[NZ_Ross]

Ricoh's stock price has been coasting of late while Canon's is up a bit, at least over the past year or so - I think. If what you say works out even half way, then the market is being too pessimistiic about Ricoh. It's quite tempting to have a modest punt on them really - buy and look to hold for say five years.

There is certainly a much bigger fight going on than the percentage camera market share in any given year. Of course Canon will know the problem, whether they can change course quick enough to do anything about it is the Y500 billion question.

With regard to Ricoh stock - I have my own business to invest in over the next few years, so I am not 'putting my money where my mouth is'. My only advice would be to get some good advice before you do that

[monochrome]

Interesting analysis. Patents and research matter. Asahi built Pentax by licensing Super Multi Coating to virtually everyone.

Don't forget Nikon also own Nikon Precision, tenth largest semiconductor equipment manufacturer globally in 2013.

[jgnfld]

In the US, in the past, the Pentax distributor has had terms that were unfavorable for smaller retailers (i.e. high volume and purchasing requirements). I wonder if this still applies.

I don't know what the general policy is. I do know my recent K-50 purchase in Newfoundland at a small shop was exactly the same as the national online deal and they threw in a $60 Eye-Fi (which I cannot make work yet) and a $60 case to boot.

[Zygonyx]

Interesting analysis. Patents and research matter. Asahi built Pentax by licensing Super Multi Coating to virtually everyone.

Don't forget Nikon also own Nikon Precision, tenth largest semiconductor equipment manufacturer globally in 2013.

+ AFAIK , Nikon is a subsidiary of ESSILOR, world's first "vision correction industry" actor...

[JPT]

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.

Thanks for that. It's the most accurate analysis so far, I think.

I agree that Ricoh is less exposed to some of the dangers other camera makers face because it is relatively small and never had a big compact camera business, which the worst hit area of all. Basically, Ricoh wouldn't have to take a lot of market share from Canon or Nikon to give them a headache. Of course other competitors like Sony, Fujifilm and Samsung will concern them just as much.

If Ricoh really wants open war with Canon, they could also challenge them in the consumer printing business. All those consumables must be a very attractive business, and Ricoh has a good start in terms of technology and production. It seems like a logical way to connect two parts of their business but they probably would want to build up their camera business before doing that.

I think there is a strong chance that Nikon will end up merged into another company, but I doubt it would be Ricoh. Nikon talk frequently about their need to diversify, publicly mentioning rather implausible ideas like buying into the medical business. They may be open to or even looking for a merger with a suitable partner. Nikon has the brand, user base and technology, so I think they would be an attractive takeover target, but I doubt Nikon users would have anything to worry about the brand's future.

[Zygonyx]

Anyone betting on Nikon merger with HOYA and Pentax Medical.... ?

[normhead]

Anyone betting on Nikon merger with HOYA and Pentax Medical.... ?

HOYA only does hostile takeovers, nobody invites those folks into their home.

[Zygonyx]

Let'm be the prey this time

[mecrox]

Thanks for that. It's the most accurate analysis so far, I think.

I agree that Ricoh is less exposed to some of the dangers other camera makers face because it is relatively small and never had a big compact camera business, which the worst hit area of all. Basically, Ricoh wouldn't have to take a lot of market share from Canon or Nikon to give them a headache. Of course other competitors like Sony, Fujifilm and Samsung will concern them just as much.

If Ricoh really wants open war with Canon, they could also challenge them in the consumer printing business. All those consumables must be a very attractive business, and Ricoh has a good start in terms of technology and production. It seems like a logical way to connect two parts of their business but they probably would want to build up their camera business before doing that.

I think there is a strong chance that Nikon will end up merged into another company, but I doubt it would be Ricoh. Nikon talk frequently about their need to diversify, publicly mentioning rather implausible ideas like buying into the medical business. They may be open to or even looking for a merger with a suitable partner. Nikon has the brand, user base and technology, so I think they would be an attractive takeover target, but I doubt Nikon users would have anything to worry about the brand's future.

