We have positioned this year as the one in which Canon returns to a path of growth, achieving sales and profit growth. To realize this objective, it is essential that we reinforce our high value added products. Today, I will start by discussing our business strategies, first for strengthening existing businesses, then for new businesses, and finally for future technologies.
Strengthening Existing Businesses: Copying Machines and LBPs As for copying machines, with imageRUNNER ADVANCE systems at the core, we will leverage various solutions and our proprietary cloud environment, which we established to facilitate coordination with the external environment. In this way, we will provide various services through the active promotion of alliances with leading IT vendors. Strengthening Existing Businesses: Cameras
With regard to interchangeable-lens cameras, we will work to improve the performance of image sensors while expanding our lineup of camera bodies and renewing our interchangeable lens offerings. As for compact cameras, the explosive popularity of smartphones is starting to eat into the low-end compact camera segment. In response to smartphones, which offer advantages in terms of network connectivity, we are improving the communication features of cameras to make them more attractive.
On the other hand, the increase in smartphones has led to steady growth in the number of users becoming more familiar with photography as well as a significant increase in the number of photos being taken. What is important now is how to lead these users, who can now appreciate the enjoyment of taking pictures, to compact cameras or interchangeable-lens cameras. We are not looking to just compete against smartphones, we would also like for them to co-exist. One such answer is the PowerShot N, which we launched the other day.
Introducing new concepts like this is how we will address this challenge. Strengthening New Businesses: Cinema EOS System I will now discuss the strengthening of new businesses. In the process of working on digital technologies for copying machines and cameras, we conducted research on elemental technologies from various perspectives, resulting in many ideas that can be used in new products. For example, Cinema EOS System was born from the high level of video-recording performance realized by our digital cameras.
Cinema EOS makes use of our internally developed high-performance large-format CMOS sensor, which allows users to shoot movies and commercials with the same resolution as our SLR cameras. Compared with other cinema cameras, ours offer advantages in mobility due to their compact size and light weight. And Canon’s broad range of interchangeable lenses offer greatly enhanced visual expression potential. In addition, from a price perspective, Canon also has an advantage, which makes possible significant reductions in the video production costs.
Last year, these technological capabilities were highly evaluated in the U. S. and Canon was awarded with a Technology ; Engineering Academy Award. Strengthening New Businesses: MR SystemIn July 2012, Canon commercialized the MR (Mixed Reality) System, which combines the real world and the visual world of computer-generated (CG) images. The system makes possible the verification of product design and operability through three-dimensional CG images which reduces the number of prototypes needed during the development process and contributes to shortened development times.
It has been very well received and is gaining interest from automobile manufacturers, home builders and heavy-equipment manufacturers, and is also being considered for training purposes. Strengthening New Businesses: DreamLaboThe DreamLabo is our commercial retail inkjet printer that offers high image quality and superior productivity through Canon’s proprietary high-density print head technology. Through the DreamLabo, we aim to expand our presence in the retail photo industry, a new market for us. Strengthening New BusinessesAs globalization progresses, competition grows increasingly severe.
And today, as products also become more diverse, what becomes important is the kind of value that can be provided from the customer’s perspective. As a means to facilitate this, it is important to create new value not only through cutting-edge technologies, but also through the application of existing technologies, or the combining or compilation of multiple technologies. This way of cultivating the market is something we have not paid much attention to in the past, but in the development of new businesses, we will maintain such an awareness of the times.
Strengthening Future TechnologiesIn addition to technologies that are being used in products that have already been commercialized, Canon is conducting R;D in various areas with an eye to the future. These include Super Machine Vision, which is capable of identifying objects that the human eye cannot, such as in dark environments and dead spots as well as fast-moving objects; and ultra-high sensitivity, exceptionally high-resolution CMOS sensors. Our leading-edge optical technologies are also used in the Subaru telescope located in Hawaii.
