Canon Q3 Operating Profit Nearly Halves on Post-Brexit Yen Strength

[Stu_bert]

Okay maybe Brexit has hurt the world economy. (We'll only know that in 20 years) But blaming it entirely for a nearly 50% loss of profit is simply ludicrous.

or you don't understand how safe haven currencies work?

There are many, many things in this world I don't understand. Care to explain?

when there's a disruption in the world people tend to flock to what's called safe haven currencies such as the Yen, and purchase that. Driving the price of the Yen up. when the yen is priced higher, Canon Japan gets less money for each camera or printer they sell to the USA, Europe,etc well anywhere in the world BUT Japan.

so if you by default make around 10-15% profit per widget, it doesn't take much of a currency change for your widgets to make far less profit. a 5% change can easily eat 1/2 to 1/3 of your profits.

Canon estimates that the change of currency caused losses of 1 billion USD to Canon Japan. not exactly small change.

But even with that .. this is Canon overall .. looks like Office took the major hit, ILC's are going strong .. demand is good, sales are the same as last year - it's hard to say this is caused by an ILC problem.

it's always funny to see a report like this .. and everyone starts complaining about a particular camera as THE REASON... canon is a huge company and spreading out even more so after purchasing Toshiba's medical division.

A slightly more in depth explanation on why the Yen is a safe haven currency

http://www.financialsense.com/contributors/matthew-kerkhoff/why-japanese-yen-safe-haven-currency

Comparing smart phones camera abilities to an SLR to me is a pointless exercise. I have and use both as they both fulfill a requirement that I have. But to suggest that Apple, Samsung etc have put everything into their latest models that they could is a fallacy. As Sanj pointed out, the phone market like the camera market is hitting saturation because people can already do so much with their equipment and manufacturers have to balance the cost of development, continual refresh cycles, offering enough for people to upgrade but not too much that they struggle with the next iteration and get spikes in their revenue. Same could be said for Adobe and Lightroom, Photoshop etc, and Intel's last 3 generations of CPU, which on a clock for clock basis never seem to jump much more than 10-20% on Office Apps performance ie general use.

Look at Apple's changes to the iWatch v2 as they recognise that with the current cost & limitations that it isnt going to be the next big thing for a while, so they've changed it to be a health/fitness/sports device and lowered expectations on sales. Market saturation, lack of sufficient innovation and new compelling products coupled with the and inability to grow the less saturated regions is what is hurting Apple.

Sony has to risk more in its features to lure people away. Given the investment of changing camera - everything from chargers and cables, through to lenses and the body. It's significant, and more so if you are a Pro. All the manufacturers know this - they try to make their products sticky enough to make that transition less appealing. So to move you away from your current dSLR, Sony has to offer a compelling product. Nothing new there. But Canon and Nikon don't have to so much - they already have the broadest set of lenses, good support, track record of staying etc. Individuals have to weigh that up of course, and those with less investment with the kit have less stickiness and therefore propensity to move is greater.

I only changed from a iphone 4 to a 6 because it was given to me as a leaving present. The 4 still works fine although the battery isnt as good and the home button doesnt work. I have the Ipad mini 2 and the only thing which makes me want to change it is the storage and the lack of finger recognition, but neither of those are compelling enough to make me change. I still have a 20d modified for IR which works fine, although I will eventually get a 1Ds III modified.

Pay good money, chose the right (quality) manufacturers and the products should last. Heck I have a microwave oven from 25 years ago. Still works fine and does everything I need.

And there's the problem, as the tech reaches a plateau, so the manufacturers try to wring as much out of the tech as they can economically, while their R&D teams try to find the next step-change. Be that Intel, Adobe, Apple, Samsung, Sony or Nikon. The sensible ones diversify as a saturated market will not grow as much until that step-change happens. Hence why Adobe is spending more effort on mobile versions of their products, as there is more opportunity there and less maturity of their products. Desktop versions have reached the same plateau.

And sensible buyers probably skip 1 or 2 generations when they realise the additional cost will not produce a step-change in their output. The iphone 6+ has a great screen in comparison to the 4 and having used it for 18 months, I'd never go back and frequently use the phone rather than the ipad. But the 4 did everything I wanted except for the screen. I still have 1D MK IVs and 1Ds Mk IIIs and a single 1Dx, and whereas the appeal of the new sensor tech is strong, I will still wait to see what Canon do with a refresh of the 5Ds before deciding if I think the 5x range will be better for me than the 1x range (especially if Canon only keep a single model). Multiple accessories are a pain for me when travelling abroad.

