Sony and Olympus: what does it mean?

Following the accounting scandal that saw former CEO Michael Woodford ousted, Olympus’ coffers were looking decidedly empty; at that point, many potential suitors were rumoured. It turned out that Sony was the one whose offer was accepted. In a share transfer and cash deal – completed about a month ago – Sony pumped US$645 million into the company, to hold a total of 11.5%. What’s more interesting is that on most of the major business sites, this wasn’t reported as a transaction to invest in the cameramaker; rather, Olympus was frequently referred to as a ‘world leader in medical imaging’.

Although photographers know and love Olympus as the manufacturer of various quirky cameras and small systems, the truth is that margins in the medical industry – anything with ‘surgical’ or ‘medical’ in its name means an extra couple of zeroes on the end of the price tag – are much, much higher than the camera business. Like Nikon, it’s been making a good chunk of its income from something other than cameras for a long time. (I don’t know how much it makes from dictaphones these days, though.)

I’m going to take off my photographer hat now and wear my analyst/ M&A/ consultant one, for a bit of change of pace. Let’s put the pieces together.

  • A diversified electrical consumer-goods conglomerate makes significant investments in a very specialized company.
  • Sony themselves have been on shaky ground: for Q3 2012, they posted a $338m profit on $22.45b of revenue; a neat reversal of the $1.1b loss made on slightly less revenue during the prior year. Interestingly, a good portion of the profit from 2012 was made due to the disposal of a chemicals business. Note: we’re talking roughly 15% operating margin before tax here. Compare that to Apple’s $35b revenue and $8.8b profit for the same period – 25%. 
  • Sony now supplies sensors to Olympus for both the current M4/3 products as well as its compacts; it may even OEM some of those compacts – who knows?
  • Sony itself isn’t exactly taking the camera market by storm as it intended – response to the SLTs has been somewhat lukewarm, and the NEX series might sell reasonably well in Japan, but I see very few people carrying them anywhere else. The RX100 and RX1 compacts are interesting, but priced too high to be mass-market.
  • Arguably, the OM-D is probably the best option for M4/3 users at this point – it’s a great blend of light, small, full-featured, responsive and high image quality. Even the new GH3 is believed to use a derivative of the same sensor.

Now, if this were any country other than Japan, I’d say this is the beginning of the end for Olympus. The trouble is, Sony isn’t exactly on a strong footing either, which means they may not have the resources required for a complete takeover. And being Japan, the conglomerates and cartels have existed for as long as business has been done; it might not make sense on initial examination, but ensuring the competition stays at a relatively similar level means that every stage of development can be recouped and monetized to the maximum*. In the long run, this is good for the industry, but it does milk the consumers – of course, you always have a choice if you want to go for the next incremental upgrade or not.

*Have you ever wondered how it’s possible for Nikon and Canon to respond to each other’s new product launches so quickly? There’s no way Nikon announced a D600 and then Canon designed and released a response within a week – the product design time, marketing campaign design, booking media etc – takes at least 6-9 months. I’ve heard from a number of industry insiders – some very senior indeed – that this is not just a repeatedly serendipitous coincidence. And then there’s the obvious one of Sony supplying sensors to competitors – if you wanted to kill the competition, just cut supply of the most critical component. Here’s the interesting bit: if sensors were more profitable, why make cameras? And if cameras were more profitable, why supply sensors? Yet Sony does both.

From a business standpoint, the investment makes sense for Sony: it’s hedging. In case the NEX line eventually doesn’t make it, at least they have their foot in the M4/3 door. The numbers make a compelling argument: in 2012, 12/20 of the top sellers in Japan (traditionally a bit different to the rest of the world, but also a bit ahead of the trend curve curve) – representing a whopping 47.2% of all mirrorless cameras sold – were M4/3 cameras; of this, Olympus had 25.8%. Sony had 18.4%.

Let’s take out the crystal balls and photographers’ caps for a moment: what does this mean for both companies, and both systems, long term?

Status quo. This is the obvious answer, and almost certainly what will happen in the short to medium term. The market shares aren’t far apart enough to justify culling of one system or the other; if anything, both companies will continue to sell as many cameras of whatever type they can manage. Death of either mount would be deeply embarrassing to the parent company.

NEX dies. I see this as being the most plausible scenario; in effect, they’re competing against themselves. And it wouldnt’d be the first time Sony has bid goodbye to a product that was a good idea – Betamax, for instance – but poorly implemented; in theory, the NEX mount should offer better image quality than M4/3, but I’m just not seeing as much of a difference in practice as you would expect. What I find interesting is that most of the time, even if cameras share the same Sony sensors – the Sony version seems to have the worst image quality. The NEX system just doesn’t have the diversity to compete with M4/3, not is it likely that this is ever going to change due to the costs required and the type of users it attracts. A good portion NEX shooters are compact upgraders of beginners rather than experienced photographers seeking a second system; the conversion rate to wanting to buy more serious/ niche lenses or accessories is therefore much lower. Couple that with a smaller market share to begin with, and investment here looks like a poorer proposition: why spend the same money developing a lens for perhaps 10m potential users instead of 100m, when the development costs would be nearly the same? Sony exiting the NEX market would probably mean transferring existing efforts to support Olympus M4/3 development – which might result in some very interesting products, and even hotter competition for Panasonic.

Olympus exits the camera business. This one I don’t see happening, but then again, even stupider decisions are made on a daily basis in most large companies thanks to the power of decision by consortium, so we never know. And Olympus has that rather profitable and even more dominant medical imaging (mostly endoscopes, running anywhere up to US$100k apiece) business. But on the face of it – it just doesn’t make sense to exit a market in which you are the leader. Even if we reach a sensor development wall at some point that makes image quality directly proportional to sensor size and nothing else, I don’t see the difference between APS-C and M4/3 being large enough to make a difference for most consumers (and they are the bulk of the buying market) – they’d either buy what they’re already familiar with, or whatever has the most compelling advertising.

