This has been a fascinating thread to read, and hear the positive and negative positions about the future of Ricoh/Pentax relative to market share etc.
It got me thinking about each companies overall business, and what the drivers and business motivations are. So I did some quick searches of 2014 company results and found the following
Ricoh: Revenue = 2.2 Trillion Yen, Camera/Others = 90 Billion Yen, Camera/Others =4% of revenue
Canon: Revenue = 3.7 Trillion Yen, Camera/Imaging = 1360 Billion Yen, Camera/Imaging = 36% of revenue
Nikon: Revenue = 0.98 Trillion Yen, Cameras = 680 Billion Yen, Cameras = 70% of revenue
Sony: Revenue = 7.8 Trillion Yen, Cameras/Imaging = 760 Billion Yen, Cameras/Imaging = 9.7% of revenue
Note that due to the bundling of categories by each company we are not comparing like for like in terms of pure camera sales - other products (video cameras for Sony, sport optics for Nikon etc) are bundled.
Analysis of Data:
In terms of camera/imaging revenue Canon is leads with Y1,360B, Sony is next Y 760B followed by Nikon Y680B and Ricoh are well below this at Y90B
In terms of who is exposed to revenue damage with the current camera market contraction Nikon are very exposed at 70% of revenue, Canon somewhat at 36% of revenue, Sony and Ricoh not much at all - say 5% Sony (allow half video, half still camera) and 4% Ricoh.
So, Nikon could be in real trouble as a company if the camera market downturn continues. If camera volume/revenue halves as some on this thread have been predicting then Nikon could lose as much as 35% of company revenue - catastrophic for them. For Nikon this explains the rush to FF cameras - trying to get the selling price (and profit) per unit up, as sales volume drops. It makes a lot of sense, but I am not sure it will help them much in the end with FF being only about 10% of the total camera sales. Nice try Nikon, but in company revenue terms still likely to be a fail.
The question then becomes, why has Ricoh, as Y2.2T business imaging company decided to add a camera unit that adds a tiny 4% of revenue.
To answer that question you have to know who Ricoh competes against (I will give you a hint - it isn't Nikon). Globally Ricoh completes against Xerox and Canon in the massive business imaging market. Very recently Canon has taken the number one spot in that market off Xerox. In Japan, with Xerox being an American company Ricoh competes head to head with Canon. Canon is bigger overall Y3.7T verses Ricoh Y2.2T but almost all of that Y1.5T revenue difference is in Canons Camera/Imaging revenue of Y1.36T.
Business Imaging - Ricoh's and Canon's main game involves a lot of machinery, including a vital imaging component. Canon have imaging and sensor expertise and symmetries, R&D, optics etc across their business machine and camera/imaging groups - much more so than Ricoh.
So, why did Ricoh purchase Pentax - well it was cheap for a start, but it also provided optics and imaging expertise and more importantly a drawer full of imaging patents. Folded into Ricoh's existing very small camera group it has provided the start for building over time all the advantages that Canon currently holds in this arena. A definite head start for Ricoh due to the patents and optics expertise. What Ricoh needs to compete more successfully and fully with Canon is wide and deep imaging and optics expertise, patents and R&D.
Pentax development is one small corner of what they are working on - the Theta might be more of a clue as to where some of the optics and software development is heading.
For Canon, Ricoh and Xerox the massive competitive pressure is if one of them gets a massive jump forward in business imagining/machine quality and, or cost structure - that puts 2 trillion yen a year revenue at risk. Ricoh will be working very hard to make sure that doesn't happen to them.
A further motivation for Ricoh in the acquisition and development of Pentax is that if they can compete with Canon in the imaging products market - still and video cameras, sports optics etc. then they will increase their revenue (and profit) while potentially reducing their main competitors revenue and profit.
The math works like this. Canon Imagining revenue Y1,400 billion a year (rounded for simplicity). Lets say camera sales half as the market contracts - so Canon Imaging revenue now Y700 billion. Ricoh imaging revenue currently Y90 billion. Lets say that halves too - to Y50 billion. So far so good.
Now lets really speculate that Ricoh produce some very cool, high value, well executed camera and imaging product and grow their market share and revenue by 3 times to Y150 billion. Lets also speculate that market share comes from Canon, and that Canon also lose some market share to Sony and others. So very speculatively Canon loses another Y200 billion of market share to Ricoh, Sony and all others. So now the Canon Imaging Group is Y500 billion revenue and Canon total revenue (business machines stays the same) is now Y2.8 trillion. At the same time Ricoh have grown their imaging and other revenue by say Y100 billion - they are now a Y2.3 trillion company, with imaging growth momentum, and also within realistic striking distance of Canon at a time when Canon would be struggling because of lost revenue, need to reduce costs etc. They are growing at the same time as helping their main competitor to a raft of problems and issues - a sweet strategy.
In this scenario of half revenue from cameras, Nikon would possibly fold or with a reduced annual revenue of Y600 billion be brought out by a company with a strategy of consolidating and growing its imaging group. If for instance Ricoh were to buy a reduced Nikon at that point they would have revenue of about Y2.9 - Y3.0 trillion and be about the same size or slightly bigger than Canon, with a similar suite of products and complimentary strengths.
Which would in turn provide Ricoh better risk management and development in the all important business machine revenue market. Ricoh would also be the company growing and developing while Canon, caught with the large camera market shift would be the company shrinking in revenue and struggling. Perhaps a small harbinger of this developing problem for Canon has been their lack of innovation in their cameras and camera sensors recently.
So, with a slightly aggressive strategy and a few smooth moves, executed over at the most a decade Ricoh could achieve a huge range of business goals - with or without swallowing Nikon - (that would just make it more interesting from the sidelines)
.
So, having written these scenarios - do I think 'Pentax is doomed' - not a chance, the future is extremely bright for Pentax, because it is an integral part of a very smart, logical and well planned business strategy that Ricoh is executing right now. I look forward to their new products and developments
Nikon, now that is another different, and much more interesting business story........