Panasonic to dismantle digital camera business

Danilo Del Tufo

Danilo Del Tufo

Well-known member
Panasonic to dismantle digital camera business and place it under the umbrella of other operations

via Nikkei: http://asia.nikkei.com/Business/Companies/Panasonic-takes-out-scalpel-again-as-profits-falter

<<I have been saying for months that Nikon is not the only photo company in trouble. Panasonic just announced a big restructuring as profits sink and I am pretty sure this is just the beginning:

"Panasonic plans another round of restructuring of unprofitable businesses, responding to sinking profits with the same prescription that has restored the ailing giant to health before. Yet the company will need more than cutbacks to thrive in an electronics industry searching for new growth avenues as prices slide."

The interesting part is that Panasonic is planning to dismantle their digital camera business and place it under the umbrella of other operations:


"Three other businesses units -- digital cameras, private branch exchange telephone systems and optical disk drives -- will be dismantled. Each will be scaled back and placed under the umbrella of other operations, with headcount to be reduced.>>
 
deleted: link didn't work to Financial Times article on this restructuring move.
 
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The Panasonic Digital Camera Business will be around at least another 3 years! I can prove it. I have just bought a panasonic camera with a 3 year warranty... :-)

The problem with these sorts of businesses is they have pushed for growth (into the pro-sumer and consumer markets) and competed offering more for less on slimmer margins and at some point they were going to hit market saturation. Now "everyone" has converted to digital what next? They are not going to buy new cameras every 3 years.

in DSLR's and mirror-less Digital the Mega pixel race is over. Effectually anything over 10Mp is => 35mmSLR and most are now 15-25Mp range. Now it is incremental add-on's that most don't want. (and the disposable smart phone has the lower end of the market.)

in video cameras "everyone" now has a 1080HD camera. all be it a phone in most cases though still togs having video on the DSLR to the prosumer 4K cameras.... the problem is whilst I can handle 1080p HD I don't want to buy the computing power and disk space for 4K. There will be a comparatively limited professional market for 4K but I think most who have HD Panasonic video cameras will bother with it.

I think the sweat spot is over. Now the market saturation race is over the numbers of new sales will drop and prices of new cameras will rise.

I could (and usually am according to the wife) be wrong but the camera companies can't continue as they have in the last few years.
 
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Restructuring is not unexpected. They put out warnings in December that it was not looking good for the 2016 fiscal year. With 2015 only delivering a 5% profit, the company was still in major trouble and this downturn put them back where they were a couple years back. The normal steps are more headcount reduction, re organize, and get rid of some operations.

It mentions that six businesses (including digital cameras) represents 5% of their revenue. So digital cameras must be just a tiny blip (perhaps less than 1%) of their portfolio. I guess when a business is under 1% of the revenue, it no longer rates as a business unit to keep track of and it will get swept into another business unit to reduce administrative and operations overhead.
 
jagraphics said:
... in DSLR's and mirror-less Digital the Mega pixel race is over. Effectually anything over 10Mp is => 25mmSLR and most are now 15-25Mp range. Now it is incremental add-on's that most don't want. (and the disposable smart phone has the lower end of the market.)

in video cameras "everyone" now has a 1080HD camera. all be it a phone in most cases though still togs having video on the DSLR to the prosumer 4K cameras.... the problem is whilst I can handle 1080p HD I don't want to buy the computing power and disk space for 4K. There will be a comparatively limited professional market for 4K but I think most who have HD Panasonic video cameras will bother with it.

I think the sweat spot is over. Now the market saturation race is over the numbers of new sales will drop and prices of new cameras will rise.

I could (and usually am according to the wife) be wrong but the camera companies can't continue as they have in the last few years.
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Indeed. I've wondered about this. Just how much longer can cameras and televisions go on? Who needs 8K? My vision isn't 20-20 and my living room can't fit a 10' panel. The cameras do everything but compose the shot now. Yes, the microcosm of filmmaking still wants a few more things, but that business is a spit in the ocean compared to consumer electronics and consumer electronics is suffering, so imagine the pain in the professional business.
 
This makes sense (and, yes, Matsushita/Panasonic is a huge company) - the declining digital camera business can't afford the overhead that it once supported. Ergo, it needs to be rolled into some other department.
 
I can't see this recent pace continuing beyond 4k. CPUs have not caught up to really handle 4k, especially encoding times. I will shoot 4k for interviews but the rolling shutter is poor on a lot of 4k cameras because their chip readouts have not caught up yet either. We could see a plateau of camera releases with just refinements. How much detail/resolution does everybody need?

With regards to Panasonic, the past few years have had some ragged product releases from them which tells me the staff is hanging on by a thread and doing the jobs of many. This is not how they have always operated.
 
It must be bad if they're willing to announce this now and affect sales of the GH5 being released next week.
 
