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Sunday, 10 May 2015


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It is my impression, also, that cameras are indeed a sideline, or "hobby", business for Olympus. Of course the irony seems (to me) to be that cameras are the legacy line that put the brand into the more profitable lines that now support the company.

I wonder how comparable the complexion of Leica's income statement is to Olympus's? Leica is also involved in premium lines of lab/tech optical gizmos parallel to Oly. (It's my impression that if you can't afford a Leica scope you fall back to an Oly?) I don't think M and S cameras/lenses paid for Leica's brand new galactic headquarters campus in Wetzlar, do you?

Horses for courses

I read Thom Hogan because he knows more about cameras and Nikons and photography than me.
I read Consumer Reports for refrigerators, Car & Driver (amongst other enthusiast mags) for cars, Pop Photo and Amateur Photographer for cameras, a bunch of Computer mags., etc etc. etc.
I have many years of experience and training as a financial analyst.


The most spectacular hobby business in the world may have been Ferrari while Enzo still ran it.
Its was (is?) organized as a sports team that happens to have a automobile manufacturing business on the side.

It makes me happy that they so stubbornly keep producing cameras, and not just because I shoot Olympus gear. Some products are important enough to warrant a subsidy, whether from the government or from other , healthier parts of the business. And they have stated several times that they consider the research they do for their cameras important for their profitable health products.

If we determined everything by the bottom line we'd be very poor indeed.

You could probably add Pentax to the list of hobby companies. Since Ricoh took them over at least here in Canada numerous former retailers of the product no longer do so. Ricoh advises dealers push Pentax as your primary camera for sale or don't ask. The company is noted for photocopiers, not cameras

Yes indeed. And there's the holistic view: everything is connected. If Olympus cameras were to disappear, it might not affect the medical products business... but then again it might! Who knows, enough people might think: "wait a minute, Olympus cameras went down the drain, can we really trust their other products to stick around and still be supported?

When I still owned the DOMAI nudie-girl site, I featured on it an actual *paper book* with the pictures. And a beautiful small actual bronze sculpture! Which I had commissioned especiall for the site.
Compared to the memberships, they did not make all that much money. But I wanted the visitor to see clearly that DOMAI was not a porn site, see? We believed in culture, we had culture, we sold culture.

(Actually the sculpture is still for sale:
It is lovely. After several years, I still love mine. The sculptor Victor Issa is brilliant.)

Olympus appear to have about 90% of the world-wide market share for microscopes in my speciality - and we mostly get to choose our own microscopes.

Considering that a well specified one starts at $30,000 and goes way up from there, that's not a bad market to corner. Then the other Olympus medical imaging equipment makes ours look cheap.

Never underestimate the nature of image, status, and history to branding and marketing.

And don't underestimate the cultural and legal obstructions to ending such a business - it's written that in Japan firing of Salarymen is very difficult - so it might be that closing down the camera division would on net cost more (over the short term) than keeping it running. You'd have to really know what's going on inside to evaluate that.

Doesn't mean it's not a hobby business, or that it won't disappear at some point.

Dear Mike,

Hobby businesses, or at least nonprofitable businesses, have benefited photographers several times. Up until the end of the 1980s, Kodak's entire scientific emulsions line, dye transfer, and Kodachrome (I think) were hobby businesses. They did not make money for Kodak. They were subsidized by Kodak's high-profit lines. Much the same way that non-specialty book publishers price books by the pound, more or less, knowing that they're going to lose money on the very poor sellers but they'll make out real well on the bestsellers.

When Kodak changed to a “carry your own weight” accounting philosophy, whole bunches of products simply disappeared from the catalog. Others tripled in price. It guaranteed that Kodachrome and dye transfer were going to die. Dye transfer sooner than expected (there was much mendacity involved), but Kodak dragged Kodachrome out far beyond its sell date–– accounting philosophy or not, they were carrying it as a hobby business for a long time.

Most darkroom folk don't know that Charles Beseler Corp. was primarily a manufacturer of industrial shelving. That was their bread-and-butter. They got into darkroom equipment because the owners of the company were interested in photography and realized that with all their metalworking and fabrication equipment they were well set up to manufacture darkroom gear.

My recollection is that this was not technically a hobby business; they did make money on their photographic line. But not a huge amount, and it wouldn't have existed if it weren't leveraging off of the shelving-manufacture infrastructure.

There are probably lots of other photographic products that operated as hobbies or sidelines to the main business. It would be interesting to hear from readers who know of such.

pax \ Ctein
[ Please excuse any word-salad. MacSpeech in training! ]
-- Ctein's Online Gallery http://ctein.com
-- Digital Restorations http://photo-repair.com

Looking at Hogan's analysis, one thing pops up that you didn't cover: Sony's results and how they expect the market to decline significantly as well.

