Yes, checking their historical financial statements, they have been in a decline in imaging for roughly five years, with decreased revenue in the segment overall, and a decreased proportion of that revenue coming from cameras. Canon has a plan for growth, and it doesn't include cameras. The segment is specifically targeted for cost reduction, not sales volume increase. Focusing on one product class and a high percentage gain on a small count is myopic, at best. You can't increase in one half of a period but only match the prior period unless you had lost sales in the other half.
We are in the beginning stages, or at least Canon is. So, I will take this as a snapshot of their progress or their journey. What this shows are many, and I will not go into that. I've had my share on analyzing FS almost 20 years ago, and I will do a great injustice if I don't pore back 10 years or more from the past. I am not going to do that without getting paid!
Yes, at least with a publicly traded multinational they have to follow regulatory guidelines and we can be confident in their audited results. I'm not going to type up a full blown narrative analysis, but it was easy enough to download their 10 year historical BS/IS and common size them to get a quick look at trends. Wading through their media release to glean intent was also not difficult. I wouldn't do a whole lot more for free, but at least their balance sheets balance and the net profit from the income statement is also the same amount impacting retained earnings. It's disheartening when the in house statements of a business with several million dollars a year in revenue can't even get those details right, and I see that far too often. Or they carry noncollectable receivables on their aging report, for something ridiculous, like 800 days.
800 days? Really?
But from the standpoint of Sony and the others, Canon is lagging. And from what I know now and what I've read/hear/seen, what should worry them is their lag in R&D in the critical areas. Sony knows this and is pouring in all the gas, and pulling off the stops. They know they have the momentum and will take advantage of this lapse.
IN the early 2000's, I was still optimistic with Kodak. Why? Because they had tons of money, and they still had time to turns things around. Unfortunately, they still sat on digital and defined their future with what they were good at in the past. They still weren't into change 100%. They were in, in a perpetual search or testing the market. Canon must take a page or two from the lessons learned from Kodak.
I am still optimistic with what they can do (Canon). But really, they must really start taking the mirrorless cameras seriously! And don't be afraid to risk it all, and cannibalize your old cash cow! Their downfall, if it should come, is trying to protect their cash cows. That is a big mistake, because, all the money in the world is not going to cut it and make you catch up with the wrong mindset, hence wrong strategy to implement it. It always starts with - "the future is not dslr. how can we transition smoothly to mirrorless?"That's how they should be phrasing their situation.
That's the hard part about forecasting, pricing stocks, and gauging markets. It's all pure guesswork. Kodak had consumer digital camera tech back in the 70s, but weren't confident in its future (and of course it was severely limited early on). Then, when they went with Easyshare, they captured
all that juicy market share, only to lose it. Blockbuster actually had the physical stores, a streaming service, and small automated rental boxes, with an overwhelming market lead, but now they're gone. Microsoft had to seed Apple with $250MM to keep them from going under and losing the only 'competition' they had to stave off even more monopoly charges, then a decade later the iPod starts them down the road to being the most valuable company on the planet. It's a realm full of SWAGs, not much more.
My degree is in Tech Management. So we are looking less at stocks and the like but their tech suite, their culture, their R&D efforts, and their focus. Then you compare that to its competitors and other industries and markets. That is what usually gets them, especially during inflection points or paradigm shifts. The one that kills you is not from the same industry. So, we also look at outside the industry.
Apple didn't get to move under Scully. yes, they were raking it in 2-3 years after they botted S. Jobs. But then again, this is a high tech company. And Scully didn't understand or know how to run a high tech company, where innovation is the name of the game. But their new CEO is not very impressive. He's going to lose all that 5-7 year lead in tech/R&D soon.
Steve Balmer was really bad for MS. I won't even go into details anymore. But when he was gone, under the new CEO, things are moving and are better.
Canon seems to see the decline in cameras as a continuing, probably irreversible trend, and they are defending the bottom line by cost cutting further, not seeking to innovate as much or as often. They don't seem to think they can bring in new consumers by marketing continuous new features. They can lean on their brand recognition and stock photos of 220 lenses piled together.
Actually that poor showing on the 2nd quarter says it all. If they flaunt that mirrorless sales is up, and seems to make a difference, no matter how small, they should ask themselves what would be their numbers had they not released a slew of M cameras!
If they do see this as an irrversible trend, defending the low end is not going to be sustainable. They know that for sure. But what are they going to do about it? And using your brand name can take you only so much. Not even an illustrious 50 or more years in the business is going to cut it. Rememer Kodak with over 130 years on its belt? Or IBM with 9 decades or more history being in the red in around early 1990's for 2 years straight? No, you can only use your good name for only so long till the people realize that the emperor is not wearing any clothes!