Oh and since I live in the UK, waiting till late '17 will also hopefully see some reductions in prices, although I doubt the currency rates will revert to where they were for a long, long time.

 

[sanj]

I hope canon learns to respect their customers. Both my 5d3s were due for upgrade this year. Then canon releases a disappointment and named it 5d4! Come one! You took 4 years to release this $hit?! I don't see ANY reason why I'll get myself a 5d4! I don't care about video. You could spend less time blaming brexit and spend some time on r&d.

Exactly, from me, that's at least $3500 they missed out. I was planning to upgrade from a 5d3 as well, but I don't see the point

Yes. I also know of a lot of people you refuse to upgrade including people who shoot video because the 4k is not good enough. I also did not upgrade but bought 1dx2.

 

[douglaurent]

I just wrote the text below in another forum thread - much weaker sales than in the years before can't all be blamed to a Brexit or the rise of camera phones alone. This is also one of the reasons:

People say that camera sales are massively falling because of smartphone use - but nobody talks about one major difference between smartphones and DSLRs:

- With a current iPhone 7 or Samsung S7, hardly any realistic wish for features and functions is left open. It's very hard to imagine which real essential things the manufacturers should come up with in the future. If you own one of the top smartphones of one of the leading manufacturers, there are no real reasons to complain about the few specs that are better in the competitor's product. You can survive with the functions of the current smartphones for decades, and it feels like as if everything's there.

- With a Canon DSLR that is 5-10x as expensive, you can easily make a realistic future wish list of a few dozen relevant missing points, because those functions are already implemented in lots of other existing products by the competition (many in mirrorless cameras). While the quality of the cameras is great in itself and you can use them for many years to come, a lot of things are limited, and logistics and workflow are not as convenient as they can be. A lot of extras and multiple devices need to be bought to be able to have allround capabilities.

Final result is: A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you. A 2016 Canon camera feels expensive, because you know the company has left out many things and didn't even pretend to try to release the best they can do. That is also the main difference to Sony. An A7RII or A99II feel much more as if it's the best Sony could come up with at the time.

All of which bodes well for future pro/prosumer DSLR/ILC sales (room for improvement to sell you a new model in 2017+...), and poorly for smartphone sales (what more could you need?):/ Remind me again where you thought this argument was taking you?

My theory is still logical.
Canon camera sale outlook: still weak as long as they keep their politics of feature limitation, which doesn't make upgrades necessary.
Smartphone sale outlook: at least still on a stable level, as probably not even 5% of the world population do have one with all modern timeless features.

 

[douglaurent]

Final result is: A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you. A 2016 Canon camera feels expensive, because you know the company has left out many things and didn't even pretend to try to release the best they can do. That is also the main difference to Sony. An A7RII or A99II feel much more as if it's the best Sony could come up with at the time.

Regardless of what you say above, Canon has 50% of ILC market share while Sony is stuck with their ~ 13% market share for many years now and Nikon is losing ~ 5 to 10% of their market shares to Canon.

So, how do YOU explain that?

As much as some here are kellyannconwaying the Canon results, they absolutely doesn't matter because the main facts are:
a) Canon does sell much less than years ago
b) Canon would sell much more, if they released a great mirrorless line already
c) Any Canon sales statistics doesn't help any photographer or filmmaker in the field, who's standing there with limited functions, or packed with twice as much equipment as necessary.

 

[douglaurent]

I just wrote the text below in another forum thread - much weaker sales than in the years before can't all be blamed to a Brexit or the rise of camera phones alone. This is also one of the reasons:

People say that camera sales are massively falling because of smartphone use - but nobody talks about one major difference between smartphones and DSLRs:

- With a current iPhone 7 or Samsung S7, hardly any realistic wish for features and functions is left open. It's very hard to imagine which real essential things the manufacturers should come up with in the future. If you own one of the top smartphones of one of the leading manufacturers, there are no real reasons to complain about the few specs that are better in the competitor's product. You can survive with the functions of the current smartphones for decades, and it feels like as if everything's there.

