how to sell insurance from Sony?

Sure they are...

[/quote]

Well, thanks but that's just a wannabe neuroanatomist...there was one on sony-rumors and at least one other forum, too, for a while. I think they're all Mikael Risedal waging his private little war of DRgression.

 

[WillT]

Nice you have an impostor!

 

[old-pr-pix]

Let's confuse the analysis with facts... Camera sales continue to reflect a declining market according to CIPA data for all the reasons debated in this forum. 2016 YTD shipments are down 21% from 2015 - essentially all of the decline being camera's with built-in lenses. Interchangeable lens camera shipments are basically flat. Shipments of mirrorless are up 14% while dSLR's are down 5%, yet total shipments of dSLR's exceed mirrorless by roughly 3:1 globally (more like 7:1 in the Americas). Mirrorless share improved in some markets but actually dropped in the U.S. and Japan!

Looking at 2016 BCN data (sales in Japan for 2015), Canon is #1 in share for dSLR's, #1 for interchangeable lenses, #1 for integrated lens cameras, and #3 for mirrorless. Canon increased share in each category from 2014 to 2015.

IMHO Canon is doing a better job than most in managing its position in a declining market situation. Sony is no superstar as Olympus took 10 percentage points away from them in the Japanese mirrorless segment.

 

[rrcphoto]

I haven't read the thread but I can guess.
a) canon is doomed.
b) I moved from canon to nikon/sony/fuji/kodak/hellokitty and this tells me I made the right choice.
c) avtvm suggests that canon could have sold millions if they simply developed the camera he specifically wants. Even though sony has it and it sells like shit .. but the special AvTvM model will be a hit I'm sure.
d) canon is fine. diversification is necessary.
e) who cares?