Canon is working to develop applications for these leading-edge technologies and aims to use them in such cutting-edge fields as the aerospace industry. In the medical field, Canon is collaborating with Kyoto University in the area of mammography and with hospitals affiliated with Harvard University in such areas as optical imaging and medical robots. One after another, the buds of promising new technologies and businesses are growing. In this way, Canon is on a steady course toward renewed growth through the strengthening of existing businesses, new businesses and future technologies.
Manufacturing: Automation/In-house ProductionNext, I will discuss manufacturing, the source of Canon’s profits. The automation of toner cartridge production has led to a significant reduction in the proportion of product costs related to labor. Due to this, we can carry out manufacturing globally without concern for labor costs. Aside from cartridges, by making use of Canon’s proprietary production technology for other large-production-volume products with high value added, we could greatly expand our ability to realize improved profitability.
In addition, although in-house production until now had focused on key components, we will expand its application to include general parts, molds and manufacturing equipment. Strengthening Sales and MarketingNext, I will discuss the strengthening of sales and marketing. 1955 marked the start of Canon’s direct sales overseas with the opening of the New York branch, which was followed in the 1960s by the establishment of Canon USA and Canon SA Geneve.
Canon’s sales network then expanded to include countries in Europe and Australia. Currently Canon has 275 subsidiaries in 48 countries. Of these, 145 are sales companies, which form a sales network covering the entire globe. In the future, the center of the global economy will shift from the Atlantic region to the Pacific, including such countries as China, India, Southeast Asia, Australia and the U. S. Within this region, China is expected to provide a major boost as a global growth center.
Strengthening Sales ; Marketing: Developed CountriesIn the office segment, by leveraging the full integration of Canon and Oce sales companies, we will thoroughly strengthen our direct sales, solutions and service-business capabilities. In the consumer segment, we will strengthen our advertising and other sales-promotion activities, increasing purchases designated by major volume retailers to expand market share. Strengthening Sales ; Marketing: Developing Emerging Markets / Expanding Sales OfficesCanon added 10 sales offices in China in 2012, bringing the current total to 31 locations.
But as China has more than 350 cities with populations exceeding one million people, we do not feel this is sufficient, which is why we are looking to further expand into urban areas. As for India, in 2012 we established 43 Canon-brand shops and aim to have 300 by 2014. Canon will also actively develop sales activities in other areas, including ASEAN countries like Indonesia and Vietnam, as well as Russia, which gained entry to the WTO in August last year. Additionally, we will take a finely tuned response to markets in Central and South America based on the actual conditions in each country.
Strengthening New Businesses: Network CamerasWith digitization, the range of network camera applications continues to expand significantly, from surveillance to tools designed to protect society, as well as in such areas as operational efficiency, improving productivity, marketing and improving customer service. Over the next several years, the market for cameras alone is expected to reach around 1 trillion yen. If you include systems, we could be looking at a market that is two to three times this size. Last year Canon introduced a full HD-model network camera.
But in this area, it is not only the performance of the camera that comes into question, it is also the operability and expandability of systems and the capability of software to handle huge volumes of data to reliably detect anomalies and track objects. Canon has outstanding elemental technologies that support this business in such areas as cameras, lenses, high-sensitivity CMOS sensors, systems, controllers and encoders. And we established the Network Visual Solution Business Promotion Headquarters, a new organization responsible for combining the aggregate power of these technologies to develop our systems and solutions business.
In four to five years, we aim to secure sales of around 100 billion yen and an appropriate level of profits toward eventually building this segment into a significant business pillar, securing a top-class position worldwide in this field. | | Technology-based Diversification Canon has grown through technology-based diversification. Initially a camera manufacturer, Canon enhanced its technological capabilities in such areas as optics, electronics, communication and chemicals, which enabled the company to enter the business machines business.
In this way, Canon has made products in accordance with the demands of the times. Over the past 10 years, our information-oriented society has fueled rapid advances in the digitization of all technologies. And at Canon, through repeated innovations in development and production technology, we have carried out the digitization of our cameras and copying machines. At the same time, we have made progress in strengthening existing businesses through our networks and services as we follow changes in social infrastructures.