- With a Canon DSLR that is 5-10x as expensive, you can easily make a realistic future wish list of a few dozen relevant missing points, because those functions are already implemented in lots of other existing products by the competition (many in mirrorless cameras). While the quality of the cameras is great in itself and you can use them for many years to come, a lot of things are limited, and logistics and workflow are not as convenient as they can be. A lot of extras and multiple devices need to be bought to be able to have allround capabilities.

Final result is: A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you. A 2016 Canon camera feels expensive, because you know the company has left out many things and didn't even pretend to try to release the best they can do. That is also the main difference to Sony. An A7RII or A99II feel much more as if it's the best Sony could come up with at the time.

Realistically, smartphones and high end ILC are quite different markets, with smartphone sales sustained by cheap debt and a 'consumable' mentality ("free" on contract, everyday use item, toss it out and get a new contract in 2 years or less) whereas some people seem to expect a DSLR should be perfect and feature complete now, last forever, and cost less than ever. If you take out the cross subsidy from your telco contract, top-end smartphone prices to me seem like a very expensive and poor value for money item if you churn through them every couple of years as most people do. It will be interesting to watch smartphone sales over the next few years to see if what you have said (and I agree with) about phones doing everything they need to sinks in, and people stop spending the ridiculous sums they are now.

Nobody expects Canon or Nikon for lower than ever prices. Consumers ask them not to raise prices by 50-100% in times of zero inflation and interest rates!
Future smartphone sales and smartphone manufacturer politics are also completely irrelevant for a large sensor camera user that is irritated with Canon's offerings today.

 

[douglaurent]

...A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you...

That's your opinion, but certainly not mine. I think smartphones are ridiculously overpriced, especially since they are purposely made to have screens that crack easily and batteries that die as soon as your contract is paid off. I've never had to replace a camera (Canon or otherwise) because it quit working. But, I have replaced any number of smartphones simply because they either broke or stopped working.

My experience has been different. I have lots of family members (especially the older ones) who have been using their phones for many years and refuse to upgrade as it works fine. I personally have sent my Canon for repairs several times and never my phone. This is my experience.

Smartphone repair service is very convenient and cheap these days, I just had a destroyed backcover exchanged within 30 minutes in a shopping mall. The people who upgrade their smartphones every year are the ones who can afford it and for lifestyle reasons, and know it's worth the money because it's heavily used - not because it's necessary to upgrade them.

 

[IglooEater]

Okay maybe Brexit has hurt the world economy. (We'll only know that in 20 years) But blaming it entirely for a nearly 50% loss of profit is simply ludicrous.

or you don't understand how safe haven currencies work?

There are many, many things in this world I don't understand. Care to explain?

when there's a disruption in the world people tend to flock to what's called safe haven currencies such as the Yen, and purchase that. Driving the price of the Yen up. when the yen is priced higher, Canon Japan gets less money for each camera or printer they sell to the USA, Europe,etc well anywhere in the world BUT Japan.

so if you by default make around 10-15% profit per widget, it doesn't take much of a currency change for your widgets to make far less profit. a 5% change can easily eat 1/2 to 1/3 of your profits.

Canon estimates that the change of currency caused losses of 1 billion USD to Canon Japan. not exactly small change.

But even with that .. this is Canon overall .. looks like Office took the major hit, ILC's are going strong .. demand is good, sales are the same as last year - it's hard to say this is caused by an ILC problem.

it's always funny to see a report like this .. and everyone starts complaining about a particular camera as THE REASON... canon is a huge company and spreading out even more so after purchasing Toshiba's medical division.

Thanks! Always good to learn. The only place I disagree is your 10-15% profit. I don't know Canon's finances, but I'd be surprised if it's that high.

 

[ritholtz]

Market saturation is a reality. And happens regularly. Then a company comes along and brings along a revolutionary product (5d2, Iphone, iMac etc.) and sales hit the roof but the saturation cycle starts again.

Lets see if it is possible for a company to launch a camera which is innovative enough for many to want to sell off their current cameras and buy the new product.

I am expecting a phone with 1" sensor. Instead we are getting multiple tiny sensors.

 

[Valvebounce]

Hi Sanj.
I'm sorry, from your post I'm trying to work out how Canon lost out, instead of spending £3600 on a 5DIV you spent £5200 on a 1DxII.
Seems Canon's ploy worked, they got 30% more of your money than you originally intended to spend!
Have a good day and enjoy that 1DII sir.

