Olympus - the rebirth :)

pdk42

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The issue I have with this idea is that Olympus was already struggling to stay afloat. Developing a FF camera would also require them to develop a line of lens, unless there was a way to share an existing FF mount. I can't see that making any sense to the board of Olympus.
I agree that it’s fraught with risk - but sensor size has become a sector-defining characteristic. Selling m43 bodies like the EM1.3 and EM1x at prices above entry-level mirrorless is always going to be a hard sell. They could have joined the L mount alliance of course - that would have limited the risk somewhat.
 

BDR-529

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The issue I have with this idea is that Olympus was already struggling to stay afloat. Developing a FF camera would also require them to develop a line of lens, unless there was a way to share an existing FF mount. I can't see that making any sense to the board of Olympus.
I bet that L-mount alliance was begging Olympus to join them and by doing so, they would have instantly had access to over 30 lenses from reasonably priced Sigma budget options to not-so-reasonable Leica. Olympus could have easily started by designing just the mandatory 50mm F/1.8 and covering a couple of gaps in the lens portfolio with Olympus ones. Customers might not have been able to purchase every lens they need under Olympus brand but so what.

There should not have been any problem with mirrorless FF bodies either. If you look at the 5000-7000€ action oriented Canon and Nikon bodies, they still have 20MP sensors because speed is the key here, not resolution. All the development work Olympus has done for their 20MP flagships could have been simply re-used in a mirrorless FF body. Bulk of R&D investment is going to SW and processing power and they don't care where those 20 million pixels come from.

But then what?

Even Canon, Nikon and Sony who have huge market share and customer base have reported a loss from camera business and warned that their investment in mirrorless FF was based on false assumptions. The market they planned for just isn't there. And it's not due to Corona. Cost of transition to an entirely new mount system is so huge that customers are not willing to cough up the money since their existing cameras and lenses work just fine. Big players also admitted that they misscalculated how many companies will enter this market and how fierce the competition will be already in 2020. This is a winner takes it all-market, latecomers who cant gain >20% market share will just fade away.

Olympus has so small customer base that even if every loyal customer who can afford it, moves to Olympus mirrorless FF, volume would still be a fraction of what Canon or Nikon has. And those two big players have just reported that "Oops, looks like we should not have never invested in mirrorless FF. Volume turned out to be too low for profitable business"
 
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ashburtononline

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  • Thread Starter Thread Starter
  • #43
after a week with my new EM1X, my thoughts .... Autofocus / tracking is great ... light years ahead of the EM1. The build quality is great except for the shitty flip our screen ... I have nearly snapped it off already. Image quality at low ISO is great but I'm disappointed at over ISO800 .... its no better than the EM1 ... may even be worse. Overall, I'm content as mostly I shoot at ISO200 :)
 
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If Olympus stays at 3% market share it will only sell 150k units a year. Canon will sell something like 2 million. That’s out of a market ILC estimate of 5 million total sales in 2 years given current ILC sales projections from Canon, Nikon, and Sony in their financial reports.

Olympus sold about 300k units in 2019. Revenues were US$406 million on that, but they lost $100 million. So for every $ we spent, Olympus spent 1.25. That subsidy from science and medical imaging is now gone.

JIP are likely to anticipate a revenue drop to below US$200 million. At 150k units sold, that means every consumer has to spend US$1,333 to break even. The EM10 or PEN EPL look unlikely to survive as their unit price and after sales are probably too low. Olympus needs far more “pro” units moved relative to low-end.

Its tough to see how a camera manufacturer can make a profit and cover R&D on so few sales. It also means Olympus has to leverage higher-end sales while facing FF competing at lower price points, all while using the same 20MP sensor we’ve had for 4 years. I believe it extremely unlikely Olympus/JIP can hold the same price points against larger sensors.

It also wasn’t clear that the PEN and Tough lines, binocular, and audio, would transfer to JIP, reducing their gross sales, making the m43 ILC project a stand-alone. The only benefit is that we don’t know how much overhead Olympus was bearing, so maybe they can reduce that operating $100 million/year loss by a considerable amount once $800 tee times and tea service are cut. I think m43 has lost the “equivalence” price point argument and will have to completely retrench. JIPs past behaviour of cheapening a product line while coasting on a brand or locked-in purchasers (VAIO and some aviation suppliers) is likely to be their modus operandi.

Literally, JIP has to cut at least 50% just to break even. As a private equity entity they are in it from the outset to make $$ right away. Don’t look for JIP to invest new funds chasing non-existent new customers.
 

