Canon 2007 Annual Report Download - page 63

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the overall industry are moving lower as prices fall and compe-
tition increases. Therefore, Canon seeks to continue cutting
production costs while expanding sales volumes.
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 believes that it played a major role in the continued
expansion of the digital SLR market in fiscal 2007. This market
is expected to continue growing for the time being. Canon
expects the interchangeable lens market to grow as a result of
the rapid market penetration of digital SLR cameras. Canon
aims to expand its sales and market share by introducing the
most suitable products for the digital SLR camera users, including
products with Image Stabilizer capability.
For video camcorders, the market has recently switched
entirely over to digital. Against this background, two trends
have been conspicuous in the market. First is the diversity of
recording media for video cameras, including DVD, HDD, SD
cards and other new forms of media. Second is the trend
towards higher picture quality using high-resolution recording
methods such as HDV and AVCHD. Canon believes that these
two trends will lead to higher picture quality of video camcorders
with longer battery life, and will likely contribute to further
growth for the overall digital video market.
Canon will seek continued sales growth with a stronger
product line while investing in research and development in
order to better respond to new market trends.
Canon expects that the market for business-use liquid
crystal projectors will continue to grow by about 10% per year
on a unit basis, while market prices will continue to decline,
resulting in almost no sales growth. Especially in the low-end
segment, sales are expected to decline, despite an increase in
units sold. On the other side, unit prices of high resolution and
high luminosity models are relatively stable and unit sales and
sales in value terms are both expected to grow.
In these market conditions, Canon believes that its high-
resolution and high luminosity projectors have been very well
received by professionals such as system integrators. Canon
plans to continue to develop distinctive, value-added products
by further improving picture quality, resolution, luminosity and
system expandability with Canon’s proprietary AISYS technology
and LCOS.
Optical and other products segment
In the semiconductor-production equipment industry,
equipment manufacturers must provide high quality products
corresponding to rapid technology progress. Canon will continue
to focus on developing new products which adopt leading-edge
technologies, such as immersion exposure technology and ultra
precision processing and measurement technology.
In the LCD production mask aligner market, Canon will
seek to strengthen its technical capabilities to meet the recent
trend toward larger glass-substrates due to the increasing
demand for larger LCD televisions.
In addition, Canon will continue to make distinctive products
enabling high resolution and high productivity.
In the TV lens market, demand for HDTV, which has grown
in the United States and Japan, is now growing in Europe as
well. In particular, there has been increased demand for lenses
used for broadcasting sporting events and for producing
dramas and documentaries. Canon also expects to see new
worldwide replacement demand thanks to greater progress in
digitalization. At the same time, there have been signs of
expanded HDTV applications by the media. While Canon already
has a major market share worldwide for this class of lenses, it
intends to continue to strengthen its position in this market.
The large format printer market unit sales and sales in
value terms have experienced stable growth of 10% every year.
Canon’s sales growth in this market is much higher than average
growth in the market and our market share has expanded every
year. Unit price in the market has been stable in recent years.
Canon has been able to incur lower costs of production and
improve inventory turnover by expanding its market share and
achieving economics of scale that improve its profitability.
Forward looking statements
The foregoing discussion and other disclosure in this report
contains forward-looking statements that reflect management’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 assump-
tions of future events that may not prove to be accurate. The
following important factors could cause actual results to differ
materially from those projected or implied in any forward-
looking statements: foreign currency exchange rate fluctuations;
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; uncertainty 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 tech-
nology 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.