Cheers, Graham.

Yes. I also know of a lot of people you refuse to upgrade including people who shoot video because the 4k is not good enough. I also did not upgrade but bought 1dx2.

 

[Valvebounce]

Hi Folks.
It seems us Brits are responsible people, it doesn't matter what goes wrong we are responsible.

Cheers, Graham.
Ps I can't find a smiley with a tin hat or nomex suit!

 

[neuroanatomist]

Final result is: A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you. A 2016 Canon camera feels expensive, because you know the company has left out many things and didn't even pretend to try to release the best they can do. That is also the main difference to Sony. An A7RII or A99II feel much more as if it's the best Sony could come up with at the time.

All of which bodes well for future pro/prosumer DSLR/ILC sales (room for improvement to sell you a new model in 2017+...), and poorly for smartphone sales (what more could you need?):/ Remind me again where you thought this argument was taking you?

My theory is still logical.
Canon camera sale outlook: still weak as long as they keep their politics of feature limitation, which doesn't make upgrades necessary.
Smartphone sale outlook: at least still on a stable level, as probably not even 5% of the world population do have one with all modern timeless features.

As logical as pigs flying over snowbanks in hell.

Canon's product differentiation strategy has been consistent, 'not putting their best in every model' as you put it. 5DII updated the sensor and nothing else, 6D AF not even as good as the 60D in most ways, etc. They have been and remain the market leader, even as Sony throws everything including the kitchen sink into some of their models. Tell us again how that's affected their market share?

dSLRs have been around much longer than smartphones, the markets are at different points but already the same trend is evident – double-digit smartphone growth is over.

 

[Woody]

As much as some here are kellyannconwaying the Canon results, they absolutely doesn't matter because the main facts are:
a) Canon does sell much less than years ago

True... same for all other camera manufacturers out there.

b) Canon would sell much more, if they released a great mirrorless line already

Nope, they will a little more, but not that much more. The size, weight and multifunctional capability of camera handphones are hard to beat.

c) Any Canon sales statistics doesn't help any photographer or filmmaker in the field, who's standing there with limited functions, or packed with twice as much equipment as necessary.

Then, by all means, go find another camera that suits you better. Canon will continue to sell to many other buyers out there while you carry on whining.

 

[neuroanatomist]

b) Canon would sell much more, if they released a great mirrorless line already

OMG, you sould tell Canon this immediately!! They're clearly suffering horribly without your expert knowledge and advice.

BTW, who's definition of 'a great mirrorless line' should we be using? Yours, I suppose. :

c) Any Canon sales statistics doesn't help any photographer or filmmaker in the field, who's standing there with limited functions, or packed with twice as much equipment as necessary.

True, but you're the one making claims about what Canon should and should not do...so ignoring the sales data makes you look disingenuous at best, more likely just foolish.

 

[unfocused]

Final result is: A 2016 smartphone just feels good and not like an expensive thing...

All of which bodes well for future pro/prosumer DSLR/ILC sales (room for improvement to sell you a new model in 2017+...), and poorly for smartphone sales (what more could you need?):/ Remind me again where you thought this argument was taking you?

My theory is still logical...

As logical as pigs flying over snowbanks in hell.

Strained industry comparisons are entertaining, but never accurate.

The young, or those who have short, selective memories, misread the camera market. DSLRs, Mirrorless, etc., all constitute a small niche market that appeals to enthusiasts and professionals. The digital revolution temporarily changed that as millions of customers suddenly could get a cheap, digital camera that they could use to take and share pictures without having to send their film to a lab or build an entire darkroom.

Point and shoot sales exploded, as did starter DSLRs. This attracted huge competition as the market grew. But, the smartphone killed off the point and shoot market and most buyers of entry-level DSLRs see no need to replace their cameras once a certain level of technological sophistication had been reached.

Thus, the T3i became the most popular DSLR ever and there are no doubt many buyers who will still be using their T3is a decade from now, only replacing them if they have a desire for greater connectivity and easier wireless sharing of photos. Probably even more will let it sit on a shelf and instead substitute their smart phones.

Canon and Nikon take the long view. They knew that the boom times of the last decade would not last. (They did, however, hugely misread the impact of cell phones, as did every other camera manufacturer, but that's another essay).

