Sunday, October 21, 2007

VIDI: Is Canon invincible?

I was reading this article on Canon at SeekingAlpha.com (a stock site, not a Minolta Mount Alpha site), and I was trying to respond with a comment to the extremely bullish article written by the author. Unfortunately there were some technical difficulties and I wasn't able to publish the post there, so instead of waiting for the technical issues to be resolved, I am posting the comment here as VIDI, our Sunday faux-editorial.

Remember, the post below is in response to this article. Please read it first in order to put the comments below in context! Here is my reply to that article:

I have to offer a rather contrarian view to this however. These are only my opinions and trends, it doesn't mean the Canon train will be derailed, just that it's not a bed of roses. Why?

1) For the first time in many years Canon lost the lead in the Japanese DSLR market. A year ago most people thought that was impossible, but Nikon outsold Canon in H1 in Japan. While Japan is not the world, the Japanese market is influential both in terms of trends and because it's the home market of most of these companies.

2) Their flagship 1D Mark III has been plagued with issues a $5000 camera should not have, while Nikon's upcoming flagship the D3 has been generating more buzz than any Nikon in recent years. While very few people buy these, there is siginificant trickle down effert from having a top dog camera.

3) They lost the press release war this time around. This rarely happens. Usually companies make their new announcements and trumpet their products, then Canon makes their announcements and gets them all quiet. This hasn't happened this year. Nikon won the press release with the D3 and D300 duo.

4) Canon has been notorious for being able to consistently sell a camera model throught its product lifecycle. This time around the prices are not holding up. For example they were forced to crash the price of the S5 IS in order to compete.

5) Unable to take over the "fun zoom" segment. Usually Canon is not the first to jump on a new trend, but once they do, they take over. This is partially why they have pretty spreadsheets, they make very business savvy decisions. However, they have not been able to take over the new "fun zoom" subsegment of the superzooms. The TX1 was a failure by Canon standards, and while the SX100IS is doing better, it's still not there compared to the Panasonic TZ3.

6) A lot of A-series cameras under $200, and a couple hugging the $100 price. This increases unit sales and market share, but it's not as pretty profit wise.

Again, these are just some trends to watch, all of these are correctable, and it does suggest that the Canon train is derailed. But it shows they are neither invincible nor guaranteed to be #1 for the rest of time. That was not the case a year ago :)

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