The general consumer doesn't know enough to care about most capabilities and features. They are, for the most part, well served by their smartphones. And smartphones continue to try to improve their stills and video capability, with the convenience of apps and browsers for instantly sharing what you've just captured. And the phone itself is always going to be carried, a camera can easily be left behind. Apparently more than 90% of unit sales for Canon are no higher spec than the Rebel series, so they can/will use incremental improvements without a lot of capital spending. They seem to always be several years behind in innovation because they don't have to be the innovators, and they don't see themselves as being able to make mistakes in cameras. They are expanding to new industries, no need to risk failure by a misstep in your most recognizable segment.
Well said.
It is sad though because in one of our case studies, we studied Canon and how it entered and beat Xerox in the 1980's and the others in the market. It seems that they are also committing the same mistake as the ones they unseated now, but only this time in the camera market.
I think they saw mirrorless as a difficult position to take point. As small as the bodies can get, they're still camera bodies. You can't make calls or send texts and emails with them. Still a secondary device to a phone, which can still take pictures. Battery life, af, ergos, these were all valid complaints that stem from new tech and the constraints of a small body and no mirror.
Well, it would be a mistake to make the entry level into cameras with cell phones. Samsung tried that with the Galaxy s4 camera-phone. No takers it seems, so it's stops there at s4. Now, Lenovo/Motorola wants to give it another go, but from the POV of a smartphone and with the ability to add lenses if one needs to or want to. In this way, you get the convenince and size of a phone, but if you want to get more range or photo moxy, you buy the attachments. Now whether that is smart or not, I am not going to hazard.
But it isn't as if this is a new approach. Sony did try the same attachment lenses that can stand alone as a camera (though without a viewfinder or screen to see your framing and focus). I don't think it got any traction either. But it was a good idea as it is brand neutral. But I think the tech at the time is not yet there, so maybe they should have persisted more.
Canon let others proof the market, make the investments, and got consumer response across a huge range of mirorless products while they made much smaller strides and spent far less on skus on he shelf while their dslrs still afford the most brand recognition. Once they go mirrorless, and if it is at a time when the bodies are bigger (with the consumer space now accepting bigger bodies, even demanding it due to battery/grip issues) and shooting performance is fast achieving parity with dslr with unique advantages and diminishing disadvantages - they now have the issue of all that tangible and intangible asset value tied up in their slr lenses. Notice how sparse the M mount lineup is. Canon isn't ready to switch, they are moving slowly.
Yes. obviously. And one can consider that smart or dumb. In my case, with the training I had and how we were taught, a bad move. Though it seems clever to let Sony, Panasonic, Fujifilm, develop the market, and get the feel where it will go, this also deprived them the learning experience to transition to mirrorless. And to me, that is a big loss. One might even say, that's how Kodak played the game! Wait and see. let's not panic. We are big, we can turn on a dime and use our millions to catch up.
Meanwhile, Fujifilm, who had less resources, took a different path. They knew film's time was over. And they understood clearly that it's no longer a battle of chemical giants. It's a battle of semiconductors! And he who can chart and have the right R&D on sensor and its needed processor and software, will survive. And they did!
The other thing is video. The fusion of photo and video has been decided years ago. And yet, they still treat it as separate things in their cameras. Even if their cameras have video, the video is never given the other supporting tools and features like their competitors. There is still no zebra, focus peaking, better codecs, etc. This is the 2nd big mistake in my opinion.
Further defense of existing product lines, likely from the same viewpoint. People will still buy Canon video products for the Canon name, and consumer sales of video products is not a sector to look to for growth. Perhaps they plan to make mirrorless a more fully featured video platform when they move to it and taper off from dslrs. Until then, it seems they, at most forward looking, are using both stills and video lines to generate sales and profits to perhaps invest in mirrorless that will integrate and dominate both. But again, can they leapfrog competitors in that space?
Good question! That is a smart and meaningful question that likely only one with an MBA or Phd asks!
My answer to that is NO. I am not privy to their R&D or what their focus will be in the next 3 years. BUT...
I have seen their products and know they are really lagging in key techs that can execute mirrorless correctly and effectively. This complaint of the 6d2 lacking dynamic range is just the tip of the problem. The other problem is that dual pixel tech, good as it may seem, has some side-effects that will later be a handicap, especially for some types of photography. But what got my suspicions confirmed is when I watched a video of a Canon engineer who explained why they didn't do 4k video, and why they couldn't do this or that. That confirmed my suspicion that indeed they were lagging in key technologies to move forward.
They have the strongest name around, but it is more and more being associated with less featured, less innovative products. Can they continue with a slow burn and take over the same mindshare that Sony and Panasonic have? I haven't a clue. But by limiting video in the less expensive products, they are taking a large risk.
They can take the slow burn for now. But eventually, people will wise up. They know there really is nothing for them to compete. And that is the thing with high-tech companies. Your R&D is your lifeline to the future. If you lag in it. You die.
And putting a mirrorless camera out, even with warts and all, is necessary to find out what you have missed in the internal R&D! Look at how much flack and criticism Sony got with their cameras in the early years! it lacks this, it's slow to AF, it's dynamic range is poor, etc. But Sony still brought out products. Why? Because the best way to learn is to bring it out and let the people use it and tell you what still needs to be fixed!