Every major shift in technology brings about an accompanying shuffle in the players – digital was no different, and we saw the death, absorption and acquisition of many long-standing names in the business. Though things have stabilized somewhat over the last few years, I think we’re going to see another phase in which the big boys fight it out for diminishing growth; once we reach saturation point, the only way forward is to innovate. In fact, the mobile phone industry was a good example: until the iPhone came along in 2007, every successive generation wasn’t that different; there was no compulsion to buy on the part of the consumer. In fact, I feel we’re approaching that point again today – it seems pretty much everybody has an iPhone, and upgrading every cycle is both expensive and stupid – it seems the new ones aren’t always better than the ones they replace.

The same goes for cameras. Note that the cameras which are getting the most attention – and in most cases, sales – are those that dare to break the mould and challenge existing preconceptions. The RX100 has taken the compact world by storm; the RX1 should have, but price point killed it (I have a feeling it’s an exploratory product for a cheaper, more mass-market appeal successor); Fuji’s X series has taken off in a big way – the only thing that’s holding it back from gobbling up even more market share is usability.** There’s no real reason why we should be still using film-shaped cameras other than legacy design and user familiarity; but at the same time, designs that are too radical and unintuitive (Sony F828’s buttons, anybody?) won’t go the distance due to lack of widespread adoption, either.

**I looked at the X-Pro1 and nearly switched on spec: here was a system that gave me all of the lenses I needed; a small body and rangefinder-like experience, and of course high image quality. Then I used one, and was instantly reminded of why I sold my X100.

Those companies who have trouble innovating will have trouble surviving. Though both Sony and Olympus have been through their periods of ups and downs, both companies have a history of innovation – we can only hope their engineers get out of their silos long enough to cooperate and rope in a few real photographers in the process. MT


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  1. Olympus oder Pentax?

  2. susodelrio says:

    Hi there!

    I liked the article when posted, and when re-reading it today I was surprised of how much reaction/comment it had. It seems, Ming, that most of your readers (included me 😉 are CEOs/CTOs/CFOs of top companies.

    I’d like to comment on the comparison between the Sony-Olympus buyout and the Sony-Ericsson join venture.

    The first one is a buy, not a merge, so the new parent company will decide what to do with the portfolio of the bought one (as when Sony bought Minolta to gain market share with the alpha series). I personally hope they let Olympus breathe, and keep developing micro 4/3 as a system, but this is not more than that, a personal hope.

    The second one was a join venture in an specific, relatively small in volume/revenue but huge in general public image, of two giants (Sony in consumer electronics, Ericsson in telecommunications equipment) that were lacking the skills of the other one in a moment mobile phones were changing from pieces of communications engineering to consumer products (however “smart” they eventually became). Since the market changed and the JV really never took off, both companies split, letting Sony freedom to integrate mobile phones in a wider end-user experience (of which I’m sure we’ll see more soon) and Ericsson stepping aside from a business that was not really their own. By the way, Ericsson seems to keep on selling equipment like 3G modems, as I discovered when I opened my HP laptop to add extra memory and I discovered the 3G wireless interface was Ericsson.

    And Ericsson claim ( USD 33,8 billion sales in 2012 and 110K employees worldwile, so they must be quite alive.

    My personal view (reinforced with the sales/operation income information of Olympus is that Sony is behind Olympus’ healthy medical business and not their struggling imaging one.

    I think that we, as photography fans/aficionados, tend to overeact about the news that affect our favorite activity. But life is much of the time governed by feelings, not rational thinking, so it makes sense we spend so much time and energy in commenting this news.

    • Actually, you never know – I count many such people amongst my students…

      Thanks for the thoughts – it seems to me too that medical is the target to reinforce Sony’s struggling overall bottom line; which would be sad because it means eventually that imaging may well be a casualty in the long run.

  3. The digital imaging world is still very new and is only now showing signs of maturity. ( My digital world started 9 years ago with a 20d that I have just given to my 17year old daughter!). So I think we can still expect some more m&a and rationalization. But think back 10 years ago, who would have thought that Olympus would be a market leader, and that Panasonic would make fine cameras? How about new brands like Samsung, Rokinon, etc and the demise of Kodak. Perhaps the ‘uninteresting’ cameras from Canon is more a case of caution in the present economic climate, but seriously any camera from Nikon, Sony and Canon produces damn fine images, almost on a par with Leica but of course at a price that the 99% can afford. Having started in film 30 years ago I am still gobsmacked at the pace of new releases and the mad scramble to posess the latest and greatest, as if what we have right now is not good enough! I make my living from photography and therefore I have to justify a reasonable return on my camera investment and of course the longer I wait to replace the better that return is. The next nine years should be a lot more interesting!

    • Me too – I only buy something if I’m actually going to get a visible improvement from it over something I’ve already got. Anything else is a waste of money.

  4. Olympus is rightly described as a medical company with a money loosing camera division… note “medical company”, not “medical imaging company”. Olympus’ core business is in the endoscopy sector… GI, arthroscopy, internal medicine… some of it endoscopy camera related, but a lot of it surgical equipment related, and unlike in consumer cameras, they are market leaders. This is a different sector from medical imaging, where the players are GE, Siemens, etc, and which is much more capital equipment focused.

    Sony the brand, to put it in polite terms, is middling in the medical field… they’re really hampered by the “silo” structure of their company and don’t move very quickly. Also, like in cameras, they tend to supply components to other companies. Sony rescuing Olympus at the corporate level was really something of a necessity for both companies… Sony is never going to break the Nikon/Canon duopoly without a serious partner… they didn’t move fast enough to capitalize on the Minolta/Konica legacy… hopefully m4/3 and the Olympus brand is a second chance for them.

    As for Olympus… it wasn’t just one thing, but a whole series of questionable business practices and transactions. All things considered the company got off lightly because of the incestuous nature of the Japanese business community… with so many companies and banks having cross-ownership, there was a strong incentive for many for Olympus not to fail. Olympus is larger than its other competitors in this field, so the medical division will continue in one way or another, but should anything drastic befall Olympus again, the medical division will once again be a keenly eyed prize.

  5. I’m pretty sure Sony has a bigger market share of mirrorless cameras than Fuji does in Europe. Which is not really surprising as Fuji is very new to the mirrorless game. And Sony probably wouldn’t release 3 new NEX cameras each year if they didn’t sell well. So I don’t think the NEX situation is as bad as you paint it to be (or as it might in fact be in Japan) – at least not internationally.

