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Canon President To Step Down Amid Weak Profits

U
Undisclosed #1
Feb 08, 2016
IPVMU Certified

Successor is Massaya Maeda, senior managing director.

Story.

JH
John Honovich
Feb 08, 2016
IPVM

More color from the WSJ:

"Eighty-year-old Canon Inc. Chairman Fujio Mitarai, a bulwark of Japan Inc. for the past two decades, said Wednesday that he was stepping back from day-to-day leadership of the maker of cameras and printers for a second time.

Mr. Mitarai said he would yield the post of president—roughly equivalent to the role of chief executive in the U.S.—to make way for Masaya Maeda, senior managing director, on March 30. Mr. Maeda, who is 63, spent a large part of his career in Canon’s imaging operations."

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Brian Karas
Feb 08, 2016
Pelican Zero

Sales ticked up 2.0 percent to 3.80 trillion yen, the company said. "Demand for digital cameras with exchangeable lenses faced severity due to weak emerging market currencies and China's slowing economy," it said in a statement. "Demand for compact cameras also declined as the market shrank." The cheaper yen was partly responsible for an increase in operating cost, it also said. Maeda "has a great track record as the head of the business division", Mitarai told a press conference today, the Nikkei business daily reported.

Not that these statements are surprising, but it starts to make their expensive acquisition of Axis seem more logical (or desperate, depending on your viewpoint).

Sales of "traditional" cameras in the form of DSLR's and point-n-shoot cameras are dropping, due to the ubiquity of perfectly adequate cameras on every smartphone these days. I know I haven't touched my Canon 5D in about a year, and only now use it for "purposeful" shots.

CCTV does appear to be going through a growth phase in terms of units deployed and segments reached. The popularity and acquisition of Dropcam is an example of this. Canon is hoping that Axis/Milestone will carry them into the next phase of mainstream imaging. This would also indicate, to me, that the Axis and Milestone names will go away, or become product names of Canon instead of independent brands.

(1)
U
Undisclosed #1
Feb 08, 2016
IPVMU Certified

The corresponding Lars-Martin phone call would have been informational.

UM
Undisclosed Manufacturer #2
Feb 09, 2016

"This would also indicate, to me, that the Axis and Milestone names will go away, or become product names of Canon instead of independent brands."

Why?

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Brian Karas
Feb 09, 2016
Pelican Zero

Why?

Tradition/Ego/Branding.

Canon has been around for over 80 years. In that time they done very few acquisitions, the Axis and Milestone deals dwarf all their previous deals by a huge margin (to the extent you can even determine this, other money spent on acquisitions was so small there is barely any info).

Brand/Image and History are very important to Japanese companies, especially those that have been around for a couple of generations. For these companies, it's not just about shareholder value and driving up the stock price, it's about being an institution and being associated with quality and innovation. Canon cannot do these things if the majority of its value comes from two subsidiaries, and foreign ones at that.

Axis and Milestone MUST be folded into Canon. They have to go away and new products need to be released that incorporate the technology of these companies, but under the Canon brand, and under the appearance that the products were the result of Canon's engineering.

Canon is smart enough and patient enough (IMO) that this will happen slowly. They're not going to try to wipe the Axis and Milestone brands off the planet as fast as possible, but rather they will take time to understand these acquisitions, understand the new market they are in, and release something for the next phase of the security industry, not the current phase.

In 5-7 years Axis will be a memory, or a shell of its former self selling leftover technology.

(1)
U
Undisclosed #1
Feb 09, 2016
IPVMU Certified

Canon has been around for over 80 years. In that time they done very few acquisitions, the Axis and Milestone deals dwarf all their previous deals by a huge margin (to the extent you can even determine this, other money spent on acquisitions was so small there is barely any info).

Actually there was the purchase of Oce in 2009, a company valued at 1.1 billion by the offer. Smaller than the Axis deal certainly, but far bigger than the Milestone. Also Canon was smaller itself at the time.

Axis and Milestond MUST be folded into Canon. They have to go away and new products need to be released that incorporate the technology of these companies, but under the Canon brand, and under the appearance that the products were the result of Canon's engineering.

Again, in the case of Oce, Canon said at the time of the acquisition that would continue as its own brand.

As of 2016, Oce is still run with its own branded products, and same HQ and executives. It has over 20,000 employees and last year's sales were 3 billion.

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Brian Karas
Feb 09, 2016
Pelican Zero

Oce is far less consumery than Axis/Milestone, and Oce is also branded as "a Canon Company". They are a manufacturer of very large-scale printing equipment where the top-brand is less important/visible.

Canon has also made a statement that IMO reads as if they intend to slowly "consume" Oce into the larger Canon org, though they will maintain the factory that Oce owned.

If you look on Canon's website you see in places where the Oce products are already ("already" measured in the span of ~4 years) being positioned as Canon products. That hasn't happened with Axis yet, but the Oce example seems to indicate that Canon is taking over the company/brand/products and making them appear as Canon owned/controlled/branded products.

If you google for something like "OCE printers" all the links go to Canon.com websites. You can still get to OCE's website, but after a couple of clicks deep you're being redirected to Canon sites.

