Olympus Imaging post a profit

[drd1135]

Olympus first quarter results published: "operating profit recorded in Imaging Business" - 43 Rumors

It's interesting that Olympus cites the EM1 II as the source of much of their first quarter profit. If true, this may validate its high price in their eyes. What do you think?

 

[994]

I think they've come along way from the doomsayers who predicted they would fail right after the accounting scandal

 

[magIBIS]

Good news, for them and the system we are invested in.
For me the most interesting part of the news is, that they say to have reached 90% of the expected profit for this fiscal year in q1. The comment on 43 rumors was, the em10m3 will not bring high income...
I always saw the em10 line as best selling and little r&d cost part of the Olympus world. How this goes together?

 

[ijm5012]

Wasn't Olympus supposed to go out of business a few years ago? That's what everyone on the internet was saying...

As for turning a profit, it's entirely due to the higher price, higher margin items (E-M1 II, 300/4 PRO, 12-100 PRO, 25/1.2 PRO). Camera companies like Olympus can't rely on high-volume, razor-thin margin products. That ship has sailed. In order to make it, companies must be manufacturing and selling higher margin items, which is Olympus is now doing, and apparently, doing so quite well.

 

[eteless]

I always saw the em10 line as best selling and little r&d cost part of the Olympus world. How this goes together?

A high volume of sales doesn't mean the EM-10 brings much if any profit as the sensor and chips used are identical in cost to a higher end body however the retail price (and thus markup) is far lower, while the NRE costs of sensor and processor will have been amortized by higher end body production there is still significant R&D costs regarding board design (often more art than science, and you can't rush art) and also software (namely firmware).

The EM10 isn't meant to compete with the high end or necessarily be a technology showcase, it exists to remove as much barrier to entry for the system as possible and encourage brand loyalty - if successful you're more likely to purchase items traditionally associated with a higher markup such as lenses. The EM10 seemed to do this by offering more features than other models at a comparable price point, I would suggest that far too often low end bodies are crippled by the omission of useful features to avoid cannibalization of the higher end.

What surprises me is how well it seems to be working, several times now I have recommended an entry level m4/3 body to acquaintances only to have them come back a few weeks later asking for a lens recommendation - this surprises me as it didn't happen previously with Canon or Nikon, for them the kit lens always seemed like enough.

I'm a bit tired and the best analogy I can come up with is that they're the bread at a restaurant before you order food, while it's unlikely to win any awards it gets you salivating and in a frame of mind to order more other food and drinks (lenses) than you would without it.

 

[Christop82]

A high volume of sales doesn't mean the EM-10 brings much if any profit as the sensor and chips used are identical in cost to a higher end body however the retail price (and thus markup) is far lower, while the NRE costs of sensor and processor will have been amortized by higher end body production there is still significant R&D costs regarding board design (often more art than science, and you can't rush art) and also software (namely firmware).

The EM10 isn't meant to compete with the high end or necessarily be a technology showcase, it exists to remove as much barrier to entry for the system as possible and encourage brand loyalty - if successful you're more likely to purchase items traditionally associated with a higher markup such as lenses. The EM10 seemed to do this by offering more features than other models at a comparable price point, I would suggest that far too often low end bodies are crippled by the omission of useful features to avoid cannibalization of the higher end.

What surprises me is how well it seems to be working, several times now I have recommended an entry level m4/3 body to acquaintances only to have them come back a few weeks later asking for a lens recommendation - this surprises me as it didn't happen previously with Canon or Nikon, for them the kit lens always seemed like enough.

I'm a bit tired and the best analogy I can come up with is that they're the bread at a restaurant before you order food, while it's unlikely to win any awards it gets you salivating and in a frame of mind to order more other food and drinks (lenses) than you would without it.

I think the E-M10II is an exception to your point. It is loaded with features and hardware that make it very competitive to premium bodies. I think Olympus packed so much into it that it actually dipped into the em5 II and possibly em1 II market. I'm not saying it's better than either of those models, but for your casual photographer, it can do nearly everything it's big brothers can.

 

[ijm5012]

I think the E-M10II is an exception to your point. It is loaded with features and hardware that make it very competitive to premium bodies. I think Olympus packed so much into it that it actually dipped into the em5 II and possibly em1 II market. I'm not saying it's better than either of those models, but for your casual photographer, it can do nearly everything it's big brothers can.

I believe the point he was trying to make was that the E-M10 line never debuts any "new" technology. It simply uses existing technology implemented on higher-end cameras like the E-M5 and E-M1 models, but makes it more affordable.