    Also a couple other things to consider: The NEX series shares a lot of components with the Alpha series. Sony also uses E-Mount for camcorders and just recently released the first E-Mount camcorder with a full-frame sensor. There’s also a lot of speculation about a full-frame NEX that might be released next year. I’m skeptical about this one, but the rumors aren’t unrealistic. In any case: Sony seems to have high ambitions for the NEX and Alpha platforms. I also recall restructuring plans from Sony that were based on three pillars: Playstation, cameras, and … something. Maybe semiconductor stuff. They already laid off other branches like TV so I’m sure that everything that’s still standing is here to stay.

    Also: The sensor business appears to be very lucrative. And if we assume that the NEX and Alpha series turn in profits as well … then why would they want to choose between selling sensors and selling cameras? Why not do both? This kind of vertical integration has the most potential for high profit margins; Apple is a prime example for that. Samsung is another: Besides Apple, they are the only smartphone maker that’s not making a loss but actually generating a profit in that market. And they are also the only other company in that market that is highly integrated: Logic boards, SoCs, displays, flash memory – everything is made in-house. I wonder if this is one of the reasons their NX line of cameras still exist, since they have an even smaller market share than either Sony or Fuji.

    There is one scenario that I feel is missing from your article: This transaction is kind of a partnership between Sony and Olympus. Sony already supplies sensors to Olympus, which is why you suggested the NEX line might get killed. But what about the possibility of Olympus producing lenses for the NEX series? I don’t mean instead of M43 lenses, but in addition to that. Olympus gets Sony’s sensors, Sony gets Olympus’ lenses. The NEX desperately needs lenses and as far as I know, in a system camera ecosystem the most money is made from the lenses rather than the cameras; so both companies would profit from that. A bit like Panasonic and Leica. Do you think that’s unrealistic?

    • The last paragraph is interesting. Not unfeasible, but I didn’t consider it because of the existing Sony agreements with Carl Zeiss; it’s not unrealistic, but I can’t see them diverting resources to produce another range of lenses (none of the current ones can be adapted due to image circle and flange distance); plus the impression I get of Sony’s branding strategy is that they see themselves as a direct competitor to Olympus – which would make using their lenses almost an admission of failure or lower positioning.

      • But Sony has opened up the NEX lens mount and will license just about anyone in order to get more lenses for the platform. While this may not be considered an admission of failure it certainly is an admission you need help. Besides, as an extension of what Wili brought up, Olympus could just fill a similar role as Zeiss is doing and just provide lens design and engineering services rather than actually manufacture lenses.


        • We can only hope this will result in more and better choices like M43, but they should probably have done this in the first place to avoid it looking like a call for help as you say…

  6. Bradley Cooper says:

    You wrote: “Following the accounting scandal that saw former CEO Michael Woodford ousted … ” which names but does not explain the role of Michael Woodford.

    Michael Woodford was the hero who upon becoming CEO found that the Olympus books had been cooked for years. He immediately demanded accountability, honesty, and disclosure and was promptly fired for doing the right thing.

  7. “**I looked at the X-Pro1 and nearly switched on spec: here was a system that gave me all of the lenses I needed; a small body and rangefinder-like experience, and of course high image quality. Then I used one, and was instantly reminded of why I sold my X100.”

    Same here, Ming. I recently sold the X-E1 and the three primes as well: the size factor with these big lenses means that there is no meaningful size/shape/volume difference over the competitors, IMHO. I am presently using a GH-2 for video and stills; I have no deep ‘connection’ to the camera, but the prime lenses are much smaller and hence the package of what I need to take on a job is less. The X-E1 and the 35/1.4 does produce better images—but not significantly better as you observe (comparing the X-Pro 1 with the OM-D, which I also owned).

    I really like the form factor and handling of the X-100s, but am no fan of the 35mm EFOV. If Fuji ever comes out with an ƒ2 50mm equivalent, I will buy it.

    I realise this is a bit ‘OT”, but the context is cameras, after all.

    • the problem is I picked it up, and then the experience was so slow and clunky as to be immensely frustrating. The hapatics matter.

  8. My crazy thoughts:

    Olympus and Sony combine camera division and to be known as Olympus. Streamline both of their engineering and productions and also jumps into the “mobile-smart-camera” market. Their line of products becomes:

    – Olympus M (all of P&S, superzoom, all-weather/tough, previously from Sony and Olympus should be under this category, all have “smart-camera” capabilities) – caters to entry market
    – Olympus R (all “high-end” non ILC camera previously from Sony should be under this category i.e R100, RX1. Olympus XZ-series would fall under this category as well. There could be a “high end” tough camera also in this category) – caters to enthusiast/pro market
    – Olympus Pen – caters to the entry market for m4/3
    – Olympus OMD – caters to enthusiast/pro market for m4/3
    – Olympus Nex – caters to entry market for APS-C, video and enthusiast/pro market for FF

    I personally do not see any benefit of the SLT line. One problem I see is how to harmonized between Sony and Olympus design philosophy.

    • It leaves too much complication at the high end. And what happens to the SLR lenses and 4/3?

      Sony likes menus. Olympus likes buttons. Enough said…

      • Well Canon forsake several generations of FD lens when they created EF mount back in ’87. So, I would say Sony can forsake the SLR lenses too. And why would anyone want to use a 4/3 now? Except of course, Mr. Robin Wong. It’s too bulky for the size of it’s sensor. I believe it will be a dead end anytime soon. I believe the future trend for camera size would be towards the smaller side. And that’s why I personally would drop both the SLT and 4/3 line. But I’m not a camera marketing genius, I don’t know nuts about the market.

        Though, again as you mention the design philosophy of Sony and Olympus lines are too contradictory, it would take a genius product designer to merge those two.

        • That decision was fairly starightforward and streamlined, I feel – Sony and Oly on the other hand…is messy. Four lens lines into one or at most two is going to leave a LOT of very unhappy users – especially since there’s no reason to do it other than cost savings. (FD couldn’t AF, which is a legitimate reason to upgrade the mount spec.)