In the face of the changing market, both companies are adapting new strategies. They are trying to squeeze more money out of the lucrative enthusiast market, which is better insulated from economic downturns and less price sensitive than either the professional or the entry level markets.

The good news is that both Canon and Nikon have seen this all before and most of their history has been during periods of stable market demand, just as we are entering today.

It is just plain delusional to suggest that the things some people on this forum would like to see in a camera has any impact whatsoever on worldwide trends in the market and in the economy that are driving the overall revenues of Canon, Nikon and Sony.

It's as accurate as suggesting that because you happen to like popcorn with extra butter, that the entire movie industry's success is dependent on whether or not theaters offer popcorn with extra butter.

 

[ritholtz]

Final result is: A 2016 smartphone just feels good and not like an expensive thing to buy for what it gives you. A 2016 Canon camera feels expensive, because you know the company has left out many things and didn't even pretend to try to release the best they can do. That is also the main difference to Sony. An A7RII or A99II feel much more as if it's the best Sony could come up with at the time.

Regardless of what you say above, Canon has 50% of ILC market share while Sony is stuck with their ~ 13% market share for many years now and Nikon is losing ~ 5 to 10% of their market shares to Canon.

So, how do YOU explain that?

As much as some here are kellyannconwaying the Canon results, they absolutely doesn't matter because the main facts are:
a) Canon does sell much less than years ago
b) Canon would sell much more, if they released a great mirrorless line already
c) Any Canon sales statistics doesn't help any photographer or filmmaker in the field, who's standing there with limited functions, or packed with twice as much equipment as necessary.

Rumor is they are selling lot of mirrorless cameras this year. Canon has two M cameras (M3 and M10). Not sure if they are considered as great cameras by lot of folks here. But there are people buying them. We have to wait for numbers to confirm this story though.

 

[rrcphoto]

b) Canon would sell much more, if they released a great mirrorless line already

enthusiasts never dominate the camera market. consumers still do.

canon has been selling a ton of M10's and M3's. there's little proof that a higher end "great" mirrorless line would sell well.

Consider that Sony is still selling less ILC's via marketshare than they did when they simply had DSLR's.

So there's little actual logic in your words, outside of assuming that your own needs drive the market. They don't.

 

[douglaurent]

Some do describe the Sony A7 mirrorless line as pretty irrelevant in terms of sales.
But wherever you look - if it's magazine ads and reports,blogs and forums, exhibitions, stores - the series seems to be extremely present and much better received than all the latest Canon cameras.

I know from store owners that Canon did never care about Sony products, but since 2015 they are worried.
In a few years Canon will have products with exactly all functions the A7 series is having today.
Does it mean Canon is stupid then because they care about this oh so irrelevant market?

 

[douglaurent]

Currently there will be little common ground between the two types of Canon users that do write in this thread, the satisfied ones (1) and the complainers (2):

1) If you just have replaced your 2008 phone with a 2012 smartphone and don't need any more features, of course you are happy with it, and will the next 4 years.

2) If you are always up to date and use the latest technology, own a 2016 smartphone and know which features all 2016 smartphones can have, you are disappointed when suddenly you get a 2012 smartphone to use for the next 4 years.

The 5D4, 1DX2 and other current Canon cameras are pretty much that 2012 smartphone. The Canon 1DC has been presented at Photokina in autumn 2012, and not that much has been added and improved since then. Some things even got worse (high ISO noise) or have not been implemented anymore.

 

[rrcphoto]

Some do describe the Sony A7 mirrorless line as pretty irrelevant in terms of sales.
But wherever you look - if it's magazine ads and reports,blogs and forums, exhibitions, stores - the series seems to be extremely present and much better received than all the latest Canon cameras.

which is irrelevant. In actuality, Sony focusing on selling less per year, but at a higher margin will hurt them in the long run.

Sony stumbled by dropping like a hot potato any momentum the A mount built up, they still haven't reclaimed that. In actuality, smaller cameras are not used nor wanted by obviously the vast majority of photographers - or everyone would have switched by now.

 

[rrcphoto]

Currently there will be little common ground between the two types of Canon users that do write in this thread, the satisfied ones (1) and the complainers (2)

perhaps stop complaining, find a camera you like and move the .. on.

on one's forcing you to comment here. what's weird is people that whine and complain, when there is so much choice in the camera industry.

not to mention that none of this has anything to do with these forum thread anyways.. go complain on one of the other many threads you already are.