April 30, 2012 | In: General

Is Canon Going Out of Business?

Canon, one of the largest makers of cameras and printers, recently reported less than estimated profits, a result that raised a few eyebrows here and there. “Will Canon go out of business?”, some investors whispered…

Let’s examine Canon’s main two products:

Cameras: When was the last time you bought a camera? When was the last time you saw someone buying a camera? And why do we need dedicated cameras when all smartphones nowadays are equipped with high resolution cameras? Obviously, the camera business cannot be sustained on the long run and at one point, all those big camera manufacturers will find themselves selling cameras only for professional photographers. The Canon “Rebel” model should be the only one that Canon should continue making, while it should drop all the other non-professional models.

Printers: We all know that all companies lose money on printers (please, don’t try to convince yourself that a wireless printer that sells for $49 costs only $49 to make). The thing is, most companies make money on ink cartridges, that often sell at a price higher than the printer itself (so it is sometimes wiser to buy a new printer everytime your run of ink – yes, it’s that stupid). However, we all know that everyone’s going green (e.g. less printing is happening), and that everyone now has a smartphone and/or a tablet (so there’s no need to print that document anymore, just send it to my tab or smartphone). In conclusion, people will be printing less because of two main reasons, which means that people will be buying less printers and, more importantly, buying less toners – and this is already happening.

It’s clear to see that Canon’s main business model needs to undergo a major transformation in order to withstand the major changes that are imminent in its main markets. Failing that, Canon will definitely post a continuing decline in profits (and maybe an increase in losses) in the next several quarters until it reaches the bankruptcy point.

Canon still has time to salvage itself – the same way RIM and Kodak did. Better use that time wisely and carefully plan for the future. The best thing to do is to learn from Samsung, a company that transformed itself from a minor, non-important player in several markets to a major player in these markets.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

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