Canon 2005 Annual Report Download - page 54

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Chief among the priority strategies contained in this plan is
making all of our current core businesses the overwhelming
No.1 position and establishing our display technologies as busi-
nesses, a major new business for the Canon Group. And we
aim to review our production systems in Japan through steps
like the introduction and promotion of high-productivity auto-
mated systems, and we will establish new production systems
to sustain international competitiveness. We will also expand
our business operations through diversification and establish a
Three Regional Headquarters System based in Japan, the U.S.
and Europe, identify new business domains and accumulate
the required technologies. Furthermore, we will also focus on
nurturing strong individuals promoting these everlasting corpo-
rate reforms.
By forcefully advancing these priority strategies, the Canon
Group aims to create business operations that can prosper in
perpetuity and make us a truly excellent global corporation.
Business Machines Segment
Office imaging products
In the office imaging products segment, it has become more
important to provide added value in the form of networking,
integration, color printing, and multifunction models. Also, in
addition to the mid segment products for office market which
enjoys steady growth, Canon expects that the market of
higher-end models and low-end multifunction models will
expand as well. The market for color digital devices continued
to grow rapidly, and sales of monochrome digital MFDs were
stable, reflecting the market trend shifting from single-function
to multifunction. Recently, there has been a new, printer-based
MFP market created by other printer vendors as they seek to
enter the copier and MFD market.
To maintain and enhance a competitive edge and to meet
more sophisticated customer demands, Canon is strengthening
its marketing capabilities by reinforcing its hardware and soft-
ware product lineups and by improving functionality. In 2005,
Canon strengthened the product lineups of its color digital
devices in addition to its existing full line of monochrome
machines and maintained its market share by executing busi-
ness strategies in line with the current market trend.
While competitors seek to transfer manufacturing facilities
to China, Canon regards its manufacturing bases in Japan
important, in order to reduce total cost, through strengthening
and reinforcing its technology, in particular through the collab-
oration of its R&D, manufacturing and quality management
divisions. In fiscal 2005, Canon established a new global
mother factory in Toride, to achieve the above-mentioned goal.
Computer peripheral products
The inkjet printer market continues to grow steadily. Canon
expects a continuation of declines in market prices, a shift from
single-function printers to MFPs, and an expansion of the digi-
tal photo market. To manage these trends, Canon has estab-
lished a line of MFPs from flagship to entry models in order to
expand its printer sales.
Canon’s laser beam printer business holds a strong position
in the market. In the monochrome laser beam printer market,
Canon expects that the transition to a low price segment will
expand sales in the micro-business/home office market and in
the emerging markets. In the color laser beam printer market,
Canon expects continued strong growth in demand. In gen-
eral, competition will become more intense as competitors
implement aggressive price strategies in order to establish
themselves as market leaders. Canon seeks to remain competi-
tive by developing technologies that can be deployed in a
timely fashion to produce innovative products in all segments.
Canon is also working to lower costs by automating produc-
tion of consumables and to secure procurement of essential
parts through internal sourcing.
Although Canon expects that the size of the scanner
market will continue to contract, the stylish and compact
CanoScan LiDE series and Hyper CCD models with ultrahigh-
resolution were both introduced in fiscal 2005 in order to
increase Canon’s share of this market.
The size of the worldwide facsimile market has remained
stable, as expansion in Asia, mainly China, has offset declines
in other regions. Due to price declines for inkjet MFPs with fac-
simile function, prices are also declining for stand-alone
machines.
Business information products
With regard to personal computers, demand from corporate
clients in the Japanese market held steady in fiscal 2005, but a
decline in sales was caused by Canon’s change in marketing
strategy from selling single products to a solutions business
involving the proposal of unique combinations of various prod-
ucts. This trend is expected to continue in fiscal 2006.
Cameras Segment
The entire digital camera market continues to expand. While
the growth rate has slowed in Japan and the United States,
emerging markets, especially China and Eastern Europe, have
experienced strong growth. In addition, the emergence of new
photo imaging systems has contributed to this growth as well,
such as PC-free direct printing systems, by expanding the digi-
tal imaging functionality through network connectivity, along
with the improvement of the user-friendly image processing
interfaces and software.
The digital camera industry is seeing growth on various
fronts. As with most other digital consumer electronics, the
digital camera market is now confronted with a fierce price war
and intensified technological competition in terms of picture
quality and functions. Profit margins have been shrinking for
the overall industry, but Canon has been able to maintain
higher margins through reforms of its production and procure-
ment systems.
Canon expects the market for compact digital cameras to
expand in the intermediate term. However, profit margins for
the overall industry are moving lower as prices fall and compe-
tition increases. Therefore, Canon plans to continue cutting
production costs while expanding our presence in terms of
quantity.