As someone who does corporate analysis for a rating agency, Olympus' aim isn't unrealistic: shrinking markets can be survived if (and largely only if) you can cut costs so that you have break-even to avoid further bloodletting.

Consider this as well: given an overall shrinking market as cell phones increasingly meet the needs of the many, any camera system that isn't in wide-spread professional use - which at this point is only Nikon and Canon - may well end up being hobby businesses as well. A case can be made - no pun intended - that this is true for Leica, Fuji, Panasonic, Sony and pretty much everyone else in the business.

Doesn't mean that it will drive them all out of business. but rather that the continued existence of our favorite systems will be based not on commercial success, but rather corporate unwillingness to lose face by closing those divisions down. Yikes!

The concept of a hobby business is also useful for distinguishing between those camera companies that don't "need" to make money from those that do. The hobby businesses have a curious stability in Japan. The Japanese love of tradition and ancestry shields these divisions from the usual bean counters.

Does that make them less vulnerable than the dedicated camera businesses? In a big market downturn the "for profit" camera businesses may have to make decisions that the hobby businesses can ignore. Time will tell.

Japanese hobby camera businesses include:

Olympus - supported by medical imaging.

Fujifilm - supported by cosmetics(!) and specialty chemicals,

Ricoh/Pentax supported by copiers

Japanese non-hobby camera businesses include:

Nikon (even though they make a lot of money elsewhere they're an optics company).


Sony (even though they're making more money on making sensors for everyone).


Ricoh, for example, has held user conferences for the Ricoh fans. Even releasing special limited edition cameras just for the conference. So they not only loose money making and selling cameras but the company will actively spends money on the customers. To some extent this is just a very specialized marketing scheme: perhaps next time a Ricoh GRD user needs a new copier in the office they'll suggest Ricoh.

How many camera companies (or camera divisions of larger companies) are actually profitable? I'm guessing Canon, Nikon and Leica. I'd be surprised if there were any others.

Maybe Olympus isn't the only company with a "hobby business"?

There are all kinds of reasons to keep enterprises going. People forget that.

The same is often said about Fuji's digital camera division, though I think that recently it has started to turn a profit, or nearly turn a profit. I also think Fuji's biggest business is also Medical, though they seem to have plenty of hands in plenty of pies.

At Sony, I never hear the term "hobby business" thrown around to apply to any of its divisions, but I think sensors, Playstation, Sony/Columbia Pictures, and Columbia/Sony Music are the only profitable businesses outside of their financial services division, which outperforms the others by a significant margin. Their TVs, stereos, headphones, and other consumer electronics products are kept around just for the pride and history of them. Digital cameras? Neither profitable nor historical...

The term has also been used by Apple itself to describe its Apple TV product, though speculation has that one leaving "hobby" designation later this year, if it hasn't technically already done so by becoming profitable in its own right.

Thom has been "predicting" the death of Olympus camera business for nearly as long as he's been online and digital has taken over.
Enough already with the regular "prophecies of doom"! Boring...

What happens to photographers when a company tires of it's 'hobby'? Think Ricoh GXR for example.

They can keep running it any way they want, as long as they "keep" running it....

For many years, a lot of American companies ran divisions or sub-companies as money losing propositions to either enhance something their main company was accomplishing, or as a service to their clientel, or whatever, and it was never considered a "bad" thing. It was the dawn of idiots like that guy from GE, that thought that there was too much slack in corporations and that everyone had to pull their own weight, and each division had to make ridiculous quarterly profit marks, that drove this kind of thinking.

Want to know why every one is constantly mad and harassed at your company? You're working with half the people you need because of that guy. Want to know why if you live in a bad or marginal neighborhood, you can't go to a decent grocery store? It's because of that guy (each store has to show it's own profit and cannot be supported by the profit of others). One persons money-losing drain on the bottom line is another person's technical experimenter and innovator.

[Jack Welch. A pox on 'im. --Mike]

In my earlier comment I forgot to mention what was probably the greatest hobby business in history, Bell Labs

In Canada companies can take advantage of SRED (Scientific Research and Experimental Development) tax credits. There's an entire industry of consultants geared towards helping companies document and demonstrate their innovations to take advantage of such tax credits. And there's nothing wrong with that.

And I should add it's all open to the tax man for audit. :)

It surprise me how this hobby business is one of the, or the, most innovative camera maker today, providing us not gimmicks, but useful features like wave sensor cleaning, sensor shifting anti-shake, live composite etc.
By the way, tomorrow they are announcing the Titanium E-M5 MkII, nothing innovative but their first titanium digital.

