From the Olympus Website--A little better translation than DPReview

Started Feb 14, 2013 | Discussions
Craig from Nevada
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Re: Cost accounting and reality.
In reply to John King, Feb 17, 2013

John King wrote:


-

Craig, there is an awful lot of crystal ball gazing in your analysis ...

Firstly, Olympus has a considerable success on their hands with the OM-D. Quite a number of people I know here with FF cameras are buying the OM-D ... They are more than pleasantly surprised at the IQ that this camera produces ...
Like very surprised!
Like maybe even: "Why am I lugging 10+ kgs of camera gear around " surprised ...

Secondly, one does not steer the ship by looking over the stern ...

Thirdly, Olympus realises both of the above, and are taking the (right) steps to address both the current problems and the issues arising therefrom. They also make most of their money from medical imaging, so have this to fall back on if determined to continue. Compare this with (say) Nikon, where they are all but totally reliant on their camera business ...

Not one of us can predict the future of Olympus, or any other company.
IBM nearly went broke because of their attempt to introduce a proprietary bus structure into PCs (anyone remember the PS/2 bus ?) and followed it up with the disastrous "Windows killer" OS, OS2 ...

At the time, IBM was the largest company in the world, IIRC ...

John:

Good morning from northern Nevada.  I agree there is a lot of crystal ball thinking in my discussion (it does not rise to the level of analysis).

The OMD is a mystery to me.  It is a critical success.  It has sold.  As I noted above, I don't know if it is profitable at this point.  At the time it was announced, I was astonished at its price point. Heck of a deal.  Compare it to GH3--$200 more on the price and not near OMD.  A lot of the profitability lies in the capacity of Olympus to sell lenses to go with the camera.  As someone looking at this from the outside, I was surprised that they have had a good year with OMD and losses doubled anyway.

Yes, the OMD is lighter, but the phone camera is lighter still and serves multiple functions. The camera as a free-standing device is still heavier than the phone with the camera and you can't text or call home.

The point you make about steering the ship from behind is spot on.  Specifically,the numbers that matter are those for next year.  They erred tremendously in their projections for the imaging division losses.  So did a lot of the traditional manufacturers.  There are a couple of things here--the number of units and the price they get for each unit.   On a forward-looking basis, there is some recognition that the camera market is changing.  The releases by Olympus cited above recognize this.

Olympus doesn't have an accounting problem, it has an economic problem--where the market is going.  The accounting problem only show me the outcome of this year's sales.  They don't tell me where the market is going.

As we have seen in the airline industry, there were too many seats chasing too few passengers. We have too many cameras and mounts chasing too few buyers in a world where people seem to prefer the integrated camera phone thing.

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Craig from Nevada
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Re: Craig, we have the actual figures - but do "we" understand what they mean?
In reply to John King, Feb 17, 2013

John King wrote:

rovingtim wrote:

Craig from Nevada wrote:

Lets assume world digital camera sales are above 115 million cameras

73 million

That looked very like it was the figure for the quarter to me, but I could have been mistaken ...

Let's assume Olympus has market share of about 10 percent or about sales of 11.5 million

7% ... or 4.8 million

Lets assume Olympus Imaging loses $170 million this year on cameras only, but breaks even on lenses and accessories.

Olympus is losing almost $15 on each camera it sells.

Oly's camera division losses doubled from last year.

Once again. Is it the 20th time in the last week? These are carry forward losses and liabilities. Not provision for non-current (future) losses or liabilities. Not trading losses from the current year (they made a trading profit ... IIRC ... ).

This is from the link I posted earlier.

Isn't it amazing how everyone with a simple cash book program on their computer is suddenly a high-flying corporate accountant/financial controller?

Hands up everyone who holds an accounting degree, membership of their professional accounting body, and a practising certificate ... ROTFL ...

John--Olympus has an economic problem and not an accounting problem.  On a prospective basis do they have the products to compete and be profitable.  The restated forecast loss is a big problem.  When they made the projection they did not understand what was going to happen in the market--This is a change in demand (not a change in the quantity demanded) for cameras.) How the worlds uses imaging technology may have changed.  A free-standing camera is okay for some, but the world may want a single device to communicate with the world including the capacity to take and sent pictures. OMD is not this device.

