Canon 2006 Annual Report Download - page 56

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businesses. Secondly, we aim to achieve steady cost reductions
and further reduce our cost ratio through continuous measures
to improve productivity, such as promoting production
automation by introducing high-speed automation equipment;
bringing the in-house production of more key parts, taking
procurement innovation activities to an even higher level; and
building an IT system that centralizes business information for
everything from planning and development to production,
sales, procurement, and logistics.
Renewing our awareness that companies’ mission is to
maintain product quality, we will build or enhance our systems
for quality management, safety management and crisis man-
agement, including measures to heighten awareness, to help
ensure that our quality fits for an excellent global corporation.
We will also reform our research and development activities
from the new perspective to secure robust patents, which are a
critical lifeline for a manufacturer and the very source of com-
petitiveness for a high-value-added manufacturing business.
Lastly, toward the objective of becoming a truly excellent global
corporation, we will bring to bear the resource of the entire
Canon Group to ensure that our compliance activities are
thoroughly implemented, that our internal controls are strictly
enforced, and that our management excels in transparency.
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 the office market
which is enjoying steady growth, Canon expects that the
market for 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 2006,
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
business strategies in line with current market trends.
Computer peripheral products
In the Inkjet printer market, Canon expects a continuation of
declines in market prices, slowdown in market growth, and a
shift from single-function printers (“SFP”) to MFPs. To manage
in line with these trends, Canon launched new lineups of SFP
and MFP 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 general,
competition will become more intense as competitors implement
aggressive price strategies in order to establish themselves as
market leaders. Canon seeks to remain competitive by develop-
ing 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 production of consum-
ables 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
facsimile function, prices are also declining for stand-alone
machines.
Business information products
The market for business-use document scanners has further
expanded as demand for document scanners has accelerated
due to the evolving office IT environment and the need to
comply with various laws related to the management of infor-
mation. Under these conditions, in the “DR Scanner series” ,
Canon has introduced the “DR-2050C II” as a new product for
the segment of affordable machines with the most significantly
expanding demand and worked to expand sales of this product
and the “DR-1210C” introduced in the first half of 2006. As a
result, sales steadily increased.
With regard to servers and personal computers, demand
from corporate clients in the Japanese market held steady in
fiscal 2006, 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 combina-
tions of various products. This trend is expected to continue in
fiscal 2007.
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
digital imaging systems has contributed to this growth as well,
such as PC-free direct printing systems, by expanding the
digital 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