To expand on the point about Bell Labs made above by Mr. Crawford. What are philosophy, science and the arts if not the ultimate 'hobby businesses'? What was the ROI of the Lascaux paintings? If memory serves, Newton's job description as Astronomer Royal did not say anything about inventing the calculus, and Aristoteles could have done his day job as tutor without writing anything of significance. We should be proud of a society that can institutionalize support for those activities that truly make life worthwhile. Hunting bison was obviously essential for survival, but I am glad some Philistine Cro-Magnon (anachronism noted) did not dissuade the cave painting Masters from indulging their hobby. I say, if a company keeps an intersting and creative hobby business afloat, more power to them. Yes, it's not indefinitely sustainable, but then nothing else is.

I have nothing of substance to add, but I want to mention what a wonderful conversation this is. This is why I love TOP, so many educated voices. I came here to read about photography and end up learning about Japanese business practices. And, it's all interesting. Thank you dedicated TOP readers/contributors.

So, is Thom Hogan writing to Olympus share holders, or to Olympus camera buyers and users? Is he confused about who is his audience?

NeXT, Pixar, and yes, Apple might all reasonably have been described as hobby businesses at some point.

How did that turn out ?

Jobs in 1996...
"And so the way out for Apple -- and I think Apple still has a future; there are some awfully good people there and there is tremendous brand loyalty to that company -- I think the way out is not to slash and burn, it's to innovate. That's how Apple got to its glory, and that's how Apple could return to it..."

Of course, it's an outlier... way, way out there.
And Thom would probably have shut it down.

> How many camera companies (or camera divisions of larger companies)
> are actually profitable? I'm guessing Canon, Nikon and Leica.

Not really sure about Leica Camera AG. They are a privately-held company, and don't publish their financial results.

Leica might have gotten a cash injection a few years ago when Blackrock (the private equity firm) bought a stake from Andreas Kaufmann, the company owner, but there are rumors around that Blackrock has been a bit disappointed with Leica's financials lately. Incidentally, Leica's CEO has been replaced a few weeks ago...

As for Sony, looking at some of their segment results in their financial report for FY14, ending March 31, 2015:

• the "Imaging Products and Solutions" (cameras etc.) segment's sales: JPY 720 Billion; profit: JPY 54.7 Billion. So, technically, that segment is profitable.

• "Devices" (sensors etc.) Sales 957.8 Bn; profit 93.1 Bn.

• "Financial services" (banking and insurance, principally) income 1083.6 Bn; profit: 193.3 Bn.

Overall, Sony's FY14 sales amounted to 8215.9 Bn, with a 68.5 Bn profit.

Sony's FY14 results were dragged down by their "Mobile Communication" business segment, which lost 220.4 Bn, with 1323.3 Bn in sales.

Of late, major American and European banks have been fined several billion dollars by the regulators after probes into the banks' questionable sale methods of structured financial products and shenanigans with the fixing of LIBOR etc.
Many banks are thus quipped nowadays as being "a legal defense fund with a bank attached"

Considering the tidy profit delivered by Sony's "Financial Services" business segment, one might consider Sony to have morphed a few years ago into "a banking and insurance company with attached consumer electronics and entertainment interests" ;-)

Enjoy what's available and let worries to investors.

@Thom comment: His site I read per week (as the update is less) and my reference for Nikon (and bought books). I agreed to him in general. However, one minor point comes up which we (I meant the whole world) has to be careful about. Is Japan really in such a debt? Is the debt increasing?

First, all the debts are in Japanese Yen, not in US dollars and unlike Euro Japan is one country -- they can easily escape it. That is how US get away from it. Yes Yen would fall. Look lately, they got more people buying their stuff and travel to them. It is a matter of managing the fall and they are out of it. In fact, the worry is not increasing debt but how to manage it.

Second point is what I have missed and one day someone points it out in detail financial studies. Look who has borrow the money. Bank of Tokyo. The central bank. It is a money manipulation to the point that whilst they are in debt, actually as the government owned the central bank, the effective debt is actually not all ups but have ups and downs (and in fact down). That is totally against the concept that Japan is falling and debt is always increasing. Not out of the woods. But not exactly as you appear.

Do not look at their right hand who is in debt to their left hand, look at their left hand as well. Japan government is also confusing like their Japanese firm.

Do not look just at the face of Japanese, or their firm or their government. Just don't. (Long term ageing is an issue ... need more robots; another story.)

Facebook is down here. Post another comment:


"Fujifilm - supported by cosmetics(!) and specialty chemicals,"

I thought that is one of the good example, note the word "film". Those chemicals are developed out from film. That is how they diversify from the lost of film business. BTW, not sure but they still have shops in Hong Kong selling their paper and machines for people who like to print out.

@Eamon Hickey

Konica/Minolta is alive and well mostly making printers and copiers like Ricoh along with medical and sensing equipment. All seem to have optics at their heart.