U
Undisclosed #1
Feb 09, 2016
IPVMU Certified

Milestone is hardly 'consumery'.

Oce, the brand remains intact after 7 years of defacto ownership.

Its a valid counter-example.

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Brian Karas
Feb 09, 2016
Pelican Zero

Milestone is hardly 'consumery'.

Compared to the world of commercial large-format printers Milestone is very consumery. Large-format printers are typically designed to be operated by skilled technicians, VMS software is designed to be operated with minimal training of the user. "Intuitiveness" is a word often used with VMS software descriptions and almost never used in terms of large-scale printing. There is also far more potential to make the core Milestone software and technology mainstream than there is for the Oce product.

Oce, the brand remains intact after 7 years of defacto ownership.

And in my post above I said it's possible that Axis and Milestone become Canon sub-brands, but they won't remain as fully independent companies. Just as Oce has essentially been taken over by Canon.

U
Undisclosed #1
Feb 09, 2016
IPVMU Certified

In that time they done very few acquisitions, the Axis and Milestone deals dwarf all their previous deals by a huge margin (to the extent you can even determine this, other money spent on acquisitions was so small there is barely any info).

Look, based on your statement above, it seems like you didn't examine this Oce deal when you originally commented, and are now trying to post-hoc it into to your prediction of 'In 5-7 years Axis will be a memory or a shell of itself selling leftover technology.'

Its 5-7 years and neither of those are predictions are true about Oce. They still have oce.com, are still headquartered in the Netherlands with largely the same executive staffing. They have grown head count enormously, they are innovators in their field. Yes they are part of Canon but they are clearly more than a brand.

Replace Oce logo with the Axis logo on this website and tell me thats what you had in mind when you said 'Axis must go away'

FWIW, I agree with you to a large degree, I just think that you are overstating it a bit here.

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Brian Karas
Feb 09, 2016
Pelican Zero

You're correct, I didn't see the Oce deal listed in several sites I looked at:

https://www.crunchbase.com/organization/canon/acquisitions

http://www.wikinvest.com/stock/Canon_(CAJ)/Data/Acquisitions

I'm not sure why such a large acquisition doesn't show up more commonly with searches on Canon's history (though I do see it listed on the wikipedia page).

However to me it looks like the Oce deal overall shows more of what I'm predicting: Oce did NOT remain a completely separate company with no direct influence from Canon.

  • Though there is still an oce.com website, when you drill down into it, the links go to canon.com sites (or things like europe-canon.com)
  • They made public statement about integrating the workforces, the board of Oce reporting into Canon and so forth.
  • The Oce products show up on Canon's site as "Canon" products, with the Oce brand either not mentioned or presented as a product-brand, not an independent company.
  • A search for something like oce printers returns links to canon.com sites as the top results.

Canon is #40 in a global brand ranking or #196 in another. Axis, Milestone, and Oce for that matter don't even show up anywhere on those charts. Canon has been on a long-term plan to strengthen their company (and brand) by focusing on specific areas and selling off businesses that were not competitive or profitable.

Canon did not buy Axis and Milestone to be philanthropic. They did not buy them because these companies were so strong and stable that they just throw off excess cash that the core of Canon could use for other purposes.

Axis and Milestone were purchased to benefit Canon as a whole. The global security market is shifting, Canon has built a strong brand associated with cameras and imaging products. Just as Oce is being slowly subsumed into Canon, so will Axis and Milestone in due time. It might be 5 years, it might take 10, but it's going to happen sooner rather than later. Canon is smart enough to know that it has to happen slowly and gracefully, they're not trying to wipe the Axis brand out rapidly, but you WILL see it fade away.

It's likely that most of the Axis engineers and stuff will stick around, the offices in Sweden and the US will probably not be affected. Similar to the Oce deal you cite, Canon wants to make the most of the technology and doesn't appear to do acquisitions for the purpose of squeezing out redundant overhead/positions alone.

At this point, I think we've both stated our positions, we'll just have to wait and what happens over the next several years.

U
Undisclosed #1
Feb 10, 2016
IPVMU Certified

Our positions are not that different, I just think the Oce deal shows that there is no rush like we in the West always are in. And that Fujio is no Al "Chainsaw" Dunlap.

Anyway, I said very similar things as you just recently:

Maybe they will remain independent... of each other.
But neither is independent of Canon.

So there is another possibility here.

Perhaps Fujio's endgame is to build-up Canon security on the shoulders of these two giants?
Ultimately, ending up with Milestone and Axis being reduced to R&D or high-end niche arms of the invigorated Canon security.
How?

Let Axis and Milestone do what they do on their own, if they are profitable, great. Regardless, pick thru any and all technologies, innovations in progress, business plans, customer data, demographics.

Like a Vampire. Brain Drain. Technology Transfer. Ring around the Rolodex.
Sounds crazy?

Well consider the fact that Canon Security shows no signs of shutting down their IP camera division, to the contrary:

Remember for these deals to make any sense for a company Canon's size, they have to be expecting huge growth in this market. They are not looking for a couple of small companies to own that will make a buck or two.

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