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ravduc
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Re: No matter what the future holds....
In reply to Raist3d, Feb 17, 2013

I agree, but also think that maintaining one's reputation is a long term investment. Letting more people down will only affect the companies reputation with many who have invested in their line of products (four thirds) and eventually affect sales.

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rovingtim
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?!?! I agree with you description of thinking
In reply to Rriley, Feb 17, 2013

Rriley wrote:

rovingtim wrote:

I'm not sure how the camera division could justify the release of a new 4/3rds body unless its a game changer.

weird thinking on so many levels

1) it isnt SLRs that got them into the current mess, its m43

Really? How so?

2) theyre in the business of selling cameras, no cameras - means no business

They have released many cameras. It's just that none of them are 4/3rds.

3) rebooting 43rds would give them 2 fields of cameras that almost intersect.

... and twice the development costs, and twice the advertising costs, and twice the supply costs ...

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boggis the cat
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Potential for zombie attack on CaNikon
In reply to Craig from Nevada, Feb 18, 2013

Craig from Nevada wrote:

John--Olympus has an economic problem and not an accounting problem.

Those are actually strongly linked in business.

IMO, they have always had a much larger marketing problem that has then lead to red ink.  Olympus put considerable effort into marketing the first Micro FT products, in particular, and recently into the OMD line, so they appear to realise this.

On a prospective basis do they have the products to compete and be profitable. The restated forecast loss is a big problem. When they made the projection they did not understand what was going to happen in the market--This is a change in demand (not a change in the quantity demanded) for cameras.) How the worlds uses imaging technology may have changed.

Photography / videography is likely to be in constant change for a while yet.  It likely won't stabilise until they get to the point where humans are directly interfaced with such technology.  (Assuming that we don't get shouldered aside by our own technological creations by that point, and dumped into some form of wildlife refuge.)

Business tends to be conservative, and you can see just how conservative Canon and Nikon have been with their "mirrorless" products so far.  Samsung (and to a lesser extent Sony) have been the most adventurous in developing novel solutions in this market, but they are not presently a threat to 'CaNikon' so the writing on the wall is being ignored.

A free-standing camera is okay for some, but the world may want a single device to communicate with the world including the capacity to take and sent pictures. OMD is not this device.

The OMD has sold extremely well because it ticks a lot of boxes for a broad customer base.  Everyone from retro-enthusiasts looking for a shiny shiny fashion accessory through to those wanting cutting-edge IBIS can get something useful from that product.  Olympus did miss a segment by not putting decent video options in there, but perhaps the next OMD model will have some Sony-licensed video processing options.

The problem for Olympus is to cover as broad a swath of the digital imaging market as possible (remembering that their strength is in optics, so you can forget embedded cameras in cellphones etc.) while also turning a profit from that coverage.  Their lacklustre P&S models have never sold well and have a bad reputation for reliability, so perhaps they should re-brand Sony developed P&S and provide the optics -- possibly what they intend -- while putting some thought into how standard FT can be most useful.

At this point, it appears that C-AF is the area where CDAF systems struggle, so it makes sense to me that they work on making a body suitable for turning the HG and SHG lens lines into a system that can compete with the 'CaNikon' lock on sports and other fast-action photography.  Nobody really cares about how big (or white) your lens is, they want the results.  If photographers know that they can get the required results with less gear weight and costs (both in buying the gear and in transporting the extra weight and volume) then Olympus can make a good sized dent with this 'dead' system.

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alatchin
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Re: ?!?! I agree with you description of thinking
In reply to rovingtim, Feb 18, 2013

rovingtim wrote:

3) rebooting 43rds would give them 2 fields of cameras that almost intersect.

... and twice the development costs, and twice the advertising costs, and twice the supply costs ...

You can believe this point Tim. How, with shared processing, electronics, shutter mechanism, sensor, sensor stabilization and add on features could the AF, and optical Viewfinder mean twice anything... To me you are just trying to perpetuate your position.

Most of the major development costs are there, they have an excellent OVF ready to go... so question is, have they been working on a traditional PDAF system, or have they been working on the on sensor PDAF... or both?

