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04-15-2018, 08:26 AM - 2 Likes   #46
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QuoteOriginally posted by mecrox Quote
Have you done a similar one for revenue? At the end if the day it’s all about money and margins. For example, fewer items at higher prices may (or may not) be financially more attractive than more items at lower prices.
Actually, product viability is about capital allocation, not revenue or units or margins or profits.

Canon and Nikon use a high volume, low margin business model. Pentax uses a low volume, higher margin, lower cost business model - fewer units at somewhat lower unit cost, competing on a value price for features basis.

It requires an order of magnitude more units sold at low margin to not only generate the same net revenue using HVLM as LVHM, CaNikon must also overcome the capital cost of financing an order of magnitude more manufacturing capacity (to produce the high volume of units) than does Pentax, plus the associated costs of global consumer marketing and dealer inventory financing to generate high volume sales.

What CaNikon do effectively and collaboratively is erect a profit barrier to entry by competitors by making the per unit profit margin so low and initial capital outlay so high a new competitor cannot establish a foothold.

This post was edited to remove content that is my personal opinion, but could be misconstrued as fact.


Last edited by monochrome; 04-16-2018 at 07:51 PM.
04-15-2018, 09:51 AM   #47
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QuoteOriginally posted by monochrome Quote
Actually, product viability is about capital allocation, not revenue or units or margins or profits.

Canon and Nikon use a high volume, low margin business model. Pentax uses a low volume, higher margin, lower cost business model - fewer units at somewhat lower unit cost, competing on a value price for features basis.

It requires an order of magnitude more units sold at low margin to not only generate the same net revenue using HVLM as LVHM, CaNikon must also overcome the capital cost of financing an order of magnitude more manufacturing capacity (to produce the high volume of units) than does Pentax, plus the associated costs of global consumer marketing and dealer inventory financing to generate high volume sales.

What CaNikon do effectively and collaboratively is erect a profit barrier to entry by competitors by making the per unit profit margin so low a new competitor cannot establish a foothold.

This post was edited to remove content that is my personal opinion, but could be misconstrued as fact.
Ah, but fine words don’t sell a single camera. A trip to the malls, the superstores, social media, photography websites and other sites, camera stores, talking to people, checking galleries and market stalls, looking at who’s doing what at tourist destinations (I live in one), the world news, etc. - all tell a similar story in my view. The new middle classes of Asia and the young (probably via Silicon Valley) will largely dictate what happens to the photography industry and how the camera as we know it evolves. You can see it all around you right now.

Canon, Sony, Ricoh and co are just leaves in the wind. They can dress up their successes or failures in as much high-flown financial bamboozlement as they want but it won’t make a blind bit of difference to the outcome. Return on capital et al is absolutely meaningless if no one buys the products. If you don’t make what folks want to buy, you’re toast. None of this has anything much to do with Pentax (or any other individual company).

---------- Post added 04-15-18 at 06:04 PM ----------

QuoteOriginally posted by normhead Quote
My millionaire childhood friends who ended up with about 60 million inherited start up capital just sit in their office and make piles of money moving money around. They don't produce a thing.

Ricoh is in the camera business because their CEO wanted to be. There are easier ways to make money. There is nothing more cynical than "it's all about the money" Companies like Pentax, Canon and Nikon are all about assembling teams of engineers who want to make cameras. The money is an issue, if an only if they aren't making enough of it.

Just because you have this jaded "money is everything" view of the world doesn't mean it's relevant to everyone. Money can become an issue if you aren't making enough. Until then, it's just people trying to make great cameras at the best price, and making habit of money doing it.

We can assume that all the companies currently still making cameras are making enough money to concentrate on product and price point. How do you know money is an issue and is influencing decisions? When a company files for bankruptcy and is taken over by a court appointed accountant. Then you can assume it's all about money.
A corporate board is there to serve its investors. Believe me, if Ricoh or another outfit decided consumer cameras were out, they would be out in short order. Those taking that decision might have personal regrets of all kinds, and so would we of course, but they would be very clear and very ruthless in the pursuit of securing returns for their investors. It may not be nice but that is the bottom line in a modern economy, I’m afraid. Companies drop one thing and pick up another all the time, all the more easily when those things are peripheral and account for only a few per cent of the overall business. Enjoy the stuff while you can. And yes I do understand that the next Pentax camera you buy will have been made with huge expertise and dedication, but at the end of the day it’s not the guys on the line but the investors who call the shots.

