With all the hubbub about full-frame versus APS-C sensor sizes and noise versus detail, it sure seems like Nikon and Canon are two companies headed in opposite directions. The same appears to be true on the financial side of things:
When one company's entire operating profit is a tenth of the average quarterly profit of the other, it would seem clear that the two companies in question have very different approaches to doing business.
If you look at some of the numbers and rationalizations, you'll see in both stories that the high end SLR segment, which is what we primarily discuss here on FM, is going strong for both companies. Whatever decline from profit expectation Canon is experiencing is explained better by falling prices in the low-end camera segment, and the increase in the cost of plastics as driven by record highs in crude oil prices. Canon is a huge consumer of plastics for their copiers, one of which consumes more material than a couple of hundred digital cameras.
Canon's dSLR strategy is hardly to blame for increased costs in materials, since it is clearly reaping substantial profits in that arena, as is Nikon. I applaud Nikon's focus on steering people into the high end, high-profit segment, much as Apple does. Even so, Nikon's quadrupling of profit, while good for system adherents and the continuity of the system, doesn't really mean much in terms of the success of its dSLR strategy compared to Canon. Clearly, Canon is not suffering in the dSLR segment either.
While NIkon's quadrupling of profit to $124 million represents a significant increase, they'll have to pull off that miracle a few more times before they can approach the approx $1 billion operating profit of Canon in any given quarter... and those are the downgraded numbers. I suppose that Canon could also pull off the reverse miracle a few more times, but as of now, neither company is losing money.
lordarka wrote:
While NIkon's quadrupling of profit to $124 million represents a significant increase, they'll have to pull off that miracle a few more times before they can approach the approx $1 billion operating profit of Canon in any given quarter...
Arka C.
... or start selling copiers...
That's one big advantage Canon has - they can milk the profits of their copier sales, which probably dwarf their camera sales, to pay for camera R&D.
The down side to buying your camera from a copier company like Canon, is that you have photocopier technicians trying to repair your expensive DSLR every time it fails.
Seb D wrote:
I might be wrong, but is Nikon's parent company not Mitsubishi?
Well, yes and no...
Nikon was one of many companies that started under the Mitsubishi brand... they were "spun off" shortly after WWII.
They are still a part of the Mitsubishi Group, but my understanding is this is a very loose association of former Mitsubishi companies, many of them still share the Mitsubishi name. Nikon (or the Nikon Group) is an entirely stand alone entity.
My understanding is, the Mitsubishi Group's main concern is protecting the Mitsubishi Brand...
At least, that is my understanding... maybe someone else here can add some additional information.
That's one big advantage Canon has - they can milk the profits of their copier sales, which probably dwarf their camera sales, to pay for camera R&D.
The down side to buying your camera from a copier company like Canon, is that you have photocopier technicians trying to repair your expensive DSLR every time it fails.
Actually, based on the articles you posted, it appears that the current revenue stream has been propped up by strong dSLR sales, and that the less-than-stellar performance has been in large part due to the fact that the plastics used in the copiers has increased in price, hence pinching their margins in that area. Looks like dSLR for both companies is doing very very well.
Further, given the complex electronics that dominate modern dSLR, I'm not sure that copier techs are too far out of their element fixing dSLRs.
lordarka wrote:
Further, given the complex electronics that dominate modern dSLR, I'm not sure that copier techs are too far out of their element fixing dSLRs.
This probably explains their aproach to problem-solving too - keep replacing parts at random, until the problem goes away...
I`m willing to give Canon their due credit for pulling this one off.
Not exactly my cup of tea but others will think differently .
To be first with a FF dslr for only $3,295.00 is no small accomplishment assumming it lives up to the specs.`s and performs decently.
John
molson wrote:
The down side to buying your camera from a copier company like Canon, is that you have photocopier technicians trying to repair your expensive DSLR every time it fails.
a uselessly untrue comment. thank you.
and the downside to having a Nikon is....if you pixelpeek your D2X image at 1200%, you'll see nothing but this:
maybe when your D2X needs sensor work, molson, you can bring along your Walkman collection for the Factory Authorized Service people because hey, "It's a Sony" all around, right?
molson wrote:
This probably explains their aproach to problem-solving too - keep replacing parts at random, until the problem goes away...
Actually that's not a bad idea --if you equate the cost per hour of the technician.
Say it takes 30 Mins to replace every replaceable part and 4 hours to actually solve the problem and then another 30 mins to change the part. Now also say the labour charge is 50 USD per hour (what the Company charges --not what the guys actually earn) then Labour in the first instance is 25 USD, and in the 2nd instance 225 USD.
Multiply that by say 10 jobs then you've got a cost of 2250 against 250 USD.
Add the cost of parts --well you can see that solution 1 is a lot cheaper than solution 2 for most of the cheaper parts --statistics say that once every so often a really expensive part will have to be replaced but most will be the cheaper components.
(And who knows if the good parts removed aren't used again in the next repair job).
As someone who was bought up in Engineering --I don't like this approach --but it is Economics / Accountants that run businesses these days and not Engineers.
Yes, we've all bought Nikons. But Arka is right. We'll have to see a lot more quadruplings of Nikon's profits for it to even approach Canon's level. That's very important in terms of increased R&D on lenses, better technology in cameras, faster model introductions etc.
Out of pure selfishness, I'd like to see Nikon take a more dominant market position against Canon. This makes the retail value of my lenses increase (should I decide to sell any!) and ensures a whole host of other benefits...
Many people denigrate Canon's marketing. Truth is, a good marketing strategy is crucial. You can't simply "design good products" and expect people to flock to you. You have to convince them, draw them in. Canon's great at that - props to them!
That and they do push out new models quickly, and in a camera store, new buyers will equate new with better.
jimhsu wrote:
a uselessly untrue comment. thank you.
Oops! Looks like I offended another Canon troll...
And I should point out that I didn't really mean to offend photocopier technicians by my previous post, it's just an outlet for the frustration of always having to stand in line behind people with fax machines, copiers, and printers at the Canon Professional Services tech centre. I wonder which copier models qualify for CPS memebership?
Kyle Yates wrote:
Actually that's not a bad idea --if you equate the cost per hour of the technician.
Say it takes 30 Mins to replace every replaceable part and 4 hours to actually solve the problem and then another 30 mins to change the part. Now also say the labour charge is 50 USD per hour (what the Company charges --not what the guys actually earn) then Labour in the first instance is 25 USD, and in the 2nd instance 225 USD.
Multiply that by say 10 jobs then you've got a cost of 2250 against 250 USD.
Add the cost of parts --well you can see that solution 1 is a lot cheaper than solution 2 for most of the cheaper parts --statistics say that once every so often a really expensive part will have to be replaced but most will be the cheaper components.
(And who knows if the good parts removed aren't used again in the next repair job).
As someone who was bought up in Engineering --I don't like this approach --but it is Economics / Accountants that run businesses these days and not Engineers.
Kyle, you left out the steps where they send the camera back to the customer after replaceing each part - for YOU to see if they fixed the problem or not. I think they learned this practice from Chrysler back in the 1980's.