I don't know much about this, but I guess Nikon could be a real poser for Japan, Inc. - the prospect of one of their most valuable and iconic brands possibly falling into foreign hands or at least under foreign influence might not be welcome. So one wonders what might happen should Nikon have to find a safe haven with another company in the same kind of business. Perhaps this limits the pool of White Knights to other Japanese companies. Who knows.

One thing Canon have which Ricoh don't seem to have nearly so much is experience of running a big, very big consumer operation as distinct from business to business. This is a pretty big strength, at a guess, since the cost and learning curve for any competitor (Ricoh, e.g.) to get near to the same thing must be heavy. You can't just dial up that depth of expertise. Maybe Pentax is also a testbed for that, and not only for cameras. OTOH, I guess it could be that consumer operations are starting to look like millstones. Apple and Sony are eyeing up the automotive industry now ...

[Mistral75]

+ AFAIK , Nikon is a subsidiary of ESSILOR, world's first "vision correction industry" actor...

???

I am afraid they aren't. Nikon belong to the Mitsubishi group (keiretsu).

There is a joint-venture between Nikon and Essilor though, Nikon-Essilor Co., Ltd., dedicated to the development, manufacture, sales, and servicing of ophthalmic lenses in Japan and which is the #2 on the Japanese market of ophthalmic lenses. There is also a joint research centre, Nikon and Essilor International Joint Research Center Co., Ltd., dedicated to research and development in materials, optics and ophthalmics in Japan. But that's all.

[Zygonyx]

OK, sorry for confusion, that's what i heard from.
JV is no mutual capital dependance of the owners indeed.

[bladerunner6]

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........

This is almost certainly one of the best, most thoughtful analysis of where camera makers stand that I have seen on this or any other forum. Bravo👏

With a strong parent, Pentax is in great shape.

As it has been commented, Nikon is hurt in' for certain.

[Cambo]

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.........

Brilliant analysis. You're a very fine business writer. You should have a photo business blog.


Cheers,
Cameron

[monochrome]

+ AFAIK , Nikon is a subsidiary of ESSILOR, world's first "vision correction industry" actor...

Nikon Corporation is a freely-traded public company associated with the Mitsubishi Group of companies, a Japanese keiretsu.

If Ricoh really wants open war with Canon, they could also challenge them in the consumer printing business

Ricoh is making a mjor investment in Multi-Function Printers, having constructed a very large manufacturing facility in China and laying the foundation to establish their brand.

[EDIT:] Mitsubishi cross-ownership already commented.

[RonHendriks1966]

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.

My estimation is that the imaging part of Ricoh is at max 1,2 % of total Ricoh revenue's. So that is a very small part of the company.


To add a different view on your question to......... WHY?

I met these two Japanese Ricoh people at Photokina 2012 in the hall where Leica had its exposition. A nice and magical meeting and we had a talk for like 10 minutes.



On the left is Zenji Miura (President & CEO of Ricoh) and on the right is Shiro Kondo (Chairman of Ricoh).

To give you a great tip for having such surprising encounters in life: walk around with a yellow K-01!

When looking at the carreer of Mr Shiro Kondo:
Ricoh Chairman: Shiro Kondo

Shiro Kondo joined Ricoh in 1973 after graduating from Niigata University with a Bachelor of Science degree in Mechanical Engineering. In July 1999, Mr. Kondo was made Deputy General Manager of the Imaging System Business Group, and in June 2000, he became Senior Vice President. In October 2000, he was named General Manager of the Imaging System Business Group.

Mr. Kondo became Executive Vice President in June 2003 and was also named Managing Director. In October 2004, he was put in charge of the Imaging Engine Solution Development organization and was named General Manager of the MFP Business Group. In June 2005, he became Director, as well as the Corporate Executive Vice President.

In April 2007, Mr. Kondo was promoted to his current positions: Representative Director, President, and Chief Executive Officer of Ricoh Corporation.

I think that next to expand the very small imaging brand of Ricoh, wich was just 0,2 % of Ricoh revenue's and making a profit. I also think that aquiring Pentax and the K-mount is something that was wanted.

Making it a bussiness succes is a different story ofcourse.