  9. Interesting article, it got me thinking (that why I like it). I don’t have an M&A background but I looked a little bit on the olympus website to get some data. It seems that for the best part they are working on Medical equipment, the camera part is much smaller in proportion. I note that the revenue from the camera business seems to drop regularly (or maybe it’s a consequence of the scandal and it’s more readjusting with reality?). I would also think that the cost of reorganisation would be quite high (and risky looking at how much people seems attached to the brands) and the potential revenues probably quite low anyway. So the status-quo seems the most likely.
    For the medical part I think it’s another story completely, I am not sure that the customer are so attracted by the brand but probably looking at the cost of the goodsthey havea more rational approachwhen purchasing. In that area it could be a good new market for Sony to diversify itself?

    • The medical business is definitely what Sony wanted. It’s enormous. I work closely with a couple of hospital clients and landed up in a conversation with one of them on endoscopes (I wanted to purchase a used/ end of life one for watch photography, but that’s another story) – something Olympus is seen as the market leader for. There is brand loyalty amongst the doctors – they won’t change because most of them are very, very adverse to it, and since the hospitals are at their mercy…it seems like a rather nice captive market to me.

  10. Admittedly I don’t have the travel experience of Ming, but living in the middle of China, I see only 1 brand of mirrorless and that’s the NEX, if you look in the camera stores here, there is a huge presence by Sony and while the other brands are on display, they certainly seem to be pushed to the side.

    As far as non compact cameras (an area I was lead to believe is strong for Sony) they have the A and the E mounts, in which a lot of A mount users are getting a little concerned that Sony is moving its resources away from A and into E, worthy of note if you think that Sony may pull the plug on the E mount. I feel that in anything, they will push harder into the field.

    The final thing I will say is that Sony, much like many Japanese companies HATE to lose and although Sony have ‘lost’ a few battles in the past with betamax and minidisc, they went down fighting (both of which had a much longer lifespan than people think). If you look at their motives with the playstation, and read into the history of it a little, you can see what sort of mindset Sony can get into when pushed.

    • The Chinese market alone could probably sustain a brand if properly cultivated. As for the A mount – they did recently throw out SLT technology, plus of course the A99. I think that will take a lot longer to die because of the legacy lenses; I was at a Sony event recently and the majority of users were still carrying DSLRs – and mostly newer ones, too. Of course that doesn’t necessarily mean it’s representative of the whole market.

  11. Interesting lets see how this plays out

  12. Reblogged this on legaltrexblog.

  13. Jeff Smith says:

    Interesting topic that could be expanded. We have an expanding number of lens and systems and something has to give eventually. With neither Panasonic or Olympus being profitable with cameras how secure is m4/3? NEX has not really done much since it debuted, sure the cameras have gotten better but I really don’t see them going mainstream and being profitable. The Nikon 1 system does not seem like it will last particularly as APS-C cameras get smaller and smaller sensors get better. The Canon M system looks to be short lived especially with news of their pending smaller DSLR with APS sensor. With the improved focusing, operational speed and expanding lens the Fuji X system looks promising, but will it attract enough buyers, it seems it may always technically a very good system but not mainstream. Than on top all this we see that sensors have improved greatly and additional improvement is likely as AA filters are removed from more cameras and with improvements in micro lens. Soon, if notbalready, one will logically need to ask themselves if the improvement in sensor quality will really make much difference in the final image. I wish I could read the crystal ball better as I will likely jump into m4/3 or Fuji X later this year.

  14. Wholeheartedly disagree with you, Ming. As of late, SONY has been THE MOST innovative and daring camera designer and maker. The potential of NEX line is rather infinite, given the geometry of their lens mount an open-source status of its protocol. Their SLT is revolutionary in its approach, capabilities and respectful treatment of legacy glass. Both NEX/Alpha form a very logical line. If you turn out to be correct regarding its predicted demise, it will be loss of a tremendous opportunity, both of business for SONY and of creative potential for the system[s] users, with capabilities not offered by any other line. It baffles me you and your many readers do not see the obvious. Indeed, SONY needs to outsource their efforts on creating better UI and ergonomics. Maybe, Olympus will become this long-needed helping hand? What those Japanese conglomerates need the most is breaking the mold of their traditional isolationist corporate culture, embracing their user base, starting the dialogue with consumers. Miraculous success will follow.
    D. Serdukoff

    • Rain Santiago says:

      Sony’s hardware no question about it has always been top notch it’s there implementation of the system that seems to be there biggest bane. I will agree with you though the RX100 and RX1 in there respective arenas have shaken up the market.

    • Yes, they’ve been innovative, but they haven’t followed through – or bungled something somewhere along the way. RX1 at $3,000? Madness. Small NEX bodies but a really crappy UI and lack of lenses several years after launch, despite a partnership with Zeiss – and instead a strange deal with Hasselblad? Please. Let’s be honest, at least M43 has a decent ecosystem…

      All that said: it’s a real shame, the potential, resources and engineering chops are there – but half-baked corporate conservatism has held them back. I’ve heard this more than once from several employees at Sony, too. Guess what: despite great results, they got replaced by incompetent idiots that could tow the company line, but couldn’t do their jobs for nuts. Very sad indeed.

  15. In the U.S. at least, I think Sony is in a better position with their NEX cameras than Olympus is with the PEN/OM-D. Anecdotally, the last three trips I took were to Disney World, NYC and San Francisco. The majority of people I saw walking around were using cell phones or compacts, a minority of people with Rebels/DX00 and kit lenses, and only a few people with mirrorless cams (I didn’t see any E-M5’s). I think this follows sales figures generally except in Asia. For most people who don’t buy a lot of lenses, the NEXs make more sense than a PEN/OM-D because they’re available in big box stores (I did not see an OM-D in person until I walked into B&H), are cheaper (NEX-6 vs. OM-D) or the idea of having a DSLR-size sensor appeals to them (I think it was a mistake in marketing to call it “Micro” 4/3rds, by the way). If anything, I think Sony will make a bigger splash with the NEX-3N than anything they or Olympus has released so far. A small body, APS-C sensor, with a compact zoom lens at only $500 will be tough to beat.