Last edited by BigMackCam; 04-16-2018 at 06:46 AM. Reason: Edited quoted post to reflect correct content
04-15-2018, 11:00 AM - 1 Like   #48
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QuoteOriginally posted by mecrox Quote
Ah, but fine words donít sell a single camera. A trip to the malls, the superstores, social media, photography websites and other sites, camera stores, talking to people far and wide, checking galleries and market stalls, looking at whoís doing what at tourist destinations (I live in one), the world news and the money markets, etc. - all tell a similar story. Asia and the young (probably via Silicon Valley) will largely dictate what happens to the photography industry and how the camera as we know it evolves. You can see it all around you right now. Canon, Sony, Ricoh and co are just leaves in the wind. They can dress up their successes or failures in as much high-flown financial bamboozlement as they want but it wonít make a blind bit of difference to the outcome. Return on capital et al is absolutely meaningless if no one buys the products. If you donít make what folks want to buy, youíre toast. None of this has anything much to do with Pentax (or any other individual company).
All that made sense back in the old world of broadcast media, mass production, and brick-and-mortar retail.

These days companies don't always need to make popular products as anointed by up-and-coming tastemakers or high growth areas although that's certainly a often-used strategy. The internet plus world-wide shipping has totally changed the economics of niches.

The malls, superstores, and even camera shops certainly show what is popular but they don't show everything that is possible or profitable.
04-15-2018, 11:15 AM   #49
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QuoteOriginally posted by photoptimist Quote
All that made sense back in the old world of broadcast media, mass production, and brick-and-mortar retail.

These days companies don't always need to make popular products as anointed by up-and-coming tastemakers or high growth areas although that's certainly a often-used strategy. The internet plus world-wide shipping has totally changed the economics of niches.

The malls, superstores, and even camera shops certainly show what is popular but they don't show everything that is possible or profitable.
Unfortunately, the internet at least in its present incarnation is in fact dominated by self-appointed tastemeisters, from the Zuck on down to some YouTube "photographer" with a baseballl cap on backwards and nothing to say. It's a problem but it's what we are currently saddled with, I think. Also, Pentax and others are selling things to a generation which mainly wants to handle them IRL before any purchase. If you change that to internet-only selling then probably you'll end up having to change the product because you'll end up selling to a different set of customers.

I don't believe in niches, perhaps unlike many. I think they are a fool's errand. They are as vulnerable as anything else to changing fashions, are extremely hard to expand and are very easily squashed by larger competitors. More often what appears to be a niche is in reality an unprofitable black hole which is why everyone else has avoided it. Does anyone buy niche cheese or a niche biolgraphy of Napolean? They just buy cheese and a good book.


Last edited by mecrox; 04-15-2018 at 11:22 AM.
04-15-2018, 11:24 AM - 2 Likes   #50
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QuoteOriginally posted by mecrox Quote
Ah, but fine words don’t sell a single camera. A trip to the malls, the superstores, social media, photography websites and other sites, camera stores, talking to people, checking galleries and market stalls, looking at who’s doing what at tourist destinations (I live in one), the world news, etc. - all tell a similar story in my view. The new middle classes of Asia and the young (probably via Silicon Valley) will largely dictate what happens to the photography industry and how the camera as we know it evolves. You can see it all around you right now.

Canon, Sony, Ricoh and co are just leaves in the wind. They can dress up their successes or failures in as much high-flown financial bamboozlement as they want but it won’t make a blind bit of difference to the outcome. Return on capital et al is absolutely meaningless if no one buys the products. If you don’t make what folks want to buy, you’re toast. None of this has anything much to do with Pentax (or any other individual company).

