Canon shoots for larger share

JUNE 15, 2004 CANON, the world's second-biggest seller of digital cameras, aims to raise its share of the market to 25 per cent next year after introducing a record number of new models.

It won't be easy, Canon senior managing director Tsuneji Uchida says, although there is "a good chance" the target can be achieved because the company, which makes PowerShot and IXY cameras, plans to begin selling 17 new models this year. Canon and last year's market leader, Sony, are expanding production as falling prices and better image quality convince camera users to switch to digital models.

Competition is increasing as manufacturers in Taiwan target a market that grew 54 per cent to 1.2 trillion yen ($15.75 billion) last year according to the Tokyo-based Camera and Imaging Products Association.

"Canon is practically the only real winner in the digital camera market," says Hisashi Sueoka, who helps manage $US21 billion in assets at Tokyo's SG Yamaichi Asset Management.

"It is competing with Sony for number-one position in the global market, but Canon has an advantage in picture quality using its optical technology."

Uchida says the company is introducing a wide product range, from compact models for beginners to high-featured cameras for professionals.

Canon plans to ship 15.2 million digital cameras this year, which would account for 22 per cent of the estimated global market of 70 million units -- a 77 per cent increase on the 8.6 million units it shipped last year.

"Strong demand in Europe and Asia, where household penetration is not as high as Japan," will push the global digital camera market to 90 million units in 2005, from about 70 million units this year, Uchida says.

Sony plans to sell 14-15 million digital cameras in the fiscal year ending March 31, 2005, spokeswoman Junko Sato says.

Last fiscal year it sold 10 million units, she says.

"We are not disclosing how many digital cameras we plan to sell next fiscal year, but our stance of keeping the number-one position in the world digital camera market has not changed," she says.

Until last year, Canon made advanced digital cameras in Oita prefecture and basic models in Malaysia and China.

The EOS Kiss Digital, Canon's single-lens-reflex model, was the first digital camera made in Taiwan and Oita.

The company is building a new factory in Oita to meet demand.

"The lifecycle of a digital camera is short so it is important to increase production in Japan, where we can produce new models or increase production more promptly," Uchida says. "The new factory will start full production by the beginning of next year."

Rising competition in digital cameras is hurting manufacturers such as Konica Minolta, which posted an operating loss for the division in the business year ended March 31.

"Companies are entering the high-margin digital single-lens- reflex camera market, but it is really difficult for them to catch up with Canon and Nikon, which have been dominating the film SLR market," Sueoka says.

Canon had an operating profit of 18.6 per cent for the camera division in the three months ended March 31, up from 18.4 per cent a year earlier.

"Imaging processors and other in-house development of key components of our business are cutting costs," Uchida says.

Canon is lowering production costs by adding functions to its own system chips instead of buying separate parts for each function, Uchida says.

Bloomberg