I doubt it will affect the sales or support of the GH5 very much. It's going to be a very popular camera and most likely a GH6 is in the works.
The Varicam LT / Varicam PURE and Varicam 35 are like to be axed at some point. Marketing for the cameras is horrible, and the price point is way too high with no effort to make it more reasonable. If you go to the B&H bestsellers list for digital cameras, you can see just how badly the Varicams are doing as part of market share. They are sure to go by next year, with a slew of less expensive competitive products still yet to be announced this year.
 
Doctor Wu said:
I doubt it will affect the sales or support of the GH5 very much. It's going to be a very popular camera and most likely a GH6 is in the works.
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I'm thinking some may cancel pre-orders/jump ship over fear of Panasonic may not be making cameras anymore/like Samsung NX1 (whether Pan. continue to make them or not). And/or concern of resale value.

Maybe it will be a minority, but hard to judge from these enthusiast forums where people have a strong interest in following the market details.
 
GHKAM said:
It must be bad if they're willing to announce this now and affect sales of the GH5 being released next week.
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The public may find out that this is a deliberate tactic so Panasonic can now get in front of this issue and use the GH5 release as proof they are going to be around and restructuring is an effort to rebuild the business. Having discussion spiral into a pile of negativity on this announcement certainly does not help matters, paricularly those that are going to be investing in this product.

Panasonic have shown resiliance in the past during market shifts. Restructuring their business has been part of that strategy. They are doing it again.

On another posters comments, I certainly wouldn't myself venture into critiquing Varicam sales based on a very loose extrapolation of a smattering of indirect info on B&H's website. These camera's are in the upper echelon of video camera sales and it is questionable to some of us why they would be even selling this camera through B&H. Just pure conjecture and not helpful or informative.
 
Andrew Stone said:
I certainly wouldn't myself venture into critiquing Varicam sales based on a very loose extrapolation of a smattering of indirect info on B&H's website. These camera's are in the upper echelon of video camera sales and it is questionable to some of us why they would be even selling this camera through B&H. Just pure conjecture and not helpful or informative.
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The amount of sales coming through there can most probably be counted on two hands.
 
GHKAM said:
It must be bad if they're willing to announce this now and affect sales of the GH5 being released next week.
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The GH5 is probably less than 1% of their business. So it likely had no consideration when making the announcement. Panasonic's fiscal year ends this month and the annual report will be coming out soon. They need to pre-announce strategies in advance of the report.
 
Panasonic has a market cap of around $20 billion, so even 1% is still a lot of money, a lot of internal investment, and a lot of jobs.

Consumer electronics is inherently a volatile market. It goes through cycles of boom and bust all the time. I remember Panasonic making a pretty good tube TV, VCR, portable tape player, etc. But in general, consumer electronics is a growing industry. It's changing rapidly, but that's always been the case (if maybe that change was a little slower in the past).

Nikon is another story entirely. They have almost all their eggs in one basket, and they lack the ability to innovate in the right ways. The Key Mission cameras signaled to me a company without any sort of viable strategy for the future. Of course I'd hate to see Nikon go under. That would truly be sad. But I'd much rather own shares of Panasonic than Nikon.
 
Here is a little better information, looks more like a reduction in models and focus on ILC more expensive stuff:
http://www.panasonic.com/global/corporate/ir/pdf/panasonic_ar2016_e.pdf

Page 67 sales increased as the decline was offset by growth in sales of high value added products among digital cameras, such as mirrorless cameras..."

It appears to be a restructuring based on keeping the profitable ILC business. It will be interesting to see if these profitable ILC cameras are controlled by the video division.
 
I doubt anything will happen to the Panasonic Professional video division (Varicam and other Pro/broadcast stuff.), if anything the GH5 should probably be placed into the professional division.
 
Here we go with the sky is falling speculation again.

This is a business move and nothing more. The camera division is too big to justify the profits so they are shrinking it.

Honestly do we need fifteen new m43 cameras every cycle? Panasonic should just focus on two or three solid performers and roll the features of the other models into those few camera choices.

I personally don't give a darn how Panasonic structures its business as long as they find a way to keep making great cameras. Even if one guy shoved in a broom closet in the basement is doing it.
 
Andrew Stone said:
...
On another posters comments, I certainly wouldn't myself venture into critiquing Varicam sales based on a very loose extrapolation of a smattering of indirect info on B&H's website. These camera's are in the upper echelon of video camera sales and it is questionable to some of us why they would be even selling this camera through B&H. Just pure conjecture and not helpful or informative.
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Exactly. I buy a LOT from B&H, but "real" cameras, no. I want support behind/after the sale from people who specialize and KNOW our industry and needs. And so much stuff is locked into pricing by contract anyway(thanks to B&H), that it doesn't really cost you anymore to buy from a specialized dealer.
 
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