BDR-529

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JIP are likely to anticipate a revenue drop to below US$200 million. At 150k units sold, that means every consumer has to spend US$1,333 to break even. The EM10 or PEN EPL look unlikely to survive as their unit price and after sales are probably too low. Olympus needs far more “pro” units moved relative to low-end.

Its tough to see how a camera manufacturer can make a profit and cover R&D on so few sales. It also means Olympus has to leverage higher-end sales while facing FF competing at lower price points, all while using the same 20MP sensor we’ve had for 4 years. I believe it extremely unlikely Olympus/JIP can hold the same price points against larger sensors.
Averages or even retail prices don't tell whether individual products are profitable or not. This is something that only Olympus beancounters know but JIP actions will be based on profitability at indivitual product(line) level.

ILCs are already closer to smartphones than traditional electro-optical devices so It's resonable to assume that the yield is way much lower at launch than after 2-3 years of mass production. Latest high end products also use more expensive components than the older ones and they are a lot more expensive to build during ramp-up when you divide the total cost with the number of units you can actually ship. Production lines, testers, jigs which were purchased for new models are not yet paid back either but I believe that Olympus will simply write down all R&D and product line investments when they sign the deal with JIP.

So the bottom line is that old EM10 and EM5 models could actually make profit as long as they can be sold at current price levels whereas more expensive EM1X and EM1.3 might currently sell at a loss due to still high ramp-up costs. With Olympus volumes neither of these new products have never entered true mass production and achieved any economies of scale benefits worth mentioning.

As you said, it's exactly as expensive to develop a new flagship ILC whether you sell 10 or 0,1 millions of them during the entire product lifetime. Unfortuntely for Olympus development cost is also independent of the physical size of your 20MP sensor. The price point and profit are not.

Good example is Nikon D6 which was released in May. It still has only 20.8MP sensor because this sports/wildlife camera is all about speed but thanks to it's FF 20.8MP sensor Nikon has been able to set the price to $6500 (US) / 7000€ (EU). It would have cost Olympus pretty much the same to develop EM1X with 20MP FF sensor but for L-mount instead of MFT. Even if Olympus had not designed a single FF lens of their own, I still believe that they would have sold more of FF M1X bodies at higher price point. Well, even then they might still not have been able to cover development cost during the product lifetime due to 3% market share.

JIP is likely to divide products under three categories because this is the opus moderandi for financial engineering companies:

1) not profitable, can't be made profitable at reasonable cost - axe immediately
2) profitable, no potential for major improvement - keep sales volume up with recurring price reductions untill it becomes unprofitable - then axe.
3) profitable/major improvement potential - upgrade product as long as possible with minumum cost so that both price and volume are maintained at profitable level.
 
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stevedo

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It also wasn’t clear that the PEN and Tough lines, binocular, and audio, would transfer to JIP, reducing their gross sales, making the m43 ILC project a stand-alone.
In an interview in the UK, Mark Thackara Marketing Brand Manager Olympus UK, stated that the MOU covers ALL consumer products including binoculars and audio etc.

However, it will be interesting to see what happens to the brand. The MOU only talks about the transfer of the OM-D and Zuiko brands, not Olympus.
 

BDR-529

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However, it will be interesting to see what happens to the brand. The MOU only talks about the transfer of the OM-D and Zuiko brands, not Olympus.
It's highly unsual if an entire consumer product business of a well known consumer brand is sold to someone without leasing the brand to the new owner for at least few years. New owner needs a transition period before they can establish their own brand for the business.

That kind of move would indicate absolutely zero confidence in the new owner. In other words the original brand does not want to be associated with the new company in any way.

I can mention a few previous cases where this happened.

1) Saab - car manufacturer changed hands several times after the bankrutpcy till the actual owner of the brand - Saab AB (aerospace + defence company) - finally refused to lease the brand to latest owner, a Chinese company who had plans to start producing Saab branded electric wehicles. They did, however lease Saab brand to previous owners like GM and Spyker. Interestingly Scania owned the Griffin logo separately and likewise refused to let Chinese companies to have it.

2) Nokia - the once undisputed ruler of the mobile phone markts fell almost vertically to a sidenote in "others"-category but even they leased the "Nokia" brand and logo to new owner, HDM Global, untill 2024.

3) Rover - yet another car brand. BMW group first purchased Rover cars and after discovering that this was a huge mistake, they sold the whole company for £1 to a group of "investors" (sounds familiar, eh?). BMW did not sell the brand though but just leased it back to the new company. After that folded and Chinese companies bought rights to remaining products, BMW refused to lease the brand to them. In the end what used to be Rover 75 was produced in China under different names by two different companies.
 
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b_rubenstein

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If the technical people in the Camera division don't move to JIP, then there will be little or no new product development. I suspect that Olympus will move as many technical people from the camera division into their medical device division as they can afford. Also, if the manufacturing facilities do go to JIP, they won't be making cameras for very long.
 

