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Saturday, September 28, 2013

Canon Japan Rethinks Its Product Strategy

In my recent posts, I have reported Canon Japan seems to be in a low point and still working on projects like the Mega Pixel and Medium Format cameras.  Now it seems their thinking is at a critical junction because their Mega and Super Mega Pixel projects are intricately linked to their Medium Format work.

Canon recently announced their second quarter profits were flat and lowered their projected earnings for the rest of the year despite the depreciation of the Yen. A high technology camera company rarely makes good profits by selling more features for less money. But this is exactly what Canon has done in the last few years.

Ever since consumer digital photography was introduced at the turn of the 21st century, and the gradual price reduction of point-n-shoot and DSLR cameras, almost anyone with the time and dedication to learn and practice, can become a good photographer. There is little cache left in photography anymore except in high end, sought after features like full frame sensors and top-of-the-line professional gear.

Canon introduced their first consumer DSLR camera, the D30 in 2000. It changed the landscape of photography and ushered in a whole new era. The EOS-1Ds came out in November, 2001. It used to be the dreams of many photographers to aspire to own a full frame DSLR or buy a second hand EOS-1 camera. Then, in 2005 Canon introduced the 'affordable' EOS-5D full frame DSLR camera. I bought all three cameras when they first came out and it cost me plenty but I had a great experience and was satisfied with all the purchases. Fast forward a few years and now it seems there are 'new' product announcements every few months. Many of them come with frivolous features backed by boring sales hype. The products with true innovations seem to take 'forever' to come to market.

When the Canon EOS-1Ds Mk III first came out, it retailed for $8,000. Now one can buy the EOS-5D Mk III for less than $3,000 and it beats the 1Ds handily in most technology and features. Is there any wonder why there is a consumer fatigue in new product offerings? Where is the fun and incentive to buy new products when every year something comes out and it is better and cheaper? I have argued in the past Canon has blurred the difference between their high and middle end equipment so much, there is less profit to be made from their premium products.  The only profit bright spot is in the EOS-1D and Cinema camera line and Super Telephoto lenses.

The current dilemma Canon is facing is entirely of their own making. They have a habit of introducing their latest technology on the low end of their product line. Cases in point are their latest DIGIC processors, STM lenses, touch screen LCD monitors, Dual Pixel CMOS AF technology, all introduced on the lower end products first. Imagine if the 2014 Mercedes Benz S Class ground-breaking 3D cameras, radar and night vision technologies were all introduce on their entry level C Class sedans first, how many people would buy the top-of-the-line S Class sedans?

The ever shrinking price/performance differential between prosumer and professional equipment are vexing some 'professional' users.  This brings us back to the Super Mega Pixel sensor and Medium Format camera projects. Canon is now going through a big rethinking and trying to improve profits by segmenting DSLR buyers. They are trying to position the new EOS-MF line as a 'premium' product for the nature and landscape photographers. The EOS-1D line will serve the pro wildlife and sports photographers, the EOS Cinema line for the filmmakers, the remaining EOS and EOS-M line for the prosumer and non-professional users.

If true, I am not sure these differentiation are necessary. The old way was working just fine until the race to the bottom started with all the price reductions in the past few years and now all camera manufacturers are feeling the profit squeeze, especially the Medium Format companies. When was the last time you see high end Apple, BMW or Lexus products coming down in price? A product's price/performance ratio is the best way to segment the market and indicates what the consumer is willing to pay. I have been a Travel and Wildlife photographer for 25 years using Canon equipment and you can visit my website to see my works. I have a few suggestions for my friends in Tokyo.

  • Stop the price reduction strategy and start introducing new technologies on your high end products first.  
  • Shelf the idea of introducing a Medium Format camera. The market is too small to recover the investment. Go into a joint venture with a current MF manufacturer if you must.
  • Introduce the successor to the EOS-1Ds Mk III by releasing the full frame, mega-pixel camera as soon as possible.
  • Release the EOS-7D Mk II camera by making it into a 'baby' EOS-1D X. With the APS-H sensor discontinued, many photographers are looking for a 'professional' cropped frame body.    
  • Announce a new Super telephoto lens with the Diffractive Optics (DO) technology. The current EF 400mm f/4 DO IS lens is almost 13 years old. The DO lens technology is a winner and differentiates your company from others.

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