    • I see far more M43 cameras here than NEXes – perhaps the products will land up being regional. The OM-D is more of a NEX7 competitor, so the pricing is a little closer; I don’t think it’s so much that as product positioning – the OM-D is really quite intimidating to the beginner with that many buttons and dials…

      There’s the E-PL5 and E-PM2 which take on the NEX3N just fine.

    • Jack

      Last September I went to Italy for two weeks and spent quite a bit of time in the major tourist areas of Florence, Sienna, and Rome, so I had a chance to see a lot of people taking pictures and what they were using to do so; the largest single group in Florence were Asians. As expected most people were using a phone based camera or a compact point and shoot style of camera. For me the biggest surprise was the number of people using an iPad as a camera. In a way it looked cool and large format-ish, but I there must have been about 10 people or more in the tour groups doing this.

      Aside from the usual phone and point & shoot cameras, or consumer DSLRs, there were a few cameras that stood out enough that I took notice and made mental notes about them. I guess they stood out because there were so few of them, or how many I noticed in a short time. These camera were the Fuji X-Pro-1 cameras (4 different users within 20 minutes one evening) , a Nikon F5, a D4, a Leica M8, and 2-3 Olympus Pens; aside from my Olympus Pen [EP-3]. Plus, looking in the few camera store windows I came across there were more M4/3 cameras being displayed than Sony NEX bodies. So from what I saw among people that are serious about photography the mirrorless cameras are catching on.

      Concerning Sony NEX vs. Micro 4/3s I think it comes down to the luck of the draw of what you notice and where you are. Last weekend I visited 2 camera stores in Seattle. One had more Panasonic M43 bodies in boxes on their shelves than Canon, Nikon, and Sony DSLR bodies combined, but only a few NEX bodies. While the other store keeps about equal amounts of M43 and NEX in stock.


      • I’m surprised at how popular the XPros are – they’re not small, not fast, have a terrible UI, and the sole redeeming qualities of a very sensible and high-quality lens selection and image quality. But still, these are not the things the mass public typically care about…

        • I think Fuji is getting a more serious user than the mass market users. Definitely people looking for the lens and image quality, people that think of the system as Leica light, and people that want a platform to use Leica lenses that won’t cost an arm and a leg to buy. Though time will tell if these people stay long term users.

          A co-worker of mine, who is a serious D3s user recently picked up a complete system from a friend of his; who sold it to finance a Leica Monochrom.


          • It definitely doesn’t have the same feel as a Leica, though. Not that it affects the image quality at all, but it does make the camera more enjoyable to use.

  16. There are many photo bloggers out there, and lots of financial analysts … but not many photo blogging financial analysts. A great and unique post – thank you!

  17. I’m thinking Ming has a way to slow down time. To write his articles, take the photos and a million other things he does, he simply speeds up his brain, goes into a trance and the world around him “seems” to slow down. He’s a one man symphony orchestra!

  18. Rudy Mareel says:

    Given the current position of both brands in various geographical areas I believe that the combined entity will look for a dual brand strategy focusing on different market segments within a given region. Simultaneously they will seek synergy in R&D, operations and the back office. As long as they redeploy a share of these savings into innovation we’ll be better off. Just my 2 cents…

  19. Hi Ming – I think in the actual Sony and Olympus press statements in September they both talked about photography and technology share despite focussing on the medical side.

    As for sensor vs cameras, my understanding is that the photography division is a customer to the semiconductor business in the same way that any other company is, so if you can see the photography division making a profit at some point why not do both? I think the fact that Nikon seem to beat them with their own sensor shows that they are not stealing market share.

    From a photography persepctive I see it as being a way to step in to m43 – I wouldn’t be suprised to see Nex being killed off either, at some point the nex and SLT could be very interchangeable – but the size of the lens will still be the dominant factor.

    • What companies say in the press release and what they actually do is quite another thing – I’ve written those press releases before, too. The priority is usually to avoid your investors thinking you might be upsetting the applecart and hurting your share price, or having them block the buy.

      I don find it ridiculous that another company can make a better camera with their own sensor, but then again that’s as much a reflection of their business decision (exclusivity of that sensor) an anything else.

  20. Steve Jones says:

    From someone who has been living here in Japan for the past 18 years or so, I’ve learned that within all of the big Japanese companies there are always a few individuals that are just as passionate about the products they make as we photographers and users are. Case in point, a few years back I tried to get a professional Sony Walkman repaired. ( motor noise and drive problem) The store where I bought it wasn’t interested, so I located the Sony service centre (in the Ginza district of Tokyo) and asked them if they could help. They entered all the details into their computer and the girl on the counter apologized and said they no longer kept the parts to repair that product. Not surprising really, but she called the technical department anyway and somebody there was interested enough to take a look at it. they didn’t make any promises but a week later they called to say it had been repaired and would I drop by to pick it up? It was good as new and the charge for the repair was so small i couldn’t believe it.. They were happy to see that I was still using it and fixed it for next to nothing.
    Was this kind of service a one off? No. I also had Minolta take apart my 28mm Rokkor lens for my CLE compact, to remove the ‘bubbles’ in the glass( a well known problem with that lens due to the glue used to cement the elements in place). Same excellent care, attention and result because someone in the company simply cared enough to do it.
    So whether it’s SONY / MINOLTA or SONY / OLYMPUS I have high hopes that there are enough caring designers and technicians and company chief executives to keep on giving us great products like the OMD, and whatever else they come up with, for years to come.With companies jostling for position, market share and survival these days I doubt whether anyone can predict which ones will survive. Japanese companies are certainly not afraid to adapt and integrate It is part of their strength. Some of the best bicycle frames were once made here but the sudden rise of the Yen eventually made it unprofitable to continue production. however the key players in that industry ( Bridgestone and Shimano for example) continue to thrive by making parts or focusing on other areas). there will be lots more collaborations and partnerships for sure.Interesting to note that Olympus were not one of the major players in the camera industry for a while, after dropping the original OM system, but their digital only development strategy gave them a lead and has put them back at the top of the game . They could have thrown in the photographic towel and fallen back on that endoscope business but they didn’t. Leica came perilously close to folding a few years back too but they also bounced back against all odds when many had written them off both financially and creatively.Whatever happens I think we can be optimistic about future photo products even though it can be a bumpy ride for some companies.
    Great article Ming.