BDR-529

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If the technical people in the Camera division don't move to JIP, then there will be little or no new product development. I suspect that Olympus will move as many technical people from the camera division into their medical device division as they can afford.
I'm pretty sure this follows the same pattern in Japan as elsewhere in the world.

Those handpicked key engineers who Olympus really wants to keep have been receiving unexpected promotions or invitations to Medical & Scientific units since last autumn or so.

And those Imaging unit engineers who are still young and educated enough to search for a job elsewhere have been doing just that since they realized before Christmas that they will not be among the invited.

What was left by the time this deal was published a week ago will fall mostly under category "Fixed cost reduction" when JIP beancounters take over.

I'm not being pessimistic or a fearmonger. It's just "been there, seen that, bought the T-shirt"
 
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PakkyT

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1) Saab - car manufacturer changed hands several times after the bankrutpcy till the actual owner of the brand - Saab AB (aerospace + defence company) - finally refuced to lease the brand to latest owner, a Chinese company who had plans to start producing Saab branded electric wehicles. They did, however lease Saab brand to previous owners like GM and Spyker. Interestingly Scania owned the Griffin logo separately and likewise refused to let Chinese companies to have it.
It is funny you mention Saab as through all this Oly news I was comparing it to Saab. Saabs were my vehicles of choice for many years. Like Olympus they were a smaller brand that had a very loyal customer base and like Olympus their cars were not like other cars with a lot of well thought out innovations and features (non-Saab drivers called some of them weird, but they usually had a practical reason). But despite the loyal base of customer they were still a tiny company in comparison to the other auto manufacturers and eventually went under. I bought my first non-Saab (since switching to Saabs around 1990) only 3 years ago. I was hanging on to the end. I will do the same with Olympus; buy what I can find used for as long as feasible until such a point it will be time to move on.

Of course I picked a Mazda which is probably the smallest of the Japanese brands. What is wrong with me? :roflmao:
 
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It is funny you mention Saab as through all this Oly news I was comparing it to Saab. Saabs were my vehicles of choice for many years. Like Olympus they were a smaller brand that had a very loyal customer base and like Olympus their cars were not like other cars with a lot of well thought out innovations and features (non-Saab drivers called some of them weird, but they usually had a practical reason). But despite the loyal base of customer they were still a tiny company in comparison to the other auto manufacturers and eventually went under. I bought my first non-Saab (since switching to Saabs around 1990) only 3 years ago. I was hanging on to the end. I will do the same with Olympus; buy what I can find used for as long as feasible until such a point it will be time to move on.

Of course I picked a Mazda which is probably the smallest of the Japanese brands. What is wrong with me? :roflmao:
And like Olympus tying cameras to medical, Saab tied their auto manufacturing to their much larger and profitable defence and security industry.

If Olympus is Mazda, Ricoh Pentax is Subaru!
 

pdk42

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3) Rover - yet another car brand. BMW group first purchased Rover cars and after discovering that this was a huge mistake, they sold the whole company for £1 to a group of "investors" (sounds familiar, eh?). BMW did not sell the brand though but just leased it back to the new company. After that folded and Chinese companies bought rights to remaining products, BMW refused to lease the brand to them. In the end what used to be Rover 75 was produced in China under different names by two different companies.
Let's hope Rover isn't the template for Olympus. The "investors" were a bunch of crooks who asset-striped the business from day 1, lining their own pension funds, until there was nothing left and the entire workforce was laid off and the brand demolished - https://www.europeanceo.com/busines...x-four-and-mg-rover-groups-long-road-to-ruin/

However, that's the UK way - let the market and the fat cats do their usual rip-off work. I think the Japanese have too much national pride and care for their industry to let that happen.
 
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Hypilein

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I just really don't understand why people don't understand that miniaturisation has never been cheap. The (marginally) smaller cameras and (significantly) smaller lenses are not cheaper to make. Obviously the market for smaller gear is not big enough (or the benefits weren't communicated well enough), but people here seem to think it is a god given truth that mu43 has to succeed because FF cameras have become cheaper. Go and price out a system that goes from 24mm-200mm in quality lenses and you will see that FF is still more expensive even if the body price went down a bit. If you want to go from 16 to 600mm the difference becomes pretty big. I currently own the P8mm Fish, PL8-18, P35-100 f2.8 and P100-300II. I can tell you that I could not afford this lens coverage for FF and I would certainly not bring all of it on a hiking trip. Yes, some bodies are expensive, but you're not comparing like for like if you compare the crippled Canon RP with the Em1mkIII. The Canon RP is like they put a Porsche Engine into a Fiat Panda. I wouldn't want to drive on. Doesn't sound safe to be honest.

