Canon 2005 Annual Report Download - page 55

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There are signs of rapid growth in the market for compact
photo printers, which present a new business opportunity. By
creating a strong product line over the mid-term, Canon
believes that it will be able to take a significant role in this
market and turn the compact photo printer business into a
new earnings source for Canon.
Canon played a major role in the continued expansion of
the digital SLR market in fiscal 2005. This market is expected to
continue growing for the time being. However, Canon expects
the growth rate to fall once this new demand has peaked.
The market for film cameras is contracting as a result of
the rapid shift to digital cameras. Canon anticipates this trend
to continue, both for film SLR cameras and for film compact
cameras.
Canon expects the interchangeable lens market to grow as
a result of the rapid market penetration of digital SLR cameras.
In response to the rapid growth of the SLR camera market,
Canon has strengthened its line of interchangeable lenses
exclusively for digital SLR cameras, and currently has five
models in this market. Canon seeks to expand its sales and
market share by introducing products especially made for pop-
ular class digital SLR cameras.
For video camcorders, analog camcorder sales have been
further replaced by sales of digital camcorders in the United
States in fiscal 2005, where the speed of transition used to be
moderate. Against this background two new trends have
emerged in the market. First, the introduction of video cameras
using DVDs, HDDs, SD cards and other new forms of media
has resulted in a trend in which convenience offered by the
products is more emphasized. Second, the trend towards
higher picture quality has evolved, provided by products using
HDV and other high-resolution recording methods. Canon
believes that these two trends are stimulating the market by
responding to more diverse user needs and will likely con-
tribute to further growth for the overall digital video market.
Canon will seek to continue sales growth with a stronger
product line for the Mini DV market as well as for the DVD and
HDV market, while continuing to invest in R&D to follow new
trends in the market.
Canon expects that the market for liquid crystal projectors
will continue to grow by about 20% per year on a unit basis,
while market prices will continue to decline, resulting in moder-
ate growth in monetary terms. Our independently developed
SX50 high-resolution projector, which was introduced at the
end of last year, has been winning praise on the market thanks
to its picture quality and compact dimensions. This product is
helping Canon capture a significant share of the market for
high-resolution projectors. Canon will continue to make dis-
tinctive products that meet the demands of the projector
market, such as greater brightness and resolution.
Optical and Other Products Segment
Canon expects new orders for semiconductor-production
equipment to increase in fiscal 2006, as the market turns to the
recovery phase following to the adjustment period in fiscal
2005. In general, the trend toward high resolution and higher
speed equipment will likely to continue in the semiconductor
industry. In order to manage these trends, Canon introduced
the FPA-6000AS4 in fiscal 2004, and the FPA-6000ES6a in
fiscal 2005. Canon will continue to focus on developing new
products in order to satisfy the semiconductor manufacturers
who have various device patterns.
For fiscal 2005, sales of aligners for the production of LCDs
realized significant growth as the PC monitor industry contin-
ued to shift from CRT to LCD displays, and the LCD television
market continued to expand. However, in the LCD production
mask aligner market, demand is expected to decline gradually
as the trend toward increased capital investment tapers off,
and also due to the timing of the release of the brand-new
models scheduled sometime next year, the order is expected to
show a moderate decline.
The TV lens market is enjoying a gradual recovery thanks to
the improving economy and new demand as more broadcast-
ing equipment switches over to digital. In fact, in 2005 the
market returned to roughly the same level seen four years ago
just before the September 11. Growth in demand for HDTV
lenses until now has come mainly from Japan and the U.S., but
Canon is now starting to see greater demand in Europe as
well. Canon also expects to see new demand in China and
other Asian markets thanks to the shift to digitalization.
Though Canon already has a major market share worldwide for
this class of lens, it intends to continue to strengthen its posi-
tion in this market.
Forward-Looking Statements
The foregoing discussion and other disclosure in this report
contains forward-looking statements that reflect manage-
ment’s current views with respect to certain future events and
financial performance. Actual results may differ materially from
those projected or implied in the forward-looking statements.
Further, certain forward-looking statements are based upon
assumptions of future events that may not prove to be accu-
rate. The following important factors could cause actual results
to differ materially from those projected or implied in any for-
ward-looking statements: foreign currency exchange rate fluc-
tuations; the uncertainty of Canon’s ability to implement its
plans to localize production and other measures to reduce the
impact of foreign currency exchange rate fluctuations; uncer-
tainty as to economic conditions, in Canon’s major markets;
uncertainty of continued demand for Canon’s high-value-
added products; uncertainty as to the recovery of computer
and related markets; uncertainty of recovery in demand for
Canon’s semiconductor production equipment; Canon’s ability
to continue to develop products and to market products that
incorporate new technology on a timely basis, are competitively
priced and achieve market acceptance; the possibility of losses
resulting from foreign currency transactions designed to reduce
financial risks from changes in foreign currency exchange rates;
and inventory risk due to shifts in market demand.