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Old Aug 18, 2009, 10:41 AM   #1
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An interesting interview on the Imaging Insider Web site in which Hoya's CEO admits their cameras unit - i.e. Pentax - will require a partner for long-term survival. Let the speculation begin.

http://www.imaginginsider.com/?p=101329
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Old Aug 18, 2009, 1:56 PM   #2
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Thanks for this link Biro. I think there is less to speculate and more to forecast!

My take is that Pentax's digital cameras do not consitute a priority within Hoya. I interpreted the CEO's comments to mean that it cannot stand on it's own and unless they have a partner, they will either sell or perhaps (the unthinkable) close the operation. Comments such as "our digital camera business is not exactly a big operation. . ." tells me that unless it is adding to the profitability of Hoya, there is no business merit in continuing to feed it. In fact, I read the CEO's message in their annual report and there is a clear reference to the future value of Pentax's medical based imaging technologies as the motivation for the merger. It appears that the digital camera business was part of the portfolio that came with the merger. Equally troubling is the comment that from a volume stand point, Pentax sold less than 1/10th the volume of Canon in 2008. That's a long climb back to even close to the top!

Pentax lost $122 million last year. The unit aims to get profitable through cost cutting. Good short term tactic, but unless you are generating sales revenues, it is not sustainable. I work in the automotive industry and can vouch for the contribution of cost cutting vs. sales revenues to the bottom line profitability.

Economics 101 says that if you not generating revenue, you cannot stay viable for long. Add to that the cost cutting (reduced budget for R&D, marketing etc), plus this unfavorable economic climate...it is not a receipe for success.

I hope I'm wrong, but ...that's the view from my perch.

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Old Aug 18, 2009, 2:45 PM   #3
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Jelpee,

I tend to agree with your interpretation. I also agree it's a shame for photographers. I like a lot of what the Pentax camera system is about even though it isn't the right fit for me. I think they've done an extremely good job over the years of delivering products their core market wants. But, the camera business is very competitive. It's got to take lots of R&D $$ to come out with new cameras, new dslrs and new lenses every year. Once a company gets absorbed into a larger corporation those corporations care only about $$$. Business units not deemed part of the 'core competancy' and without large profit margins often get sacrificed.

What makes things more difficult is the DSLR market appears to be turning into the digicam market - instead of a clear 3-4 body offering, makers now have overlapping models further segmenting the markets (which has to add more cost to marketing and management). Hopefully, Hoya can find a partner or buyer for Pentax. But I'm not familiar enough with the industry to know what the financial projections are. My gut tells me we're in line for a contraction of companies though.
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Old Aug 18, 2009, 5:18 PM   #4
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What makes things more difficult is the DSLR market appears to be turning into the digicam market - instead of a clear 3-4 body offering, makers now have overlapping models further segmenting the markets (which has to add more cost to marketing and management). Hopefully, Hoya can find a partner or buyer for Pentax. But I'm not familiar enough with the industry to know what the financial projections are. My gut tells me we're in line for a contraction of companies though.
Boy, are you right about the DSLR market turning into the digicam market. On one hand, I hate it as a DSLR user. But, on the other hand, the SLR maket is very mature in terms of hard-core users and photo professionals. Camera makers obviously see growth in going after people who now use digicams - and are going after them in terms those people can understand.

It seems that every major industry on this planet will be down to three major players before long. Many believe Samsung is the perfect fit for Pentax and I don't disagree. But Samsung's latest move to introduce a mirrorless, APS-C sensor camera system makes it appear they are ready to move off on their own. A pity if that's true. Both companies have plenty to offer each other.

The good news is that the Hoya CEO plans on reaching break-even in 2010. It doesn't look like they're panicking. He talks about long-term survivial. I'm assuming it's the 3-to-5 year time frame that we're talking about. A lot can happen in 3-to-5 years.
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Old Aug 18, 2009, 6:06 PM   #5
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Thanks for this link Biro. I think there is less to speculate and more to forecast!

My take is that Pentax's digital cameras do not consitute a priority within Hoya. I interpreted the CEO's comments to mean that it cannot stand on it's own and unless they have a partner, they will either sell or perhaps (the unthinkable) close the operation. Comments such as "our digital camera business is not exactly a big operation. . ." tells me that unless it is adding to the profitability of Hoya, there is no business merit in continuing to feed it. In fact, I read the CEO's message in their annual report and there is a clear reference to the future value of Pentax's medical based imaging technologies as the motivation for the merger. It appears that the digital camera business was part of the portfolio that came with the merger. Equally troubling is the comment that from a volume stand point, Pentax sold less than 1/10th the volume of Canon in 2008. That's a long climb back to even close to the top!

