Canon pictures the future

Two things caught immediate attention while visiting the Canon headquarters in Tokyo, and hearing interesting stories about this Japanese company's entry into camera making way back in the mid-1930s, when German cameras ruled the roost.

We were a group of Indian journalists visiting the Camera and Photo Imaging Show 2012 (CP+) in Tokyo, on an invitation from Canon. At the Canon headquarters, Masaya Maeda, Managing Director and Chief Executive, Image Communication Products Operations, makes it clear that the company manufactures in-house all the components that go into its cameras — compacts, DSLRs (digital single-lens reflex camera), video cameras, et al.

Last year it made 26 million cameras, including 7.2 million DSLRs; all the models were built at its facilities in Japan and Asia. “All the camera bodies and components are built on a Canon platform, so we achieve economy of scale by standardising, and it helps us maintain quality. All our lenses are also manufactured in-house,” said Maeda.

So Canon does not outsource any segment of its cameras or other equipment; it has five manufacturing facilities for cameras and lenses in Japan and we visited one in Oita. But as we were given details about its manufacturing and research facilities in countries such as China (six manufacturing affiliates and two research facilities), Malaysia (three manufacturing), Vietnam, Thailand and Philippines, the obvious question to ask the Canon MD was: Why not a manufacturing facility in India? Anyway, Canon is looking at India as a “very important market”.

“Well, it is not possible to set up manufacturing plants in India because there are no incentives like tax breaks,” he said, adding that there were also question marks on dependable water and power supply. But with the markets in the US and several parts of Europe having reached saturation point, Canon was looking at emerging markets such as India, China and other Asian countries to drive its business in the coming years. But thankfully, business in some European markets such as Germany, the UK and France was relatively stable. And then he added, with typical Japanese humour: “We are waiting for the European crisis to get over… I do hope the Greeks will work harder!”

World camera market

In 2011, 105 million digital compact cameras were sold across the world; the US continued to be the largest market with 26 million, followed by Europe with 32 million, Japan with 10 million, Russia and Brazil with 5 million each and India with 3.2 million. In China, 20 million cameras were sold last year. With 32 million compacts, Asia emerged the biggest market for this product.

Worldwide, around 15.7 million DSLRs were sold in 2011, of which Canon sold 7.2 million, grabbing the top 45 per cent market share.

Alok Bharadwaj, Senior Vice-President, Canon India, says of the 32 lakh cameras sold in the Indian market last year, about 1.5 lakh were DSLRs. But it made sense to concentrate on the SLR market because of the higher price and the higher rate of growth in this category. Last calendar, Canon's sales in India totalled Rs 1,525 crore, of which Rs 620 crore came from SLRs. The company hopes to touch the Rs 5,000-crore mark in India by 2015.

Competition from mobile phones

With cameras in mobile phones getting better and better, Bharadwaj says multiple product ownership is becoming a new reality in India. “People these days have one or two smartphones, an iPod, an iPad or any other tablet. The Indian consumer is accepting multiple products, and the biggest difference we can make is in the quality of the picture.”

Connectivity and linking are the advantages that phones have. To engage with people “with a great hunger for social connectivity”, Canon has launched six new models that allow wi-fi connectivity, so pictures can quickly be transferred to social networking sites such as Facebook, YouTube, a tablet and so on. ( https://www.thehindubusinessline.com/ industry-and-economy/info-tech/article2888191.ece?homepage=true )

He adds, “In the last five years, very interesting technological innovations have taken place; if that hadn't happened, the camera business would have been dead.” New technologies like face detection, motion detection, low-light technology, high-definition videos... all these have vastly improved the quality of the image. “We are creating new and compelling reasons for people to continue to upgrade, so our cameras are complementing and not competing with mobile phone cameras!”

Market drivers

The biggest driver of the camera in India is the vacation. More Indians are not only venturing to newer, and more exciting and exotic holiday destinations, they are also ensuring that they are armed with a quality camera to capture those precious moments. Other drivers of the camera market are festivals, opening of new malls and corporate gifting.

But the Indian market contributes only one per cent to Canon's global sales and the global leadership is looking at taking this figure to 5 per cent soon.

At an international forum on cameras, the natural question to ask is on Kodak filing for Chapter 11 bankruptcy protection.

