CANON DIGITAL CAMERA GROWTH SLOWS DOWN

[Anonymous]

Canon refocuses as
digital camera growth slows
AMSTELVEEN, Netherlands, March 05 -Surging demand for digital compact cameras in Europe is slowing, and Japan’s
Canon Inc. said on Friday it was focusing on more expensive cameras, printers,
and even flat screen televisions.
Last year saw digital camera sales in Western Europe
increase 58 percent to just over 25 million units, but while that growth may
slow to 25 to 30 percent amid continued price pressure, the market for more
advanced digital Single Lens Reflex (SLR) cameras will double by the end of
2006.

“This year there will be
something like 25 to 30 percent unit growth for the market. In the worst case
there could be no real value increase (due to price pressure). But we still have
a positive outlook on Canon’s position,” Canon’s European chief of Consumer
Imaging, Mogens Jensen, told Reuters in an interview.

“We predict the digital SLR market will double in size
by the end of 2006,” he said, adding that this would be largely driven by the
company’s new SLR camera for photo hobbyists.

While
those types of cameras only represented one-thirtieth of the total digital
camera market last year, according to market research group IDC, it is a much
bigger portion in value terms and profits as SLRs devices sell for around 1,000
euros.

The
strength in high-end cameras was one of the reasons Canon reinforced its leading
position in Western European digital camera sales, capturing a 16.8 percent
market share in 2004, up from 16.2 percent in 2003, IDC said.

Sony is
No. 2 with 14 percent, Olympus No. 3 with 12.5 percent and Nikon No. 4 with 10.4
percent.

PRICE
PRESSURE

Pressure
on prices was severe last year, with an overall price erosion for compact
digital cameras of over 15 percent. The Japanese and American markets, which had
adopted digital photography earlier, slowed down ahead of Europe and large
batches of older products were shipped to Europe.

“Last
year a lot of companies had excess stock. What usually happens in such a case is
that they move it to the strongest growth market and dump it,” Jensen said.

Because
it had no inventory to burn itself, Canon could sell “fresh” products and
maintain profit margins, Jensen said.

Canon’s
European sales, including faster-growing regions like eastern Europe, increased
12.6 percent to 1,091 billion yen ($10.40 billion), and passed the Americas as
Canon’s biggest geographic market. It was already ahead of Japan.

Profitability in Europe, however, at a 2 percent operating margin, was
well below the firm’s overall 16 percent last year. Jensen said this was due to
a higher services mix elsewhere and that product profitability was in line with
the average.

Another
growth engine is the photo printing market. Canon saw global compact photo
printer sales quadruple last year.

“It’s
another key growth market. It still looks like 20 percent of all photos are
being printed.” Like other printer makers, Canon keeps making money on ink
cartridges after the sale of a printer — it is how most printer makers generate
profit.

Also
hitting the market late this year will be flat TVs, a new market segment that
Canon dares to enter because of a new thin display technology developed with
Toshiba. The SED technology uses less power, is thinner than current liquid
crystal displays and has better image resolution.

“First
production is this year, but real sales start in 2006. Also in Europe. It’s
mainly for the high end of the market (bigger screen sizes),” said Jensen.

He said
the move into flat TVs was part of Canon’s strategy to be a leading company in
imaging and that output, either on a printer or on a TV display, was part of
that plan.

[Author]

March 23, 2005 at 10:37 AM