---------- Post added 04-15-18 at 06:04 PM ----------



A corporate board is there to serve its investors. Believe me, if Ricoh or another outfit decided consumer cameras were out, they would be out in short order. Those taking that decision might have personal regrets of all kinds, and so would we of course, but they would be very clear and very ruthless in the pursuit of securing returns for their investors. It may not be nice but that is the bottom line in a modern economy, I’m afraid. Companies drop one thing and pick up another all the time, all the more easily when those things are peripheral and account for only a few per cent of the overall business. Enjoy the stuff while you can. And yes I do understand that the next Pentax camera you buy will have been made with huge expertise and dedication, but at the end of the day it’s not the guys on the line but the investors who call the shots.
Actually, it is the Executive Committee that makes these decisions, not the investors. We don't know what is in the minds of Ricoh management, how they plan to exploit Ricoh optical engineering in B2B products, nor what brand benefits accrue to Ricoh in the home market from maintaining the 'Pentax by Ricoh' brand. Whatever their reasons, they seem to have chosen a business model that allows them to continue with the brand, which they seem to want to do.

Pentax isn't really a global brand - it is a Japanese brand. They haven't decided so far to quit, and there is no apparent movement in that direction. 800,000 CIPA-reported DSLR units might be half the peak volume, but it is still 800,000 units.

QuoteOriginally posted by photoptimist Quote
All that made sense back in the old world of broadcast media, mass production, and brick-and-mortar retail.

These days companies don't always need to make popular products as anointed by up-and-coming tastemakers or high growth areas although that's certainly a often-used strategy. The internet plus world-wide shipping has totally changed the economics of niches.

The malls, superstores, and even camera shops certainly show what is popular but they don't show everything that is possible or profitable.
Markups by Middlemen and Distributors and End-Merchandisers are costs that must be priced into the product. A retail store is just another capital investment in the product delivery chain that must have cash flows (and profits) to justify. We're fortunate in St. Louis to have a robust chain of B&M Camera stores - I bought my K-1 there - but they can't feature Pentax because Pentax won't floorplan (finance) their inventory. Inventory factoring (Dealer Credit) is a 'cost' that Pentax, through Ricoh Imaging North America, doesn't price into the products.
04-15-2018, 11:40 AM   #51
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QuoteOriginally posted by monochrome Quote
Markups by Middlemen and Distributors and End-Merchandisers are costs that must be priced into the product. A retail store is just another capital investment in the product delivery chain that must have cash flows (and profits) to justify. We're fortunate in St. Louis to have a robust chain of B&M Camera stores - I bought my K-1 there - but they can't feature Pentax because Pentax won't floorplan (finance) their inventory. Inventory factoring (Dealer Credit) is a 'cost' that Pentax, through Ricoh Imaging North America, doesn't price into the products.
Just as Auto dealers will use flooring even if they have the cash to purchase all of their inventory, it certainly must have benefits as far as managing cash flow when holding high value assets in inventory. That is why I will buy a car that has sat on the dealer's lot for a year or more, regardless of color, since they are tired of paying interest on flooring charges for that vehicle and the manufacturer usually adds incentives to clear the way for the new model year.
Are the interest charges for flooring of high end cameras similar to those in the auto industry? It would certainly mean that there is a lot of pressure for salespeople to push the Canikon models if there are interest charges accruing on items in the stock room. This also hurts the consumer though. At least at Hunt's photo the sales rep was super pumped when showing me the K-1 and I understood when I held it. But they did not have KPs in stock, probably because of no flooring financing being available from Pentax.
04-15-2018, 11:56 AM - 1 Like   #52
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QuoteOriginally posted by SSGGeezer Quote
Just as Auto dealers will use flooring even if they have the cash to purchase all of their inventory, it certainly must have benefits as far as managing cash flow when holding high value assets in inventory. That is why I will buy a car that has sat on the dealer's lot for a year or more, regardless of color, since they are tired of paying interest on flooring charges for that vehicle and the manufacturer usually adds incentives to clear the way for the new model year.
Are the interest charges for flooring of high end cameras similar to those in the auto industry? It would certainly mean that there is a lot of pressure for salespeople to push the Canikon models if there are interest charges accruing on items in the stock room. This also hurts the consumer though. At least at Hunt's photo the sales rep was super pumped when showing me the K-1 and I understood when I held it. But they did not have KPs in stock, probably because of no flooring financing being available from Pentax.
I woyld bet most small businesses use their bank financing to carry their Fixed Assets and an operating Line of Credit for variable charges like seasonal promotions. I have no idea what the Factoring terms from product companies are. but my impression is the incentive is to 'turn' the merchandise so month-end interest charges don't accrue. That was the financing structure my family business had - before the products my family made and sold were obsoleted by digital communication and manufacturing controls.

