Will Nikon be out of business in 5 years?

Started Oct 28, 2013 | Discussions thread
Jeff
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Only the Paranoid Survive
In reply to Eamon Hickey, Oct 30, 2013

Eamon Hickey wrote:

Jeff wrote:

Now specifically with regard to Nikon, they have the financial, brand, and technical resources to hang in their for a while, perhaps a long while. But I suspect, for the reasons mentioned above, that they do have a walk through the 'valley of death' coming their way over the next 5-10 years. It'll be interesting to see what Nikon looks like in 5-10 years. Some companies pull if off (see Apple), others don't (see Kodak).

snip

So, like most companies with a long history, they've transformed themselves successfully before. As you said, we'll see if they can do it again. I don't have a prediction, but I will say that their senior management has been much more able than it was in the 1990s -- Nikon is much better run than it was in the 1980s and 90s, and it's better run than several other high-end optical companies, so I think they've got a decent shot.

I agree with all of that.

An interesting comparison might be Intel in the early to mid-90's. Intel's CEO from that time, Andy Grove, wrote a memoir entitled "Only the Paranoid Survive" from which I first learned the term "Valley of Death". Back then Intel made most of it's money from SRAM and DRAM chips which were quickly becoming commoditized by lower cost producers. Intel had an emerging processor business that was not yet providing enough revenue to carry the company, and which faced tough competitors including Motorola, Sun, IBM, MIPS, and others. Grove thought Intel was in serious danger even though they were making money. Many on his board and in senior management thought Intel needed to continue to continue building better & better memory chips to keep the company intact, and called him paranoid.

To force the issue, Grove sold the cash-cow memory business to put attention where it needed to be -- on being lean and mean competitor in the emerging processor market. He thought a successful technology required accepting prudent risks, so he got traded the cash-cow business so that there was no safety net under the tightrope.

http://www.cds-global.com/resources/forwardreports/stay-paranoid-top-survival-insights-from-intels-andrew-grove-pt1.html

In my view, Nikon is facing a threat similar to what Intel faced in the early 90's. Like Intel, Nikon's core business of building cameras is becoming commoditized. Literally billions of people are taking photos but using other people's products to do so. Simply working harder to milk more value out of a smaller market share won't sustain the company at it's present scale. Nikon knows how to serve photography professionals, but those guys are hurting too.

Your comments about Nikon's lens business are intriguing. One strategy for Nikon would to find a place in the value chain of photography in all of its diverse forms, ranging from medical imaging to mass market. Intel did that with their 'Intel Inside' strategy of processors for all market segments. Sony seems to be doing that now with sensors.  Nikon has the resources to so, too, so I wouldn't bet against them.

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