One thing is true though. Apparently there are not enough people who see it like me. I hope there will be enough to keep at least Panasonic afloat and invested in mu43. Currently I can't see a single ILC system that would interest me...
 

BDR-529

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Let's hope Rover isn't the template for Olympus. The "investors" were a bunch of crooks who asset-striped the business from day 1, lining their own pension funds, until there was nothing left and the entire workforce was laid off and the brand demolished - https://www.europeanceo.com/busines...x-four-and-mg-rover-groups-long-road-to-ruin/
BMW has absolutely no delusions about what will happen after they sold most of Rover Group to "investors". This is exactly why they kept the best parts of the company including the Rover brand which they only leased to resulting "MG Rover Group".

The only reason why BMW ever sold anything to this new company was based on a very simple financial fact: UK was so important customer base for other BMW brands that they simply couldn't afford to kill Rover and lay off all employees. The resulting national outrage would have crippled profitable BMW sales for several years.

This Phoenix Consortium who bought Rover for nominal 10£ was established just to take the blame for inevitable bankruptcy which hopefully could be pushed at least few years away so that BMW name would no longer be associated with it. BMW did for all practical purposes even donate half a billion pounds to Phoenix just to make sure that they will stay afloat for several years even when it was obvious that such a marginal brand as Rover could never break even let alone turn a profit.

How does this relate to Olympus camera division sale to JIP? Hopefully not in any way but all the ingredients are there.
 

Mack

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Mitsubishi! :dance4:
:eek:

Mitsubishi - Parent company of Nikon (uh oh!).

I owned one of their POS big screen TVs. Thing busted about 6 times in first year. Dealer replaced it once with another POS. Sound no Pic. Pic no Sound. Nothing when turning on other than loud click. Pressing Reset button on face so many times it broke (Beware of TVs with a reset button on their face plate and treat that button as a bad engineering design.). Mitsy finally got out of TV business and left us with the POS thing where former dealer wanted $320 for its light bulb.
 

BDR-529

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And like Olympus tying cameras to medical, Saab tied their auto manufacturing to their much larger and profitable defence and security industry.
Olympus is more or less Saab of the camera industry. They have(had) exactly the same problem with their position in the market.

Both are(were) very innovative brands with almost cult following by loyal customers who were both willing and able to pay a premium over more mundane brands like VW and Ford to get more sophisticated technology and premium look&feel. This was all fine when technology was still so simple that even a small company had the resources to design a brand new premium car.

As R&D investments skyrocketed, Saab ended up in a position which would have been sustainable only if they could have charged Aston Martin prices because their sales volume was too low.

On the other hand their market share and sales kept declining because less expensive brands like VW started offering products which first matched and eventually passed Saab in both innovations and quality.

Olympus could survive even with existing market share if it could charge Leica premium or if Olympus could maintain their current price point and increase their ILC market share to 10% or above. They just don't seem to have the recipe for either option.
 
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It is funny you mention Saab as through all this Oly news I was comparing it to Saab. Saabs were my vehicles of choice for many years. Like Olympus they were a smaller brand that had a very loyal customer base and like Olympus their cars were not like other cars with a lot of well thought out innovations and features (non-Saab drivers called some of them weird, but they usually had a practical reason). But despite the loyal base of customer they were still a tiny company in comparison to the other auto manufacturers and eventually went under. I bought my first non-Saab (since switching to Saabs around 1990) only 3 years ago. I was hanging on to the end. I will do the same with Olympus; buy what I can find used for as long as feasible until such a point it will be time to move on.

Of course I picked a Mazda which is probably the smallest of the Japanese brands. What is wrong with me? :roflmao:
Patrick, the worst thing that ever happened to Subaru was when GM bought a place on the board.

The best thing was when GM sold all their shares ... ;).

BTW, Saab used some Subaru engines.
 

PakkyT

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They didn't use Subaru engines per say, but instead they released the Saab 9-2x which was literally a rebadged Subaru Impreza WRX with Saab interior and accents, or among Saab fans simply known as the "Saabaru".

Likewise their one and only SUV was the Saab 9-7 which was also literally a rebadged Chevy Trailblazer with Saab interior and accents, or among Saab fans simply known as the "Trollblazer".
 

Repp

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Im actually hoping that JIP turns around and sells it off again... maybe to DJI? Which also now owns Hasselbald. Think, Oly tech in drones and MF hasselblad bodies, and m43 would benefit by the marketing and distribution networks of DJI, and maybe a boost in video capabilities which is honestly what I feel has kept Pany in the game.
 

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