I ask Maeda that, and he pauses for a moment before saying: “Kodak was one of the leading companies, but they lagged behind in digitising their business. They were overwhelmed by the big wave of digitisation that came along.” Kodak's example has a lesson for major players in the camera market — constant and relentless upgrade in technology.

And yet, Maeda's tech-savvy team had a lesson in traditional culture and courtesy for the Indian team as we said goodbye following a gala dinner at a plush Indian restaurant in Tokyo.

We came out to find his car parked near the entrance; the chauffer opened the door, but ignoring him, he walked with his entire team — about a dozen people — to our coach, shook hands with each of us, waited till we boarded and continued waving with both hands as the coach moved on.

Aim and shoot for Young India

The Indian camera market is estimated at Rs 500 crore for DSLR, Rs 500 crore for DSLR lenses, and Rs 2,500 crore for compacts. “As a company it would make better sense for Canon to concentrate on SLRs not only because they are priced much higher — the average price of a compact is Rs 6,700 in India compared to Rs 33,000 for an SLR — but because the loyalty factor in an SLR camera-owner is far greater,” says Alok Bharadwaj, Senior Vice-President, Canon India.

He adds that an alarming trend in compacts is the price erosion in the segment… almost 10 per cent a year. “From Rs 12,000 for a decent compact about five years ago, the price has come down to Rs 5,000 now. It is like somebody slicing over a thousand rupees off your product every year!”

Canon's marketing strategy in India is concentrated on opening more of its own retail stores offering high-end cameras. The SLR user is clearly the focus customer; “the idea is to give the customer education… allow him to explore options and give him a good buying experience.”

Canon already has 50 of its own stores in 32 Indian cities and hopes to expand the number to 110 by the end of this year, 200 next year and 300 (in 100 cities) the following year. “When 300 stores open, we expect one-third of our sales to come from our own stores,” says Bharadwaj. The Canon service network will also be strengthened.

Studies have shown that the average age of the Indian camera-buyer has dropped from 40 years about five years ago to 30-32. Canon camera buyers are encouraged to register on its Web site www.canonedge.com

With Sachin Tendulkar being Canon's brand ambassador, you can imagine how eagerly Bharadwaj and his team have been waiting for that elusive 100th ton of the ace cricketer! Says the Canon Web site: “99 power shots, one more to go” and asks its members to “pick your favourite Sachin century moment and win goodies from Canon”. It also offers tips from experts, contests, and so on.

Bharadwaj adds that the grey market in India for cameras continues to be a challenge; he estimates 25 per cent of SLR camera bodies are sold in the grey market in India. “Lenses are an even bigger problem. They have a basic duty of 10 per cent; lens is still classified as ‘film camera'; the government has to understand that the film category is dead… while bodies are classified as digital cameras, lens are still under “film cameras”!

So to fight the grey market and price erosion in the compact category, Canon India's strategy is to improve on technology, and get more upper-end products into the Indian market.

First came the Kwanon...

The predecessor of today's Canon was Precision Optical Instruments Laboratory, which produced Japan's first 35 mm focal-plane-shutter camera, the Kwanon, in prototype form. The organisation was first set up by two brothers-in-law, in Roppongi, Tokyo, in November 1933. Goro Yoshida, the younger of the two, was an inventor; Saburo Uchida was an entrepreneur. The camera got its name from the Buddhist Goddess of Mercy, as Yoshida was her devotee. The camera name was later simplified to Canon, as it was felt Kwanon could be difficult to pronounce.

Ironically, Yoshida decided to leave the organisation in the fall of 1934, “but his strong desire to build Japan's first high-grade camera remained in the company,” says information at Canon's headquarters in Tokyo. 

Another interesting nugget here pertains to Canon making the world's first 10-key calculator. “In the mid-1960s, calculators were known as desktop adding machines. Rapid advances were being made in the field of electronics, and the world was beginning to feel the impact of a wave of technological innovations. Canon, which was searching for a new field to complement its cameras and optical equipment, released the Canola, an electronic desktop calculator… with user-friendly features of simplicity, speed and silent operation, (which) became the standard in the calculator industry.”

With this, Canon quickly moved into business diversification under the slogan “cameras in the right hand, business machines in the left”!

rasheeda@thehindu.co.in

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