Have they been working on an improved mirror mechanism for more FPS?

Really that is it, those are the major development costs... 2, and if they have the on-sensor PDAF ready to go then One Beautiful system is here... If not, Mirror and PDAF, and I can be almost certain they will have been developing their PDAF processing just in case.

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John King
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O/T - Ponzi schemes ...
In reply to Craig from Nevada, Feb 18, 2013

Gidday All

I think that the problems in the camera business reflect the economic situation world wide.

Basically, the entire EU, Oz and USA economies are being run as giant  Ponzi Schemes ; China is arbitraging on its exchange rate (big time); Russia is riddled to its core with corruption - political and economic; and most of the rest of the world's States are run as personal satrapies by military dictators concerned with their own self-aggrandisement and pillaging whatever assets their country does have.

In this sort of situation, can we we really expect much?

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Regards, john from Melbourne, Australia.
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rovingtim
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Re: ?!?! I agree with you description of thinking
In reply to alatchin, Feb 18, 2013

alatchin wrote:

rovingtim wrote:

3) rebooting 43rds would give them 2 fields of cameras that almost intersect.

... and twice the development costs, and twice the advertising costs, and twice the supply costs ...

You can believe this point Tim. How, with shared processing, electronics, shutter mechanism, sensor, sensor stabilization and add on features could the AF, and optical Viewfinder mean twice anything... To me you are just trying to perpetuate your position.

I understand why you are saying this. However, consider:

Most of the major development costs are there, they have an excellent OVF ready to go... so question is, have they been working on a traditional PDAF system, or have they been working on the on sensor PDAF... or both?

This implies it cost Olympus almost nothing to develop the EM-5. Sensor by Sony, shutter already developed, CDAF well developed, no mirror box, EVF already developed ...

How on earth are they losing money then?

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John King
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Re: ?!?! I agree with you description of thinking
In reply to rovingtim, Feb 18, 2013

rovingtim wrote:

alatchin wrote:

rovingtim wrote:

3) rebooting 43rds would give them 2 fields of cameras that almost intersect.

... and twice the development costs, and twice the advertising costs, and twice the supply costs ...

You can believe this point Tim. How, with shared processing, electronics, shutter mechanism, sensor, sensor stabilization and add on features could the AF, and optical Viewfinder mean twice anything... To me you are just trying to perpetuate your position.

I understand why you are saying this. However, consider:

Most of the major development costs are there, they have an excellent OVF ready to go... so question is, have they been working on a traditional PDAF system, or have they been working on the on sensor PDAF... or both?

This implies it cost Olympus almost nothing to develop the EM-5. Sensor by Sony, shutter already developed, CDAF well developed, no mirror box, EVF already developed ...

Is this maybe just the tiniest exaggeration on your part? Or was it something else entirely?

How on earth are they losing money then?

Do you have the slightest idea of how any business works, Tim?

Do you understand about:
Carry forward losses?
Exceptional items (write downs)?
Provision accounts?
Amortisation of sunk costs?
Criminal fraud by the Board of Directors?
Job costing, and cost accounting generally?
The distinction between fixed and variable costs?
The distinction between a trading profit (loss) and an overall profit (loss)?
How to determine whether a particular expenditure item should be included as Cost of Goods Sold; or should be classified under Expenses?

etc, etc, etc, etc ...

Just asking, because it appears from what you have said here in this thread that you do not understand any of these things. Either that, or ...

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Regards, john from Melbourne, Australia.
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The Camera doth not make the Man (nor Woman) ...
Perhaps being kind to cats, dogs & children does ...
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"I don't have any problems with John. He is a crotchety old Aussie. He will smack you if you behave like a {deleted}. Goes with the territory." boggis the cat
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Craig from Nevada
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Re: O/T - Ponzi schemes ...
In reply to John King, Feb 18, 2013

John King wrote:

Gidday All

I think that the problems in the camera business reflect the economic situation world wide.

Basically, the entire EU, Oz and USA economies are being run as giant Ponzi Schemes ; China is arbitraging on its exchange rate (big time); Russia is riddled to its core with corruption - political and economic; and most of the rest of the world's States are run as personal satrapies by military dictators concerned with their own self-aggrandisement and pillaging whatever assets their country does have.

