Nikkei reports: Panasonic might do restructure the LUMIX business

Nikkei has posted an interesting “rumor” about Panasonic plans with the Lumix camera brand.

  1. Because of the difficult environment Panasonic plans to do a “structural reform” of the business.
  2. Nikkei writes that this could end in a “collaboration with other companies“.

Panasonic also told at Sankeibiz that their focus is now on attracting video customers. This is a market that is growing and that’s where they will focus their product development.

What I know: I have been told that in NO WAY Panasonic plans to do what Olympus did: It means they will not sell their Imaging Business.

a bit of everything…

Sony A7S III vs Panasonic GH5s: Low Light & Dynamic Range Battle

Today Gold Box deals at Amazon US, BHphoto, eBay, Amazon.de, Amazon.co.uk, Amazon.fr, Amazon.it, Amazon.es.
2X Anamorphic Lens Combo for MFT (Stronz Vanderploeg)
Panasonic S5 vs GH5: which Lumix is best for video, vlogging and filmmaking? (DigitalCameraWorld).
How to Use Sharpening and Noise Reduction in Lightroom (Explora).
OM-D E-M1 Mark II Tutorial | Best overview with the Live Super Control Panel (Olympus Europe).

Plenty of news on the facebook OMD group, Panasonic FF and the GH5 group.

JIP press text translated by Mistral

Our long time reader Mistral took the effort to translate the JIP press text in English:

Olympus: Conditions necessary for the revival of the camera business
Will the acquisition of JIP bring back the “VAIO Revival”?

Olympus announced in June that it would be withdrawing from the digital camera business. From now on, the “Olympus” brand will be maintained under JIP for the time being, and maintenance of sold products will continue.

Olympus is withdrawing from the imaging business, including digital cameras, which had been in the red. The business is being acquired by Japan Industrial Partners (JIP), an investment fund that is engaged in corporate revitalization. The amount of the acquisition has not yet been decided, but a final contract will be signed by the end of September and the acquisition will be completed by the end of this year.

Why take over the struggling digital camera market, especially the imaging business of Olympus, which is suffering from losses? Contrary to these questions in the industry, Shinichi Inagaki, managing director of JIP, who is in charge of this acquisition, is confident in the revival of Olympus’ digital cameras.

Mr. Inagaki said, “In the past 30 investments we have made, we have never had a case of bankruptcy. Some in the industry may ask why invest in a struggling imaging business. But I think it has strengths that we haven’t realized because the world thinks so,” he asserts.

Leveraging VAIO’s experience

This confidence is underpinned by the success of the VAIO PC business, which was once acquired from Sony. The company has also launched a contract manufacturing services (EMS) business for robots and other products to expand its core business.

Mr. Inagaki joined VAIO Corporation as head of investment. The key to success, according to Inagaki, was to “focus on unique features and technologies,” and in the case of VAIO, Sony was not able to devote sufficient resources to this business.

Inagaki explains, “In the case of VAIO, Sony was not able to devote sufficient resources to its core business. By shifting the focus from the consumer electronics market to the business market, the company was able to narrow down its sales channels and scale of operations to make the most of the characteristics of VAIO. Olympus plans to make use of this experience in the revitalization of its digital camera business. The Olympus brand will be maintained for the time being, and maintenance of sold products will continue.

Mr. Inagaki said that, as in the case of VAIO, Olympus’s digital camera business, “The problem is that the company could not allocate enough resources to individual businesses. Olympus has had a policy of focusing on medical equipment business, such as endoscopes, as its core business, and has not made sufficient strategic investments in its imaging business, including digital cameras.

Therefore, Mr. Inagaki said, “we will review the key assets of the imaging business, which were not visible within Olympus, and determine in which market these assets can be used”, and then he expressed confidence that “I feel from experience that the strength will come alive even in the shrinking digital camera market if we can change the scale and structure to suit the market and challenge it easily”.