IIRC, Canon and Nikon were the largest creditors of Ritz Camera in bankruuptcy and Nikon was 'Debtor in Possession' while the stock was liquidated. Several tens of millions of dollars. D-i-P is a very big deal. Ricoh won't (generally) take that risk. I think Creve Couer Camera in St. Louis, Hunt's, Samy's, Henry's in Canada and the big internet dealers are among the very few in North America that qualify.
04-15-2018, 11:59 AM   #53
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QuoteOriginally posted by monochrome Quote
Actually, it is the Executive Committee that makes these decisions, not the investors. We don't know what is in the minds of Ricoh management, how they plan to exploit Ricoh optical engineering in B2B products, nor what brand benefits accrue to Ricoh in the home market from maintaining the 'Pentax by Ricoh' brand. Whatever their reasons, they seem to have chosen a business model that allows them to continue with the brand, which they seem to want to do.

Pentax isn't really a global brand - it is a Japanese brand. They haven't decided so far to quit, and there is no apparent movement in that direction. 800,000 CIPA-reported DSLR units might be half the peak volume, but it is still 800,000 units.
My comments are not at all about Pentax per se but the general market, and I agree about Pentax being a Japanese brand, mainly anyway. Are you saying that if someone speaking for say 68 per cent of stockholders' capital rang up the CEO and said "Let's talk about more X" (or "Let's talk about no more X"), he would be politely told to bog off? I doubt it somehow.

What does your figure of 800K units refer to? The size of the Japanese DSLR market or something else?

04-15-2018, 12:06 PM   #54
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QuoteOriginally posted by mecrox Quote
My comments are not at all about Pentax per se but the general market, and I agree about Pentax being a Japanese brand, mainly anyway. Are you saying that if someone speaking for say 68 per cent of stockholders' capital rang up the CEO and said "Let's talk about more X" (or "Let's talk about no more X"), he would be politely told to bog off? I doubt it somehow.
A single owner of 68% of the stock of a company would be the Chairman and CEO, not calling the Chairman and CEO, but I get your point. Investors don't want to operate the company on a day-to-day basis like you describe. That's what they pay management to do. It's how 'Public Markets' capitalism actually works. Disfavor is reflected in the stock price eventually, and the CEO's job is 'scored' by returns reflected in the stock price. Ricoh Imaging within SmartVision isn't big enough to matter to the stock price* either way, so there must be some other reason to continue operating it.

QuoteOriginally posted by mecrox Quote
What does your figure of 800K units refer to? The size of the Japanese DSLR market or something else?
The current level of the CIPA DSLM Units trendline in beholder3's post #1 above.


* Taking into account the writedown of impaired capital P&E for the compact camera plant in March, 2017. IIRC, I think I read that Ricoh just did the same thing with it's 2007 investment in Ikon Office Systems in the USA ($1.2 Billion) and the smaller investment in the Cloud Storage side of Eye-Fi.

None of this is based on private knowledge - it is all available in the open, to be read on the internet.

Last edited by monochrome; 04-16-2018 at 07:34 AM.
04-15-2018, 12:34 PM - 2 Likes   #55
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QuoteOriginally posted by mecrox Quote

I don't believe in niches, perhaps unlike many. I think they are a fool's errand.
Niches can be successful in almost any field, cars, TV, whatever. In movies, it's *all* niche. Kids and comic hero films are the most successful genres. Leica is a low volume camera example.

All cameras are now niche products, post 2012, in the phone age.

For Pentax, this is same same, for Sony, Canon and Nikon this is enormously upsetting.

Last edited by clackers; 04-15-2018 at 12:39 PM.
04-15-2018, 01:40 PM   #56
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QuoteOriginally posted by clackers Quote
Niches can be successful in almost any field, cars, TV, whatever. In movies, it's *all* niche. Kids and comic hero films are the most successful genres. Leica is a low volume camera example.

All cameras are now niche products, post 2012, in the phone age.