Pentax lost $122 million last year. The unit aims to get profitable through cost cutting. Good short term tactic, but unless you are generating sales revenues, it is not sustainable. I work in the automotive industry and can vouch for the contribution of cost cutting vs. sales revenues to the bottom line profitability.

Economics 101 says that if you not generating revenue, you cannot stay viable for long. Add to that the cost cutting (reduced budget for R&D, marketing etc), plus this unfavorable economic climate...it is not a receipe for success.

I hope I'm wrong, but ...that's the view from my perch.
Hi jelpee,

I'm a glass half-full guy. I guess that you can look at the statement and current economic climate as not so encouraging, but I tend to look at it from a different perspective. . . The cost cutting continues and restructuring costs have now been accounted for. The plan is in place to make Pentax profitable in the current fiscal year. The projected sales revenues don't look overly optimistic, so this goal of profitability looks attainable.

There's talk of new Samsung branded lenses -- AF 85/1.4, 60/2(?)macro, and 300/2.8. Might be using Pentax designs for the first and last, maybe new designs of their own (or their NX lens line designer's). I'd like to see a DO design like Canon has for the big fast glass, making it significantly smaller and lighter, but I don't know if they can even get access to the technology, and I'm not holding my breath. Now that I've got my bargain FA*300/2.8, I doubt that I'd pop for one anyway. . .

There seem to be some lens design problems with the close register distances of the Micro 4/3, so this should also be the case for the NX. I think that Samsung would be wise to not put all their eggs in that basket, so further independent development of DSLRs (probably both APS-C and FF) is likely, they also have a stake in the K-mount, and they have very deep pockets (deeper than any other DSLR mfg, I would think).

Samsung has quickly made great strides in developing hi grade DSLR sensors. They may not yet be the leading edge in this technology, but they're close enough to be competitive, and this can change at any time given sufficient effort and money.

Samsung, like Sony and Panasonic before them, rose quickly from a second or third tier electronics mfg to a world leader. If they put sufficient effort to their DSLR development, there's nothing really stopping them from doing the same in this market. I doubt that Hoya would object to adopting a new Samsung designed camera and rebranding it to Pentax if it were worthy and would help the bottom line. If it meant that Pentax only had to design and make the body casing, tweak the processing engine and user interface, then squeezing the components into a different body, that would mean that comparitively little R&D expense would be expended by Pentax for a new body release. If they would not, or could not, I wouldn't hesitate to buy a Samsung branded body and continue on using my K-mount glass.

The K-7 performs well enough that I shouldn't be pushing it's limits too hard for quite a while, and as the cameras get better, I get older and less physically capable of actually utilizing further performance improvements to their best effect.

I'm pretty much not concerned with Pentax's long-term future. Other than buying their products, I can't do much about it anyway. I think that anyone who's heavily invested in the system can pretty much rest assured that they won't be left in the lurch, even if Pentax as we know it goes away. I hope that that doesn't happen, but from a practical standpoint, I'll deal regardless. . .

Scott
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Old Aug 18, 2009, 6:44 PM   #6
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Originally Posted by Biro View Post
Boy, are you right about the DSLR market turning into the digicam market. On one hand, I hate it as a DSLR user. But, on the other hand, the SLR maket is very mature in terms of hard-core users and photo professionals. Camera makers obviously see growth in going after people who now use digicams - and are going after them in terms those people can understand.

It seems that every major industry on this planet will be down to three major players before long. Many believe Samsung is the perfect fit for Pentax and I don't disagree. But Samsung's latest move to introduce a mirrorless, APS-C sensor camera system makes it appear they are ready to move off on their own. A pity if that's true. Both companies have plenty to offer each other.

The good news is that the Hoya CEO plans on reaching break-even in 2010. It doesn't look like they're panicking. He talks about long-term survivial. I'm assuming it's the 3-to-5 year time frame that we're talking about. A lot can happen in 3-to-5 years.
Hi Biro,

I pretty much agree with you here. I think that the EVIL class cams (M4/3 and NX) will be the logical upgrade path for a great number of the multitude of P&S cam users, but limitations to those systems will still maintain the DSLR as the most versatile for the very advanced photographer, especially for some specialties where EVFs will probably never be able to keep up.