It's kind of like Mercedes cars. New technology typically debuts on the S-class (E-M1 models) or E-class (E-M5 models), yet it always manages to trickle-down to the C-class (E-M10 models). That new technology never debuts on the C-class, but because Mercedes has already developed it for their higher price, higher margin vehicles (and gotten customers to pay that premium to help offset the initial development costs), they can bring that technology down-market by leveraging existing manufacturing that is in place, economies of scale for purchase quantities, etc.

 

[drd1135]

I think the E-M10II is an exception to your point. It is loaded with features and hardware that make it very competitive to premium bodies. I think Olympus packed so much into it that it actually dipped into the em5 II and possibly em1 II market. I'm not saying it's better than either of those models, but for your casual photographer, it can do nearly everything it's big brothers can.

The big omission with the EM10 series is weather resistance. It can still produce great images but won't be as versatile.

 

[Plumballs]

The big omission with the EM10 series is weather resistance. It can still produce great images but won't be as versatile.

Plastic bags work quite well.

 

[drd1135]

Plastic bags work quite well.

WR is not that critical for me for this very reason. I don't often shoot in the rain so bags work fine. It will be interesting to see what the differences will be between the EM10 iii and the EM5 iii besides WR. For a while at least the EM10 iii will be a better camera in some ways than the EM5 ii. So far, Olympus has kept PDAF auto focusing as a major difference between the EM1 and EM5 models, so I'm not sure what other advantages the EM5 could have.

 

[TNcasual]

I don't think the E-M10 will ever include weather sealing or high-Res photo. It most likely will never have the top IBIS, either.

 

[Lcrunyon]

Definitely the E-M1 Mkii drove the profit, but it wasn't just the high price of it or the latest Pro lenses. I don't think the Pro lenses by themselves illustrate an increase in Oly's pricing strategy in the last year. Those lenses have been priced consistently since they came out.

The difference now is the buzz the E-M1 Mkii garnered. This is the first time we've really seen this kind of professional acknowledgement and praise for the OM-D (and PEN F) line, and as a result, I think we're getting more people buying into the system than we ever had before. I know it's anecdotal, but just look at all the newcomers we've had with the forum in the last several months. I don't think we've seen that before.

I don't even think everyone is buying E-M1 Mkiis, though many are. Once they start looking into Olympus, they start to see how good the other cameras are too. Of course, then they come here and ask for lens recommendations, and we tell them how good the Pro lenses are, and that helps too...

 

[bye]

Olympus first quarter results published: "operating profit recorded in Imaging Business" - 43 Rumors

It's interesting that Olympus cites the EM1 II as the source of much of their first quarter profit. If true, this may validate its high price in their eyes. What do you think?

The big profits come only from low volume high profit margin units -- E-M1 Mk II. And it seemed the next forecast profit from Olympus is smaller and more modest, so Olympus is not betting the E-M10 Mk III will bring as many dollars in as it would be for the E-M1 Mk II and the initial sales drive for the flagship model has all but dried up.

But this is nothing new. There has always been this kind of low volume high profit margin sale from all makers in the past. The only reason Canon, Nikon, Sony and Olympus are emphasizing them now, and not then like 10 or more years ago) was that the compact market sales and the consumer line of DSLR bodies were boosting their profit margins. Low volume high profit margin sales has always accounted for about 10% of gross margin, while the compact sales and lower end higher volume sales accounted for the rest. And all makers used the compact sales and low end consumer line DSLR bodies as the feeder line to the more lucrative low volume high profit margin units. It's just that these days, the cell phone market has completely decimated the compact sales and the consumer line of DSLR bodies and mirrorless just simply become the low volume high profit margin units. So it's no surprise that Olympus is making money with the E-M1 Mk II.

But then again, it's not limited to Olympus. Canon which had released the Canon 6D Mk II which DPreview considered a dud camera because it has less value than the D750 (which has boat loads of DR and other goodies) and is more expensive than the A7II kit is apparently selling the 6D II like hotcakes! So it seemed that and I think it doesn't really matter if the camera performs better or not. People just buy whatever it is new and shiny even if it doesn't perform significantly better than the last model.

 

[drd1135]

I wonder if the EM5 iii will be in the middle in terms of profit.

 

[bye]

I wonder if the EM5 iii will be in the middle in terms of profit.

It really depends where Olympus is pricing their E-M10 III at. Possibly in the middle or they might push high middle and be released in 2018 and be reported in the 2019 quarter.