    • That’s a great tale – it’s really nice to see there are still passionate people around. I suppose it’s also pride in something they created? Can’t blame them at all 🙂

      • Rain Santiago says:

        I think despite the accounting scandal Olympus went though I feel the momentum in Micro 4/3 is moving at a good pace. With the OMD, PEN and 12, 17, 45, 75 mm prime lenses they just need to keep the ball rolling.

  21. They better look at mobile phones! Olympus Mobiles, anyone?

    • Jamie Zartman says:

      Actually, they should be looking at what mobile phones are doing to provide new camera features, such as those on the new Galaxy 4, none of which are available on “real cameras”

      • Possibly because they’re not features that a lot of people would use. But then again, I’m happy with nothing more than a few metering modes and aperture priority, so perhaps I’m not the right target market.

  22. Agree that all current NEXes are crap. It is especially well shown at 5R or 6 examples: lack of quick exposure correction control while two wheels are avaiable is kind of ergonomic diversion.
    PS I’m NEX-5N (which is a crap to use too) owner.

  23. I’ve heard the same myself from sources – that at the highest level, the various Japanese camera companies share a certain level of co-operation with each other. Hence, like you say, the similarities in products, if not at the same exact time, then at a tick-tock variance (you first, me second).

    I’ve never been able to confirm this though, and likely never will. But I’ve heard it quite a few times from many different people, so I think it could be quite possible. Especially when you factor in the traditional Japanese mindset – they might be in competition with each other, true, but at a higher level, they’re all Japanese competing against the world.

  24. Paul Loker says:

    This was a great article…. what was said made a great deal of sense. I do hope Olympus survive, fine cameras and lenses. Sony would do well to allow their R&D team integrate NEX with 4/3….. how I don’t know but it would be an enormous leap forward.

  25. You should ware that corporate hat more often 🙂 a great read!

  26. The NEX series is one of the best selling, if not THE best selling mirrorless system in many markets other than Japan. It’s not going anywhere. Also, unlike the picture you paint in the article, the sensor manufacturing division and camera division of Sony are not one and the same. They operate as autonomous companies within the brand umbrella.

    To the sensor division, the camera division is just another client (Albeit an internal one). They sell sensors to them just like they are selling them to Nikon and Olympus (At a better price, possibly). Many large companies operate this way. I’m surprised you are not aware of this.

    • I am aware of this, and it’s a stupid way to operate: you might sell more sensors, but you also shoot the rest of the company in the foot. There is no leverage/ benefit of brand synergies at all – to the point that the D800E sensor made for Nikon can’t even be used in one of their own products – they don’t even give themselves access to the best technology!

      • I can’t comment on Sony’s internal operation, but I disagree that selling sensors to competitors is a bad idea for Sony as a whole. It’s quite simple: if they don’t do it, someone else will. Considering that a large chunk of the market relies on Sony sensors (of which, in turn, only a small portion is actually Sony products), it would mean extensive lost profits for Sony if they kept their sensors to themselves.

        Of course, market share for Sony’s own cameras will occasionally suffer, but probably only mildly, for a) most people still don’t buy because of sensor quality, but because of brand involvement, brand love, hype, megapixels or just clever marketing, and b) any loss in market share will to a significant extent be compensated by the profit Sony makes from the sensor in that product, the sensor being by far the most expensive component in any camera. For every Nikon camera sold that has a Sony sensor, Sony will make a profit that is probably not much less than Nikon’s. That seems like a clever strategy to me.

        The only thing that makes me wonder, too, is that Sony routinely makes worse products with their own sensors than their competitors. The camera body itself notwithstanding, one and the same sensor often performs worst in Sony’s camera. The introduction of the semi-transparent mirror throughout the DSLR line only adds to that by imposing an inevitable noise penalty. But, if anything, this just means that Sony should improve their own cameras, not that it should stop supplying competitors.

        • It’s not supplying to the competition per se, it’s not allowing your camera division access to the better products – in effect you’re handicapping yourself…

          • Any sources on that? I don’t see how the 36 MP sensor being exclusive for Nikon (if so it is) could hurt Sony at the time being, given that they only have one current full-frame model and that was never intended to be a high-resolution camera.

            • Internal from within Nikon. But ask yourself: do you see anybody else using it?

              • The point is that there is no current Sony product that could have profited from the 36 MP sensor; hence no harm done. By the time Sony wants 36 MP in one of their cameras, there will most likely be a newer generation of the sensor or even an entirely different sensor they can use. At least I’m confident they didn’t agree to leave all top-of-the-line sensors to Nikon. 😉

                • Yes there is – the A99.

                  • A 36 MP sensor would have made the A99 a more specialized, more expensive, and significantly slower tool. If you have only one full-frame model, you want it to be an all-rounder because that’s what people are most likely to buy. (Not that I wouldn’t find a high-resolution variant of the 99 much more interesting myself, but we’re talking business here.)

  27. I wish Olympus endure long in the world and their engineers keep their creativity juices flowing and their job intact
    because I respected their originality and founding rights, like I respect MT and wish him health
    not easy to assemble human resources though
    much more difficult to find an abode with like-mind buddies to create and deliver without obstruction
    because I finished on Agfa paper/chemistry with Kodak & Leitz (1960) and Tatsuno & Polaroid(1970) + Kodak/Fuji film
    sentimental value linger but from heart Olympus engineering department shine independently
    about lack of promotion I think advertising expenditure hurt too
    hope photographers at large spread their experiences with OMD + human touch and guidance
    But alas I am a compact Olympus U795SW user, so pay no attention and ignore this comment.

  28. Nice Article Ming! Love my RX100. I think SONY will go FF with NEX and beat everyone, except Leica, to the FF mirror less game. Not a huge fan of the current NEX for reasons you mention. I do like SONY’s ability to create great products like the RX100 despite the fact that they compete with their other products. I think the Fuji x-E1s (IF and when it comes out) will be the one that focuses fast like the x20 and x100s.

    • That would mean a new mount and lenses – given the slowness of releasing sorely-needed new glass, I can’t see this happening…

      As for the Fujis – some of the speed limitation is lens-based, too.