And trust me, even the simplest things, the engineers can overlook! Look at the M5? It's so fairly obvious that putting the flip lcd screen downwards is a stupid idea! Who does a selfie with the lcd screen at the bottom? A simple child or person with lots of common sense will tell you that if you do that, the tripod legs or center mount of the tripod will get in the way if you mount it on a tripod! That if you flip it that way, now you can't put the camera down in the table in case you don't have a tripod!
But there it is! It flips underneath the camera? Now why is that?
I can only think of one reason why. They still think in terms of dslrs! With dslrs, the eyepiece or ovf is in the middle of the camera! So, they put the EVF there! But why? You could have moved it to the end or either side! But no, it has to be in the middle! The LCD flip screen will adjust to the EVF! Dohh!
Vlogs, blogs, and youtube product reviews and discussions are major sources of information for consumers. No matter what anyoe on this, or any other, message board site may have to provide as expert or at least informed opinion, the tastemakers care about video and are harping on video. That affects consumer perceptions to some degree. Canon, in being so conservative, is bucking the trend. Is it hurting them now? No. Will it hurt their future product strategy? I don't know. Anyone ho claims to is nothing more than a seething hater or a frothing fanboy.
I think it is hurting them now. Not as much at this time, but it is. And it is solidifying other people to really leave the Canon fold. Or at least to take another look elsewhere. Now that's not good. Why? Because once a follower starts exploring other brands, then some will find that the grass indeed is greener on the other side. Now, if this was 2012, or even 2014, maybe that might not one to switch. But it's 2017. With what the a9 has shown possible, many now have a feeling that the a7 iii and the a6700 of the future is going to be a doozy of a camera!
And no matter how much people criticize Sony, to a better degree they are listening. I mean they are trying to address each and every other issue thrown at them. It's not yet fully there (like the silly lack of a fully functioning touch screen, or a fully articulating lcd)< but you see progress. And you know that they are throwing in every new tech in their latest models. they are not holding back.
As for Nikon, well, I will repeat it for the nth time - Nikon needs a new CEO from the outside, and needs to change upper mg't team with those who are forward thinking. It's almost too late for them. Their problem is not of competency. Their problem is similar to Canon, except they have less resources to execute. And they are wasting time and resources in the same things and they call it progress.
Agreed, a race to the bottom and an inability to see a way to improve to retain consumers, rather than cut costs to float while you bleed customers, is a sure road to failure.
2017 is a coasting year for Canon and Nikon. They can still rest on their names and reputation to keep their fans. But they way I look at it, Sony, Fuji and others are not banking on their fans. If they switch, fine. If not, still no problem. I think, they know that the low end is basically done for. You just keep an a5100 down there or a a5000 there just to keep the low end a rope to latch on to. And the a6000 something to fill in the price point so it will just be a place holder and Sony does not have a price segment empty for competitors to take their position from.
Now, based on the fist half of Canon's FS, what does this tell Canon? Or Nikon for that matter? Where does the profit or margin will really come from? It's the upper segment, naturally. But what have they been doing at it lately? I'd say, not much. The 6d2 is an example. U$2,000 is not peanuts. You'd think they would have given more for that price. But they are protecting their 5d4 and their video cams lineup! Heaven forbid that Sony's A7 iii will not be as good! Because if it has 4k, more AF points, border to border, a fast AF, eye and face tracking, etc, etc, for U$1,800, it will highlight the discrepancy of the 2 cameras!
On the low and mid-end, they are also doing just place marker products. The new SL2 at the lowest, retaining the 750d/760d for that segment, the a800/77d, the 80d, the 7d II, 6d2, 5d4, 1dx2,. You can see that it does not really have so much rhyme or reason except to put a product to cover a price range.
Meanwhile, Sony alone makes things easy to understand. The a5000 if you want a cheap sony selfie like camera that is easy to use. Get the better a5100 if you want easy to use but the AF and 24mp of the a6000. Get the A6000 if you want the evf and more manual overrides too. Get the a6300 if you want 4k, and a big jump in AF performance. Get the a6500 if you want the same as the a6300 plus IBIS, touch screen, more buffer for sports shooting, etc.
For the 35FF, the a7, is the lowest and oldest of the a7 general purpose camera. It's not as good as the 6d, but for U$1,000 and U$1,200 with a 50 f1.8 fe lens, you have an entry level all purpose 35FF mirrorless. The A7s is for low light, and the A7R line is for high pixels. The a9 is the best in AF speed and the best they can for a truly balanced performing camera that can do almost all.
To me, this is how simple the Sony lineup is. I even know how the Fujifilm lineup's makes sense! Or the Panasonic! But the Canon? I am confused. I get the feeling that I am not getting my money's worth.
Now, can Canon still turn things around?
Absolutely yes.
BUT ...
They really have to commit 100% to mirrorless and video. No more of this style of upgrades. Even if they make mistakes, they have to go for it. Just like Sony did. it should be, "damn the torpedoes! Full speed ahead!" for Canon!