In this sort of situation, can we we really expect much?

-

My E-5 works fine.  Life is good.

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Craig from Nevada
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Re: Potential for zombie attack on CaNikon
In reply to boggis the cat, Feb 18, 2013

boggis the cat wrote:

Craig from Nevada wrote:

John--Olympus has an economic problem and not an accounting problem.

Those are actually strongly linked in business.

Olympus has an accounting solution to an economic problem.  This is just short-term.

What appears to be emerging is that the concept of the camera as we know it is becoming passe'.

The future is in software, not the hardware.

Size matters, but size in terms of what the person is carrying with them.  One device to meet all of their communications needs.  The "camera" will create an image that will communicate to the world seamlessly.  OMD is not that device.

If you carry an electronic device that emails, has web access, takes a picture and alllows for voice communication as well, you are good to go.  One set of cords and chargers and one conveniently sized package.  Software is going to drive the photo part, the way software corrects for distortions now in you camera.  It is going to be smaller and integrated.

The problem with m4/3rds is its size.  The camera and lenses are smaller, but remember, people are carrying around more electronic stuff now. People want all the functions with one devise.

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Craig from Nevada
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Re: Potential for zombie attack on CaNikon
In reply to Craig from Nevada, Feb 18, 2013

Last thought--this is why John's accounting paradigm in some ways misses the point. He is properly accounting for past and current problems.  This can clear the decks for future profitability, provided there is a path for this. They are getting clobbered in the market right now and by some accounts everyone else is not doing so hot. The markets for what we know as cameras is changing and the traditional makers have to get into the next market.

Looking forward to the next unit sold, Olympus has to have the right product.

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KenBalbari
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Re: From the Olympus Website--A little better translation than DPReview
In reply to Craig from Nevada, Feb 18, 2013

It wouldn't make sense for Olympus to end the DSLR line, it would be a bad business decision on their part.  Granted, it doesn't make sense for them to expand it much at this point, either.

But it's not like they've put much into the DSLR range lately.  They've released one new model in the last 3 years.  The midrange E-30 was announced in 2008.  The E-620 and E-450 in 2009, and the later only 10MP and little changed from 2008's E420. So for the last couple of years, your only real choices in Olympus DSLR were the E-5 and the now 4-year old E-620.

It's understandable that they wanted to focus on the more rapidly growing mirrorless segment.  But mirrorless is beginning to become saturated with offerings now.  All the big players now have offerings there.  That's going to cut into profit margins in that segment.  With the overall market no longer growing, you would think their top priority at this point might be to try to hold onto existing customers, and consolidate their gains.

And it's hard to see any segment of the market right now where Olympus can guarantee themselves sales more easily in 2013-2014, without reducing prices below costs, then to update their DSLR line.  Maybe it won't even be a line, maybe they only need to offer one camera.  I think at most it will be two; one E-5 update, and one not weather sealed.

If market conditions are getting tougher, then it's time to consolidate.  They can do that in mirrorless by simply continuing the existing offerings there.  They already have the next generation 16MP models of the E-PL5 and E-PM2 out there at competitive prices.  And those should sell well for some time considering the success of the OMD.  The only question is what they'll do with the E-P5, which should be out mid-year positioned somewhere between the OM-D and lower models.

It doesn't make sense at this time for them to not introduce a 16MP sensor and other recent improvements (image processing, better IS, etc) in the DSLR line as well.  That would be leaving too many potential easy sales on the table.   They could also consider introducing a more DSLR like model on the mirrorless side as well.   Maybe an E-50 and E-M50?

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KenBalbari
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Re: Potential for zombie attack on CaNikon
In reply to Craig from Nevada, Feb 18, 2013

Craig from Nevada wrote:


If you carry an electronic device that emails, has web access, takes a picture and alllows for voice communication as well, you are good to go. One set of cords and chargers and one conveniently sized package.

Yup.  I think there will still be room for a camera-first device.  But the newer models at least have to have wireless connectivity.  And there should be an android app for your phone that coonnects wirelessly with your camera, uploads pictures, and allows you to send them to contacts with a tap.

