Ricoh(Pentax) FF - issues and strategical opportunities

Started Jul 7, 2011 | Discussions thread
Documensony Senior Member • Posts: 1,171
Splendid analysis. All said /nt

CriticalI wrote:
I see Pentax users still think Pentax is a charity rather than a business.

However the 5Dmk2 did prove there is a market for a low spec FF body with last generation AF if for no other use than landscape and studio work. Sony proved the same with the A850, but the A900 was simply too expensive and sold too few to be profitable (hence the new model).

The questions of course are how much would it costs Pentax to make one (and how much resource would it divert) and how much would they have to charge for it to make a profit?

Overall the reasons why Canon can make the 5D2 for the price they do and at a profit (and Pentax can't) are:

1. It is a very old body design, requiring minimal new investment and little retooling as it borrows most components from previous cameras (Pentax would require a completely new body and mirror box design - see Sony)

2. They can offset the cost of the sensor and image processor R&D against the profits made on the 1Ds which effectively paid for it. (Pentax would have to carry all the additional R&D through sales of one lower end model)

3. They sell in reasonable numbers (Pentax wont, so the proportion of R&D and tooling costs factored into to each model sold would be perhaps 100X greater)

4. Large volumes also keep unit component costs down (Pentax cannot buy the components as cheaply so again, the unit cost per camera is higher)

5. They have a decent stable of newly designed FF lenses already out there (Pentax don't)

6. They have far more engineers and lens designers, so they can develop new FF models and APSC models side by side (Pentax can only develop one, or at most two, new models and a handful of lenses at a time - new FF means no new APSC or CSC)

So, if Pentax made a 5D2 type camera, it would cost them more overall, and the cost per unit would be greater as well. They would be forced to charge more for both camera and lenses to make a profit, not less and it would impact their ability to expand more profitable lines.

Why, apart from a handful of Pentax users, would anyone buy a Pentax FF which costs 50% or 100% more than the equivalent Nikon of Canon? Since most Pentax users seem to want to pay $1500, there is not much scope for making a profit here.

The 645D has a completely different set of economics simply because Pentax can charge a great deal more for it and because it competes in a different, specialist niche space where 5 year old AF technology is actually quite advanced, movie mode is not required, 1.5FPS is more than enough and continuous AF is not really much of an issue. They could reuse many components from the K5 (controls, firmware, AF) and the old 645 (mirror box, shutter etc) leaving them only with the sensor package to worry about. No licensing issues either. They also have stocks of most of the old 645 lenses (and many Japanese customer still used 645 film cameras) so only a couple of new lenses were really needed to get the ball rolling.

At $10k per unit and with relatively low startup costs it would not surprise me if the camera was quite profitable (even if overall revenue is quite low).

However I suspect it diverted a great deal of top resource which would have been better employed elsewhere IMO.

All growth is in the mid market. All competing manufacturers are concentrating there and margins are still achievable. At the same time they are forcing manufacturing costs down all the time hence the upsurge in new CSCs. That is where Pentax needs to go for growth, not FF. Their competitors are Olympus, Fuji, Pansonic, Samsung and Sony right now, not Canon and Nikon.

Once they have a more stable financial base and a larger manufacturing and development capability, THEN they may be able to afford to make a FF camera for a decent price. Chicken and egg.

Yanko Kitanov wrote:

The recent Pentax acquisition resulted in many FF threads.

I am an experienced M&A consultant and a photographer at the same time, so I would like to share my opinion on this matter.

I hope if you've grown tired of all the FF threads you will just forgive me for starting another one. I have answered in a recent FF thread so I will use a certain part of what I wrote there in this post

To have a FF body a company needs to get many things right, to mention just a few of them - the appropriate AF system - speed, accuracy, consistency, C.AF.

To have a FF body a company needs to have the appropriate lens line up to get the full potential out of current FF sensors (30+MP ?) - this means fast, high resolution lenses with good contrast and colour rendition, not to mention - lacking any AF issues. All the way from fish-eye to super telephoto.

To have a FF body a company needs tethering support and third party producers (lenses, lighting, accessories) support. Also flash system - a modern flash system is always a big advantage and a dated one is a disadvantage of course.

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Regards,
Steve

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Documensony
'Spontaneity is enabled by rigorous practice'

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