So what are the key features of Olympus’ digital cameras? Mr. Inagaki says, “Small size, light weight, high performance image stabilization, etc., but the technology behind it is a sensor called Micro Four Thirds”.

Micro four thirds is a medium-sized sensor developed by Olympus and Panasonic that is used in mirrorless cameras. Generally, full-size sensors are used for professional and high-amateur use, but their small size has been used for small and lightweight models.

JIP expects that there are a certain number of markets in Japan and overseas where the characteristics of Micro Four Thirds are highly regarded, and that the company will be able to establish a solid business foundation by digging into these markets where its core users are located.

Aiming to become profitable in a sustainable manner

At the same time, it will be essential to identify promising new markets where they can take advantage of these strong technologies. From a medium- to long-term perspective, the company is looking at a variety of markets, from consumer products specializing in video to surveillance cameras and other business applications. It is necessary to find the optimal market by repeatedly challenging beyond the current Olympus camera line-up.

We are also exploring sales channels and production. However, we do not intend to pull out of overseas markets like VAIO did, and it will continue to sell its cameras in Europe and other major markets. Inagaki says, “We have no plans to go fabless” and will keep the main plant in Vietnam, although we are still discussing the production system.

Although the company will carry out structural reforms suited to the size of a medium-sized company, it will not simply restructure or sell off plants, but will aim to return the business to profitability in the first year. After that, the company will continue to seek a path to revitalization under JIP, rather than selling off its operations to outside firms.

This is not the first time that Olympus has sold a business to JIP; the company sold its mobile phone sales agency ITX in 2012. Since that time, the company has had regular discussions about other businesses. The question of whether or not to outsource the imaging business came up, and from the beginning of 2012, the company began to seriously consider selling it.

“We knew that the company had its own unique characteristics and technology, and that top management, including Olympus President Yasuo Takeuchi, wanted to continue the business, and that the people on the ground were enthusiastic about the technology. That’s why we decided to acquire the company,” said Inagaki.

Securing human resources is the key to the future

Mid-level Olympus employees in the imaging business, which includes digital cameras, also have a ray of hope that the parent company will change. They are hoping that, after the carve-out, they will be able to allocate sufficient resources under JIP. On the other hand, it has not been decided whether all the personnel in the imaging business will be transferred.

For example, Hiroyuki Sasa, former president of Olympus, used to say, “The technology of the imaging business can be used for our mainstay endoscope technology”. In fact, it is reported that Olympus transferred personnel from the imaging business to other divisions, such as the administrative department at headquarters several years ago. The purpose of this move was not only to improve the loss-making nature of the imaging business, but also to transfer the know-how of the imaging business to the medical equipment business.

In other words, the imaging business is an important part of Olympus’ medical equipment business. In fact, JIP is also concerned that it will not be able to acquire excellent human resources along with the acquisition. “One of the problems with carve-outs from large companies is that R&D personnel do not follow the carve-out destination. We are negotiating with Olympus on this matter,” said Mr. Inagaki.

On the other hand, an analyst familiar with the digital camera industry is sceptical about the carve-out. “Similar to VAIO, sales of 20 billion yen and operating profit of 700-800 million yen can be achieved by cutting costs even if it”s not JPI,”. He added: “The problem is expanding business and entering new fields. The digital camera market can only survive with products for professionals and high amateurs. In this environment, it is unlikely that professional and amateur photographers will actively purchase micro four thirds cameras. In addition, if they cut costs to achieve the same level of performance as VAIO, they won’t be able to maintain the production scale needed for surveillance cameras and other products for business use” he said.

In fact, some believe that Panasonic, which has adopted the Micro Four Thirds format, has failed to enough differentiate itself from smartphones and has therefore begun to focus on full-size cameras. Although it may be possible to break the ties of large companies, it is extremely difficult to grow the imaging business of Olympus into a business that can grow its core activities and achieve profit growth every year like VAIO.

Will JIP’s carve-out of the Olympus imaging business repeat the success of VAIO? All eyes will be on JIP’s skills.