      • Nobody really saw the RX100 or the RX1 coming. IMO, your going to see Sony & Zeiss take it up several notches starting with the three new e-mounts in just a month or so.

        • I hope so: competition is good for the consumer. But they need to build on those products, not make one-hit wonders – that isn’t sustainable.

    • David Babsky says:


      NEX is also a lens mount, and lenses, in the video business, so Sony isn’t going to rip up, change or alter the NEX specification to jump into another arena (full-frame). The NEX format is (roughly) comparable to ‘Super 35’ in film and video terms, so the NEX video cameras and lens mount are positioned to fight full-frame-SLR video shooters (professionals) and the more expensive RED and BlackMagic cameras (if BlackMagic ever really materialises), and Canon super-35 and others.

      The coverage of NEX lenses (APS size) is too small to cover 35mm stills full-frame, (but DOES cover the smaller 35mm movie frame!) so NEX and full-frame mirror-less (for stills) are quite incompatible.

      Sony chose its position (midway between still full-frame and m4/3) to give best ‘mid-range’ quality for ‘consumer-grade’ stills, and to be well-positioned for amateur and semi-pro video ..but just hasn’t delivered the hardware to fulfill the promises.

      It’s hedging its bets by buying into Olympus, and assuring itself of a customer for its sensors, and – as Ming says – ensuring that “the competition” stays in business.

      Now it just needs to get a competent CEO. RIP Mr Morita.

      • David Babsky says:

        (Sorry; I forgot to turn off italics after “..the smaller 35mm movie frame..”!)

      • David, Sony needn’t change the E mount specification to accomodate full-frame sensors and lenses — if I remember correctly, they’ve already confirmed it is compatible. That the current E lenses don’t cover the full frame image circle is another matter, and of course a considerable obstacle. But if Sony chooses to launch a full-frame mirrorless camera along with specifically developed lenses, they can do so without messing with the other applications of the mount.

      • Andrew S says:

        This is why NEX is likely here to stay. NEX is huge in the video market, especially prosumer and small pro.

        The video quality of the NEX-6/7 exceeds that of most upper-end DSLRs, and things get better as you move into the dedicated Sony video cameras. Video’s not concerned about the failure of Sony to get many pro lenses, since you can mount whatever you want and autofocus is irrelevant (Yes, I shoot video on Leica-M lenses. A sin, I am certain). I pull out my NEX-7 for video because the experience and the output is so much better than on my nikon full-frame.

        Where Sony really needs a kick in the pants is the interface of the NEX cameras. They’re a usability nightmare; even after a year on the NEX-7 I dread having to go through the horrible, horrible menus. Maybe Olympus can fix that.

  29. Now you’re going to piss off the NEX fanboys by predicting that killing off their system is the mostly plausible outcome. They’ll have to go have a good cry over a beer with the GH3 fanboys. 😉

    More seriously, it amazes me how quickly Sony iterates their camera bodies compared to their lenses, leading an Internet wag to say that Sony makes interchangeable camera bodies rather than interchangeable lens cameras. As a NEX-5N user, I hope it survives long enough for Zeiss to give it a healthy bunch of lenses.

    • Rain Santiago says:

      Personally I’m Sony fan myself but Ming had a point about the NEX system’s weakness and they haven’t leverage there relationship with Carl Zeiss enough or have build G lenses for the NEX system.

    • It would be cool if SONY used Oly Lenses.

    • Commercial reality is tough to swallow. Sad thing is the NEX bodies have a lot of very innovative touches – like Tri-navi on the NEX7 – but hardly enough good glass to make it attractive.

      • Rain Santiago says:

        Totally agree with you on your sentiments towards the NEX system Ming, the only lenses worth getting for NEX is the Zeiss 24mm but yet that thing costs 1K US Dollars with micro 4/3 we can get at least two or even 3 fast primes.

  30. I’m still perplexed by the Sony/Hasselblad deal with the Lunar. To me it seems like an act of desperation for both parties. Personally, I’ve never met a Sony camera I’ve liked. Funny that you mentioned the F828 – that was one that made me cringe.

    I also agree with the comments on USA marketing. At the stores I’ve been to, mainly the discount outlets with rather large camera depts, it seems that you see the Tough cameras, maybe a point & shoot or two, but nothing on the PENs. Of course you have to get past the Nikon Ashton Kutcher display in order to really look at anything.

    • Rain Santiago says:

      I seriously can’t stand the Nikon 1, Nikon totally did a half *@$ job on that thing funny how it has the same sensor as the RX100 yet in terms of image quality the RX100 literally blows it away.

    • I suppose Hasselblad needed the tech partner and cashflow? MF digital isn’t exactly a huge market, and development costs – especially for sensors – are staggering. Who knows, perhaps they have something sensor-related up their sleeve in return for (trying) to lend a bit of halo effect a-la-Leica/Panasonic to consumer products: imagine a FF 645 sensor with the pixel architecture of the Sony-tech in the D800E…that might just be worth the price of entry.

  31. Thiefsie says:

    Sony are in the general electronics/consumer parts game, as opposed to focusing on single areas… this would be why I attribute them both making cameras and sensors for said cameras regardless of profit. They have a long history of trying to force people to stick to their holistic (and limiting) systems to both their demise and growth (though mostly demise). Think Minidisc, think Memory Stick, think PS3, etc… they’ve been kicked multiple times in the last decade of two where they have tried to control a certain device market with proprietary systems only to be completely kicked in the ass by the more open-source competition (Apple aside). I think their response to trending conditions this millennium is to focus on service rather than product (long overdue perhaps??) and thus part of providing a said service (and hence subscription model – or at least very similar – again think Apple and in-built obsolescence and the like) is having control in most critical steps that are components of these systems. This works with their old ethos of trying to lock people into one typology [SONY], but where that typology is intrinsically spread across their entire range. You’ll see this grow out of the Playstation Network with PS4 and the like and slowly yet surely head for integration with cameras and Vita’s and any entertainment systems (telly/audio/3D/etc) that they decide to put out. Slowly but surely all of their devices will be connected to the PSN in some way or other, except perhaps for the real high end stuff. They’ve tried it time and time again (mainly with walkman and such) and this is probably an actual way they may succeed in world domination. Ha!