For Pentax, this is same same, for Sony, Canon and Nikon this is enormously upsetting.
If everything is a niche then nothing is. It becomes meaningless. To me itís just a buzzword. The only thing which has changed about cameras is how some of us think of them. How does a nice piece of Gorgonzola taste different from a nice piece of niche Gorgonzola? Or take the Harry Potter story. Turned down by many publishers initially, most likely because at the time it was considered a cross-genre idea and therefore hard to sell. Bit of a mistake there, thinking it was all about a niche. Best to aim for the centre of the target.
04-15-2018, 01:42 PM   #57
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QuoteOriginally posted by mecrox Quote
Unfortunately, the internet at least in its present incarnation is in fact dominated by self-appointed tastemeisters, from the Zuck on down to some YouTube "photographer" with a baseballl cap on backwards and nothing to say. It's a problem but it's what we are currently saddled with, I think. Also, Pentax and others are selling things to a generation which mainly wants to handle them IRL before any purchase. If you change that to internet-only selling then probably you'll end up having to change the product because you'll end up selling to a different set of customers.

I don't believe in niches, perhaps unlike many. I think they are a fool's errand. They are as vulnerable as anything else to changing fashions, are extremely hard to expand and are very easily squashed by larger competitors. More often what appears to be a niche is in reality an unprofitable black hole which is why everyone else has avoided it. Does anyone buy niche cheese or a niche biolgraphy of Napolean? They just buy cheese and a good book.
Which market place are you talking about?

I am really uncertain about Europe in general, but in the United States, the Internet really has become the way that electronic devices are sold. Brick and mortar stores are farther and farther apart and even when they exist, the tendency is for people to go into them, try gear out and then order it off the internet for a slightly cheaper price and in many situations, avoid sales tax. This is not just for cameras, it is for a lot of other things as well and it really hurts local stores.

As far as "niches" goes, from Ricoh's standpoint, the idea is to release a very nice product that isn't exactly what your competitors has -- one that stands out in one way or another. In Pentax's situation, they have tried to leverage SR to stand out versus some of the other companies -- adding features like astro tracer and pixel shift and relatively aggressive pricing are all things that make Pentax's K-1 stand out versus the Canon/Nikon offerings at a similar price. As monochrome says, the fact that they aren't spending a bunch on marketing, etc means that they can sell significantly less units and still turn a profit.

As far as your examples, the biography by Napoleon is by definition a "niche" book, isn't it, but that doesn't mean it won't sell. I just read a book about Leonardo Da Vinci by Walter Isaacson. Certainly a niche biography, but one that has apparently sold a lot of copies based on buzz about the book and the author.

In the same way, releasing high quality cameras will tend to build a clientele, even if you aren't spending a bundle on marketing.
04-15-2018, 01:48 PM - 1 Like   #58
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QuoteOriginally posted by mecrox Quote
If everything is a niche then nothing is. It becomes meaningless. To me itís just a buzzword. The only thing which has changed about cameras is how some of us think of them. How does a nice piece of Gorgonzola taste different from a nice piece of niche Gorgonzola? Or take the Harry Potter story. Turned down by many publishers initially, most likely because at the time it was considered a cross-genre idea and therefore hard to sell. Bit of a mistake there, thinking it was all about a niche. Best to aim for the centre of the target.
Everything in creative content is niche these days.

It's a fragmented market. It's why mainstream newspapers and free to air TV have suffered so much over the last decade.

Potter is a perfect example of successful niche.

It's genre fiction - adolescent fantasy.

04-15-2018, 01:51 PM   #59
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QuoteOriginally posted by mecrox Quote
If everything is a niche then nothing is. It becomes meaningless. To me it’s just a buzzword. The only thing which has changed about cameras is how some of us think of them. How does a nice piece of Gorgonzola taste different from a nice piece of niche Gorgonzola? Or take the Harry Potter story. Turned down by many publishers initially, most likely because at the time it was considered a cross-genre idea and therefore hard to sell. Bit of a mistake there, thinking it was all about a niche. Best to aim for the centre of the target.
What does a cheese sandwich have to do with business models? Just think of Pentax as Subaru and everything falls right in place.
04-15-2018, 01:56 PM - 1 Like   #60
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QuoteOriginally posted by monochrome Quote
What does a cheese sandwich have to do with business models? Just think of Pentax as Subaru and everything falls right in place.
And Subaru is the most popular brand of car sold in several states here in the US. I would love to see Pentax as most popular in several countries!
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