Nikon 2003 Annual Report Download - page 12

Operating฀Results฀
Although฀the฀market฀for฀traditional฀lm฀cameras฀continued฀to฀shrink,฀
further฀brisk฀expansion฀of฀the฀digital฀camera฀market฀boosted฀segment฀
performance฀signicantly.฀Sales฀increased฀22.7%฀year-on-year฀to฀
¥271,956฀million.฀Gains฀in฀sales฀volume,฀a฀signicant฀presence฀of฀high-
margin฀SLR-type฀digital฀cameras฀within฀the฀overall฀sales฀mix,฀combined฀
with฀a฀variety฀of฀cost-reduction฀measures,฀resulted฀in฀a฀large฀gain฀in฀
segment฀operating฀income,฀which฀climbed฀72.0%฀to฀¥27,745฀million.
Business฀Strategy
The฀digital฀camera฀market฀continues฀to฀expand฀rapidly฀worldwide.฀This฀
strong฀growth฀has฀prompted฀the฀entry฀of฀manufacturers฀from฀other฀
sectors฀into฀the฀market.฀Competition฀has฀also฀become฀ercer฀as฀the฀
battleground฀has฀widened฀following฀the฀introduction฀of฀products฀such฀
as฀mobile฀phones฀equipped฀with฀built-in฀megapixel฀cameras.
Nikon’s฀strategy฀with฀digital฀cameras฀is฀to฀play฀to฀its฀technical฀
strengths฀in฀camera฀technology,฀in฀digital฀image฀processing฀technology,฀
and฀in฀optical฀technologies฀that฀can฀boost฀the฀performance฀of฀image฀
sensors.฀We฀are฀also฀deliberately฀targeting฀those฀segments฀of฀the฀market฀
that฀are฀large฀in฀volume฀and฀the฀most฀protable.฀We฀are฀the฀pioneers฀in฀
the฀segment฀for฀lens-interchangeable฀SL R-type฀digital฀cameras,฀and฀we฀
dominate฀this฀particular฀segment.฀During฀the฀year฀ended฀March฀2003,฀
in฀addition฀to฀the฀cameras฀for฀the฀professional฀market฀segment,฀we฀
launched฀the฀D100,฀an฀SLR-type฀digital฀camera฀designed฀for฀profession-
als฀and฀amateur฀photography฀enthusiasts.฀It฀was฀received฀extremely฀well.฀
We฀plan฀to฀extend฀this฀range฀of฀cameras฀further฀to฀develop฀SLR-type฀
digital฀cameras฀that฀will฀appeal฀strongly฀to฀the฀average฀consumer.
imaging products
We฀have฀now฀developed฀a฀strong฀position฀at฀the฀high-end฀consumer฀digital฀camera฀mar-
ket.฀Our฀next฀goal฀is฀to฀extend฀this฀franchise฀to฀target฀middle-class฀and฀popular-class฀markets,฀
while฀continuing฀to฀pay฀extra฀attention฀to฀brand฀loyalists.฀COOLPI X฀is฀the฀Nikon฀product฀
brand฀in฀the฀consumer-market฀segment,฀and฀we฀continue฀to฀develop฀this฀range.฀Building฀on฀
our฀high-quality฀brand฀image,฀we฀plan฀to฀develop฀products฀for฀a฀wider฀range฀of฀customers฀
including฀younger฀consumers฀that฀create฀added฀value฀through฀video฀and฀audio฀capabilities฀
and฀enhanced฀computer฀connectivity฀as฀well฀as฀advanced฀designs.฀
The฀digital฀camera฀market฀is฀increasingly฀marked฀by฀intense฀technology-based฀competi-
tion,฀by฀inexorable฀compression฀of฀development฀cycles,฀and฀by฀erce฀competition฀on฀price.฀
To฀some฀extent,฀these฀problems฀are฀unavoidable.฀Our฀response฀is฀to฀speed฀up฀all฀processes฀of฀
the฀business฀cycle,฀from฀product฀development฀to฀sales,฀so฀that฀we฀can฀always฀ensure฀timely฀
product฀launches.฀Hence,฀one฀of฀our฀most฀important฀business฀issues฀is฀how฀to฀maintain฀prot-
ability.฀We฀continue฀to฀work฀hard฀to฀drive฀down฀unit฀costs฀and฀reassess฀the฀entire฀value฀chain฀
so฀that฀we฀can฀raise฀protability฀and฀launch฀the฀most฀competitive฀products.
As฀part฀of฀this฀drive,฀we฀have฀established฀Nikon฀Imaging฀(China)฀Co.,฀Ltd.,฀a฀manufactur-
ing฀subsidiary฀mainly฀for฀consumer-type฀digital฀cameras.฀Based฀in฀Wuxi,฀Jiangsu฀Province฀
in฀China,฀production฀of฀consumer฀digital฀cameras฀is฀scheduled฀to฀begin฀in฀the฀latter฀half฀of฀
the฀year฀ending฀March฀2004.฀In฀addition,฀we฀have฀established฀a฀local฀sales฀branch฀of฀Nikon฀
Imaging฀(China)฀Co.,฀Ltd.฀in฀Shanghai฀to฀boost฀sales฀in฀the฀Chinese฀market.฀Elsewhere,฀we฀
have฀invested฀in฀production฀capacity฀at฀Nikon฀(Thailand)฀Co.,฀Ltd.฀for฀lens฀units,฀which฀are฀key฀
parts฀of฀digital฀cameras.฀These฀moves฀promise฀to฀boost฀our฀cost-฀and฀value-competitiveness฀
substantially.
We฀are฀striving฀to฀boost฀our฀share฀of฀the฀market฀for฀traditional฀lm฀cameras฀even฀as฀it฀
declines฀so฀that฀we฀can฀continue฀to฀generate฀stable฀prots฀from฀this฀sector.฀In฀the฀popular฀
segment฀of฀this฀market฀we฀were฀successful฀in฀achieving฀this฀aim฀as฀a฀result฀of฀the฀popularity฀of฀
new฀models฀such฀as฀the฀Nikon฀F75฀(or฀N75฀in฀the฀United฀States฀and฀U2฀in฀Japan).
New฀initiatives฀in฀the฀pipeline฀include฀development฀projects฀in฀the฀areas฀of฀image-related฀
software/hardware฀and฀other฀applications.฀We฀will฀also฀consider฀possibilities฀to฀collaborate฀
with฀other฀rms฀to฀achieve฀our฀objectives.฀In฀addition,฀as฀part฀of฀our฀brand฀strategy,฀through฀
an฀increased฀dialogue฀with฀a฀wide฀range฀of฀customers,฀we฀are฀trying฀฀to฀give฀Nikon฀products฀a฀
more฀accessible฀and฀easily฀enjoyable฀image,฀which฀is฀ideally฀suited฀to฀the฀digital฀camera฀age.
Topics/Achievements
Nikon฀Imaging฀(China)฀Co.,฀Ltd.฀will฀initiate฀produc-
tion฀of฀consumer฀digital฀cameras฀in฀the฀latter฀half฀of฀
the฀scal฀year฀ending฀March฀2004,฀with฀full-scale฀
production฀scheduled฀from฀the฀scal฀year฀ending฀
March฀2005฀onwards.฀Construction฀work฀is฀currently฀
underway฀to฀increase฀total฀production฀oor฀area.฀
Enhanced฀production฀capacity฀will฀facilitate฀greater฀
in-house฀manufacturing฀of฀some฀components.
1 0 1 1