    • Thiefsie says:

      And to be blunt… from what I’ve seen Sony doing in the last year or so they are actually moving in the right direction and providing real value for consumers in their ranges of consumertronics as opposed to the decade prior which was somewhat disastrous. There is really nothing but harsh truth for Sony to look back and wonder at why they couldn’t turn the Walkman into the iPod of today with the boon of billions in licensing commissions and sales percentages…

      • Lack of foresight, or perhaps nobody paid attention to the little voice amongst the staff? Sony – much like all of the large Japanese conglomerates – is run decision by consortium, rather than dictatorship like Apple was. Lower risk, lower return…

  32. Rain Santiago says:

    The only place that mirrorless camera’s haven’t totally exploded is sadly the US 😦 I guess my folks here prefer bigger is better dinosaur Canon-Nikon DSLR.

  33. So Nikon and Canon drag their feet watching the mirrorless cat fight, with Fuji’s improved X models emerging as a bit of a dark horse in it all. Perhaps the customers may yet decide the shifts, as the tectonic influences of social media cultivate increasing market swings with respect to winners and losers.

  34. Do think it’s possible that Olympus will end up like Ericsson in mobile phone market ?

    • I certainly hope not. If anything, this is more likely to be the fate of Sony – to the best of my knowledge, Ericsson still exists, but makes B2B network hardware.

      • Ericsson was totally been wiped off from the mobile phone market except it’s own core network business. During that past 8 yrs i didn’t see Sony had contributed any breakthrough nor good to the industry, worse still continue to loose it’s market share in mobile phone sales.

        Just speculating, if Olympus follows the same fate, in worse case, it probably like gradual disappearance of Olympus from the camera market. I personally don’t like this kind of big conglomerate takeover who try to be all-round, access to other’s technology and dominate everything but may ended up not good in anything. I too hope this doesn’t happen in future.

        • If the option was Olympus going under npw, I think it’s the best of two evils. At least there’s a chance they might survive still.

  35. Rain Santiago says:

    Excellent analysis and thoughts Ming on the Sony and Olympus situation. Frankly in my opinion what is truly holding back the NEX series is lenses, hence one of reasons why I got an RX100 instead of NEX 5R as secondary camera and I stuck with my E-PM1 as my ILC.

    Olympus on the other hand seriously needs to start marketing there stuff here in the US. Major big box retailers like Best Buy for example there is barely or no presence expect for there TG series underwater cameras, the ILC camera market is still dominated by Canon and Nikon, heck even the Nikon 1 series camera’s have better presence than the Pen’s and OMD it’s a shame really 😦 I do hope Olympus survives, I’m a sucker for underdog players to succeed.

    • Agree – having taken apart several 5/5N/5R bodies, I can say they are amazing pieces of engineering with absolutely zero wasted space. But the lack of a decent range of fast primes or quality zooms handicaps the overall potential of the system.

      Don’t worry, Olympus is alive, well, and very healthy in Asia 🙂

  36. Interesting insight, Ming! I’ve been wondering about the Sony-Olympus deal for a long time. Really wishing a best-case scenario for both companies, my favorites!

    • Why do you like Sony so much? I personally would never buy another Sony product.
      They have horrendous software/UI skills, they gave up long ago on the middle/high end (with some rare exceptions) they shun standards and push proprietary alternatives wherever possible. They just aren’t consumer friendly (comparatively speaking)…

      • They’re not very photographer-friendly; but I get the impression this is not intentional – as though sometimes they have the need to need to innovate for the sake of doing it.

      • GeoDesigner says:

        Paul, I love Sony as a whole (Walkman, MiniDisc, PlayStation, Bravia TVs…), but I agree they are somewhat misguided in the photo field. Their over-dependence in proprietary formats is rather unnerving, and their diffuse marketing schemes seem out of place these days (dozens of models, lots of product lines… efforts get dilluted).

        However, as Ming mentioned above, they do innovate – a lot – and set extremely important trends. Some ideas might be poorly or incompletely executed, and I do believe that lack of prior experience in the pre-digital photo business is to blame.

        Olympus, OTOH, is certainly one of the most empathetic camera makers ever. They can really understand their customers and often give them what they want. Also a serial innovator. I believe they complement each other pretty well!

        • Follow through is what’s missing from Sony; Olympus perhaps needs to be a bit less constrained by their legacy – the OM-D’s ergonomics are undoubtedly a bit compromised because of the need to stick to the pseudo-SLR shape of the previous OMs.

    • I have too – I suppose it makes sense in a way, but there’s also a lot of interesting potential there – if they decide to work together.


  1. […] According to this article from Yahoo Finance Olympus is one of the “ten brands that will disappear in 2014″ (along with Volvo cars, JC Penney and the Nook e-reader). Olympus “only has 7% market share [of digital cameras] and has failed to generate a profit from its imaging business in any of the past three years” According to this report in the Wall Street Journal the company is pulling out of the cheap point and shoot camera market because “low-end compact cameras typically don’t offer much better picture quality than smartphones, and they make it less convenient to share photos online.” For a more balanced view of Olympus, as well as a discussion on what the recent investment by Sony means to the company, Ming Thein (photographer and ex-M&A consultant) gives his opinions here.  […]

  2. […] this article might seem to come from a bit left field for a photographer, then I suggest you read my previous analysis on the Sony-Olympus deal, and bear in mind that in my pre-photography life, I used to do this kind of thing for a […]

  3. […] very good read from Ming Thein today. Sony and Olympus: what does it mean? […]

  4. […] Following the accounting scandal that saw former CEO Michael Woodford ousted, Olympus’ coffers were looking decidedly empty; at that point, many potential suitors were rumoured. It turned out that Sony was the one whose offer was accepted. In a share transfer and cash deal – completed about a month ago – Sony pumped US$645 million into the company, to hold a total of 11.5%. What’s more interesting is that on most of the major business sites, this wasn’t reported as a transaction to invest in the cameramaker; rather, Olympus was frequently referred to as a ‘world leader in medical imaging’.  […]

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