You should also be able, from the touchscreen menu on the camera, if you have a wireless internet connection, to send photos to your flickr account, dropbox account (or other cloud storage), etc.

There should also be a one touch way on camera to process a photo optimizing it for internet display.

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Craig from Nevada
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Re: Potential for zombie attack on CaNikon
In reply to KenBalbari, Feb 18, 2013

Camera first, will still have a place, but it will be a specialized place in the market.  More a niche than anything else.

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Darrell500
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Re: O/T - Ponzi schemes ...
In reply to John King, Feb 18, 2013

ohn King wrote:

Gidday All

I think that the problems in the camera business reflect the economic situation world wide.

Basically, the entire EU, Oz and USA economies are being run as giant Ponzi Schemes ; China is arbitraging on its exchange rate (big time); Russia is riddled to its core with corruption - political and economic; and most of the rest of the world's States are run as personal satrapies by military dictators concerned with their own self-aggrandisement and pillaging whatever assets their country does have.

In this sort of situation, can we we really expect much?

Agree with all of this John and afraid at some point it will all come crashing down. This is why I'm keeping my OM-1 (no batteries needed) even when the lights go out I'll still be taking photos.

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Regards, john from Melbourne, Australia.
(see profile for current gear)
Please do not embed images from my web site without prior permission
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-- -- --
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The Camera doth not make the Man (nor Woman) ...
Perhaps being kind to cats, dogs & children does ...
.
I am a Photography Aficionado ... and ...
"I don't have any problems with John. He is a crotchety old Aussie. He will smack you if you behave like a {deleted}. Goes with the territory." boggis the cat
.
Gallery: http://canopuscomputing.com.au/gallery2/v/main-page/

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alatchin
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Re: ?!?! I agree with you description of thinking
In reply to rovingtim, Feb 18, 2013

rovingtim wrote:

alatchin wrote:

rovingtim wrote:

3) rebooting 43rds would give them 2 fields of cameras that almost intersect.

... and twice the development costs, and twice the advertising costs, and twice the supply costs ...

You can believe this point Tim. How, with shared processing, electronics, shutter mechanism, sensor, sensor stabilization and add on features could the AF, and optical Viewfinder mean twice anything... To me you are just trying to perpetuate your position.

I understand why you are saying this. However, consider:

Most of the major development costs are there, they have an excellent OVF ready to go... so question is, have they been working on a traditional PDAF system, or have they been working on the on sensor PDAF... or both?

This implies it cost Olympus almost nothing to develop the EM-5. Sensor by Sony, shutter already developed, CDAF well developed, no mirror box, EVF already developed ...

Not true, the EVF in the EM5 has a new processing and refresh rate, different housing and a mechanism that makes it stabilized.

The Sensor was from sony, however someone has to marry that with Olympus' Truepic processors, adjust the image pipeline, update software etc. Also the Shutter is new, it is dampened differently, the pipeline can now for 9fps and the video has improved resolution.

To top thet off they have a brand new, class leading IBIS, I know I use it all the time and it astonishes me how good it really is.

How on earth are they losing money then?

My honest answer is that they pushed a lot into premium compacts and didnt see the return. That is my thinking... Add to that what John seems to know (I dont know much about those odds and ends)... But I seriously think they made a big push, look at the lens qualityon the new tough, the 5 axis ibis in the newest P&S as well as all the trickle down tech to their new compacts... But they cant be selling the way Olympus had hoped.

That is my honest assessment, I would feel m43rds is doing okay, compacts has been a disaster and they have decided to try to leverage again in DSLRs. Hence the very vocal support of that line.

It makes sense, just as my prediction that the long drawn out use of the Panasonic sensor suggested big changes on the horizon, and Olympus went from a sensor that had been punching just under its class for a year or two, to one that punched above its class.

That is why I feel we will see 2 lines of DSLR, redesigned and feature rich. Most of the development costs are covered, if Pentax can eek by, Olympus can chew a piece off the DSLR pie this year.

Abraham

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alatchin
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A very sensible post [nt]
In reply to KenBalbari, Feb 18, 2013
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