I, for some reason, can't imagine hanging a pocketable sized Evil body on one of my 300/2.8s, and other that DO type designs, there's not a whole lot more miniaturization that can be done for APS-C or 135 frame optics. . . but technology advances, and who knows what's in store for us in the future.

Only ten years ago, when a 2MP Oly P&S commanded over $500USD, who woulda thought that we'd be able to buy a 14.6MP DSLR body with useable ISO 1600 and more features than most photographers would be hard pressed to master in a lifetime for a couple of hundred $$ more. . . or that a TB of HDD storage could be gotten for under $100. . .

Digital photography has come a very long way in a very short time -- and things don't seem to be slowing down all that much. I think there will be a whole lot of changes coming, and I'm just hoping that I can stick around long enough to take advantage of some of it. . .

Scott
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Old Aug 18, 2009, 10:50 PM   #7
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Doesn't surprise me in the least. Pentax cameras have been a half-heartedly supported and unwanted stepchild from the very inception of this "partnership" when it was obvious from the start that all Hoya wanted was the medical imaging business. Hoya's "marketing" strategy of withdrawing from direct retail sales because of slow sales only makes sales slower and makes the gloom and doom a self-fulfilling prophecy. I am glad I have a fall-back system, but it is sad, because I like Pentax much better. Pentax deserves a better fate. All we can hope for is that a White Knight appears for Pentax like Sony did for Minolta.
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Old Aug 18, 2009, 11:52 PM   #8
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The fate of Pentax has been a concern for a few years. I've had Pentax SLR's and DSLR's since '68.

I'm not sure which way things will go, as others have said I would be sad to see Pentax disappear from the scene, especially considering that I have put a lot of money into buying Pentax equipment over the past couple of years.

I have hoped for a few years that Samsung would buy Pentax and get involved in R + D and aggressive marketing of the Pentax DSLRs'. Maybe this is just a pipe dream...there has been some joint ventures, but how far it will go is anybody's guess.

The recession has certainly had a negative effect on many companies that we once felt were invulnerable. Look at GM, Chrysler... of the tumbling profits and fast rising deficits that seem to plague pretty well all companies, including well established firms like Toyota and Honda.

I've read lately that Canon apparently has suffered losses in this 2009 quarter somewhere in the 70 odd %...the only profitable area, right now for Canon is actually the DSLR's...the main stuff like copiers, etc...have been affected greatly by the recession.

Sony recently laid off 10,000 or so employees..

The list goes on and on. It's hard to know what to think...who will remain in business...who won't...who will 'merge'...read being taken over...

The business world is certainly not stable.

The fact that Pentax sells less then 10% of Canon is worrisome. Canon is the absolute giant in camera-dom...Nikon is a strong # 2.

Most of the cameras (DSLR) that I see when I'm out and about are overwhelmingly Canon..then Nikon...then a mix of Pentax, Sony, Olympus.

I don't think it's healthy to have one make so absolutely dominate the market...Canon. But I don't see that changing.

I have a sinking feeling that there could be a cull in the camera DSLR marketplace.

But it could be Olympus, Pentax, Sony...or maybe a couple of them. Or it could be Canon if they don't pull out of this slump...selling DSLR's so successfully is great, but the main part of their business...copier, etc... is suffering.

Nikon I believe is pretty well a camera company...so they live or die by their one product cameras and lenses.

That's a lot of eggs in one basket.

Who knows what will happen, except to say that the DSLR market, like the car market, has too many competitors in a shrinking market.

Last edited by lesmore49; Aug 19, 2009 at 12:01 AM.
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Old Aug 19, 2009, 12:08 AM   #9
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The natural fit is Samsung.

After all, the Samsung GX-10 is a rebadged Pentax K10D, while the GX-20 is a K20D.

Samsung is pushing its photographic line, so they shouldn't be afraid of taking the Pentax name.
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Old Aug 19, 2009, 12:13 AM   #10
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The natural fit is Samsung.

After all, the Samsung GX-10 is a rebadged Pentax K10D, while the GX-20 is a K20D.

Samsung is pushing its photographic line, so they shouldn't be afraid of taking the Pentax name.
I don't know, but is there, or will there be, a re-badged Pentax K7 with a Samsung badge ?
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