Canon Begins Transition to Mirrorless Market Dominance

    With the year 2021 well and truly over, those manufacturers who adjusted their finances to the calendar year are now producing their financial statements. Canon’s latest figures show strong and sustainable performance that, even in times of a pandemic, is the result of a shift to mirrorless cameras and facilitates the start of a new one. dominant new market.

    Here’s what Canon’s latest financial report reveals about the company’s current state and trajectory in the camera industry.

    The death of the DSLR and the rise of the mirrorless camera

    The arrival of the COVID pandemic came at the wrong time for a camera industry already rocked by a drop in sales that resulted in a massive shrinking of the market and an exodus of names. once popular. It didn’t start there, when the seeds planted by Sony with the release of the E-mount and later the Alpha 7 called the death knell on DSLRs.

    It is more evident than ever – and especially looking at CIPA shipment data for 2021 – that mirrorless cameras are now the beating financial heart of the industry, accounting for 38% of shipments but 67% of the value. In fact, the news came thick and fast: Ricoh tried a “factory-like” production model for Japanese DSLR customers, Canon closed its last remaining factory in China (Zhuhai) largely resulting mass production of integrated cameras and the BCN Awards show that Canon and Sony are stealing the show.

    This is a turnaround like no other industry has seen, and it’s largely split into two camps: Sony, Fuji, Olympus, and Panasonic, all of which have been developing viable mirrorless systems from the ground up. the 2010s and has succeeded to a greater or lesser extent. Canon, Nikon, and Pentax have tried alternatives that have mostly failed because they were never intended to replace their money-making DSLRs.

    Canon and Nikon had to replace their camera systems during a time of severe sales decline, dwindling market share, and now COVID.

    After years of seriously discontinuing mirrorless cameras for fear of hurting their DSLR business, Canon finally jumped in on both feet with the introduction of the Canon R and Nikon Z6/Z7 times. turn in 2018.

    Canon’s financial outlook for 2021

    So how did Canon evaluate? A notable result from the entire business was a 11.2% increase in net sales to 3,513 billion yen (~$30 billion), up from 3,160 billion yen and 3,593 billion yen in the year before COVID 2019, almost bringing it returns to parity. Operating profit rose 155% to 282 billion yen and beat 2019 by a bit. This is the result of increased sales in 2021 but significantly lower costs than in 2019 due to mid-term restructuring (and you have to imagine that the closure of the Zhuhai factory is part of that). this).

    So while the overall business is doing well – very well – how is the Diagnostic Imaging Department doing? First, the Printing Division, with its large profit margins, plays the most important role for Canon, accounting for 55% of sales and 60% of operating profit. Imaging is the second largest division with 19% of revenue and 21% of operating profit.

    All divisions more or less rebounded to pre-COVID sales levels, but Imagery was particularly good (20.7% increase in Net Sales to 654 billion yen) in part because it was hit harder than Printing. With improved performance across all divisions, Canon is expected to see a 10% increase in Net Revenue for 2022 driven primarily from Printing and Imaging.

    It should be noted that Canon has restructured the reporting of its divisions; strangely, Inkjet Printers used to work in Imaging, but have now moved to Print, a division renamed from “Office” and incorporating all of its printing technologies. Canon does all comparisons retrospectively so that the necessary groups fall within the appropriate divisions.

    Canon continues to provide more details about its Imaging Division, dividing its products into “Cameras” and “Network Cameras & Others”. “Network Cameras” accounted for 34% of net sales, although the “Cameras” sector was generally more interested and saw a 24.6% increase in net sales. Canon confirms sales of 2.74 million interchangeable-lens cameras, down 1% from 2020.

    CIPA data for 2020 reports a total of 5.27 million units shipped, close to Canon’s 5.38 million, which the company believes will grow to 5.65 million units. It also shows that Canon holds about 52% of the entire ILC market, a remarkable achievement. Canon also confirmed 1.15 million compact camera shipments, representing 38% of the CIPA shipment data and pretty close to the 34.1% figure shown recently in the BCN Awards data.

    All Canon parts more or less have returned to pre-COVID sales levels, including Images.

    Camera industry in 2022 and beyond

    Given that mirrorless cameras are the only category that increases shipments, my expectation is that mirrorless cameras can grow shipments to around 3.5 million units. Canon will want to capture as much of that expansive mirrorless cake as possible and – surprisingly – projects will capture it all! As I’ve noted before, and perhaps counterintuitively, Canon has already expanded its DSLR sales in 2021 at Nikon’s expense, so it may be looking to sell deeper into this market. .

    If – and it’s an if – the BCN Awards’ market share shows a broader trend, then Canon will need to take market share away from Sony. This seems unlikely given both the historical performance and release strategies of current manufacturers.

    The mirrorless camera market is not like the DSLR market where Canon and Nikon have long dominated and Canon is likely to increase its market share to around 60%. There are many manufacturers that, successfully, still make significant sales and, to a large extent, do not compete directly with Canon. Olympus, Fuji, and Panasonic all fall into this category, and none (with the exception of the Panasonic S1) that produces a full-frame range but generates significant sales. Along with Nikon, this group accounted for 50% of mirrorless shipments, a significant percentage.

    With the closure of the Zhuhai factory, it is interesting to see that compact camera shipments for 2022 are predicted to drop to 600,000. Expect to see more low-value models taken off the shelves as Canon strengthens its focus on the higher-value, higher-margin segment.

    Canon has claimed that we have seen its last flagship DSLR, but could we see a new model in another DSLR line?

    Canon has successfully pivoted to Mirrorless

    All in all, this is a compelling set of results for Canon that shows a very successful pivot to mirrorless, closing down compact cameras and consolidating resources. Its most important goal is to establish a larger market share in the mirrorless camera sector, with one eye still on DSLRs.

    If there’s one question in Canon’s mind, it might be this one: is the old dog dead? The fact that DSLRs explode slowly suggests there’s a good chance there’s a long tail (oh my god!), so is the unthinkable possible? Could we see a new (non-flagship) DSLR model hitting the shelves? It may not happen in 2022, but we’ll know more about how the DSLR and mirrorless sectors work later that year.

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