Canon banks on services, not commodity products

Camera and imaging titan sees services as key to survival, rather than focusing solely on products.
Written by Jamie Yap, Contributor

SINGAPORE--Camera and imaging giant Canon is sticking to its business model of providing quality services and not just products, so as to steer successfully through global economic volatility and intense competition that has already claimed victims of major Japanese corporations in the electronics sector.

"We're not interested in commodity products [such as] mobile phones and laptops. That is the hardware side only [and] price is a big issue. When prices drop, there's no way for profits. You need to produce good returns," Kensaku Konishi, the new President and CEO of Canon Singapore, told ZDNet Asia at a media briefing Thursday to announce his appointment. Singapore is the company's regional headquarters in South and Southeast Asia (SEA).

The executive was quizzed about how Canon planned to avoid a similar fate that has hit major Japanese electronics companies such as Sony and Panasonic, exacerbated by the current global economic uncertainty. Earlier this month, Sony's new CEO said "painful" steps were needed to fix the once-dominant electronics bellwether, while Panasonic said it expected a US$10 billion loss in 2012.

Canon previously warned that its earnings would disappoint earlier market expectations. In January, it forecast that for 2012, operating profit would be US$5.1 billion, short of initial analyst estimates of US$5.9 billion.

Konishi explained that Canon's business model was not only about sales and quality products. "We're [about] always providing quality services, and after-sales support for customers. That is what makes us different from [these companies]," he said.

During his speech, Konishi said Canon was confident of achieving its goal of increasing revenue in South and Southeast Asia by 20 percent this year to hit US$4 billion. Revenue in 2011 grew 13 percent year-on-year, he added.

With economic uncertainty in Europe and the U.S., Asia was the only area where one can expect some growth, Konishi pointed out. "Yet, although it is a growing market, some [companies] do well, some do not."

Canon's strategy, he revealed, had three main parts: expanding its existing market share of digital cameras and imaging within the region; introducing new products whilst improving them with research and development (R&D); and boosting its emerging presence in the cinema projectors segment.

Konishi also noted that Canon gives equal focus to its cameras and imaging businesses, highlighting the importance of tailoring marketing strategies country by country in the economically and culturally heterogeneous Asia-Pacific region. For instance, the company sees a strong opportunity for digital cameras in developing economies in Asia-Pacific, particularly Indonesia, Vietnam and India. Whereas in developed markets, managed print services (MPS) will be a key priority, especially when printing and copier operational expenses are a big "headache" for several enterprises, he said.

Konishi takes over from former President and CEO of Canon Singapore, Satoshi Kimura. Prior to this role, Konishi, who joined Canon in 1978, was President and CEO of Canon India from 2007 and 2011, and before that, in Canon Hong Kong from 2004 to 2006.

Amid disappointing earnings for the fourth quarter, Canon made a surprise announcement that its president Tsuneji Uchida would be replaced by chairman and CEO Fujio Mitarai , who will assume the additional role this March, to "promote steady advancement toward achieving Canon's goals...amid the challenging business environment".

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