Konica/Minolta sold their A mount camera and lens designs along with the brand to Sony. They didn't sell their optical design group as many on the net seem to assume.

Konica Minolta Opto, Inc is an ODM (original design and manufacturing) company that designs and manufactures camera lenses (and lots of other interesting optical systems e.g. optical drive optics) for third parties, including some well known brands.

Pointers to their patents for new camera lenses pop up on the Japanese camera and imaging blog Egami on a regular basis. Figuring out who will market the design is part of the fun of patent watching.


It seems likely that some Olympus branded lenses may be designed by Konica/Minolta. Along with some kit lenses for other manufacturers.

If true that would mean that Olympus are outsourcing their "hobby". :-)

It's a small world ...
My earlier comment was a quick retort ... reading everyone else's has been quite enlightening as usual.

Coincidentally I worked at Charles Beseler Co. in the early seventies, and never read back to their history, nor did I see any traces of industrial shelving. Nice people, great gear, and they were importing the Topcon line of "way ahead of their time" cameras, in addition to making the rock solid enlargers. Definitely not a hobby business by that time. I was there for the invention and introduction of what we believed to be the first battery powered auto winder - it was a great time in the camera biz!

@ Mike
Jack Welch was the reason I and countless other NBC employees had no benefits (luxuries like health insurance) from the mid nineties for the first eight+ years of my "non-employee" employment on the "Tonight Show with Jay Leno". We all protested in one way or another, and were trying to form a unified group when there was a change. It was rumored that Jay (a very generous guy who was NOT our employer) and some of the brass called Jack Welch, so we were shuffled over to an "employer" (set up by GE/NBC) who gave us health insurance - that's it. **Many of us believed that this was also coincident with Microsoft losing $97 million in a case they lost in 2000 ... eerily like NBC's employment practices.

Fourteen years later, when the show ended in L.A., about one third of the staff, those hired before the "no more employees" date, received substantial separation packages, continuing health insurance, pensions, vacation pay, etc. Most of us "run of show contractors" a hearty invitation to leave. My wife was one of the lucky third - her health insurance took care of my bills during a three month hospital stay.
P.S. Her GE Retiree health insurance has just been substantially reduced, .......thank goodness for Medicare.


Olympus makes darn good microscopes (I use one in my day job) and endoscopes. They have expert lens designers. I consider that they are a mostly-optics Zeiss-type company that also puts the pertinent machine around their optics.

The discussion above: TOP at its best.

> Second point is what I have missed and one day someone points it out in
> detail financial studies. Look who has borrow the money. Bank of Tokyo.
> The central bank. It is a money manipulation to the point that whilst
> they are in debt, actually as the government owned the central bank, the
> effective debt is actually not all ups but have ups and downs (and in
> fact down).

This is totally incorrect.

The original debt instruments — i.e. the borrowings — are issued by the government, not by the central bank:

• The US Government issues the debt, not the Federal Reserve

• The individual governments of the Eurozone countries (e.g. Greece) issue the debts, not the European Central Bank

• The Japanese Government issues the debt, not the Bank of Japan.

When a central bank — be it the Fed, the ECB or the BoJ — acquires government debt instruments, it purchases them on the financial market from a counterparty — e.g. a private sector bank that bought the government securities when they were auctioned by the gov't.

As it purchases the bonds, the central bank must, obviously, pay for them: what sane private sector bank would relinquish for free — i.e. without receiving a payment — the ownership of one of its assets ?

I don't think there's a single central bank in an OECD country that's authorized to buy a government bond directly from the government at its issuance, without the bond first making a detour through the financial markets. This rule, obviously, prevents a spendthrift government from having direct access to the central bank's banknote printing presses.

The payments issued by the central bank when purchasing assets can be made either with paper banknotes, or as entries in an electronic ledger — i.e. a bank "account" — maintained at the central bank.

Thus, the central bank, when it purchases assets and issues a payment for them, creates money — i.e. increases the money supply — by increasing either the quantity of banknotes in circulation, or the balance of an electronic bank account held at the central bank.

1) Asset and liability positions after the gov't has auctioned a new gov't debt:

Gov't asset:
cash received as payment for the newly issued gov't debt

Gov't liability:
gov't debt it'll have to pay back in a few years

Private sector bank asset:
Gov't debt instrument that will mature in a few years

Total of the assets and liabilities of all the parties involved: after mutual cancellation of assets and liabilities, there remains, at the national level, a net asset that's equivalent to the amount of the gov't debt.

2) Asset and liability positions after the private sector bank sells the gov't debt to the central bank:

Gov't assets and liabilities: unchanged

Private sector bank asset:
cash received as payment from the central bank

Central bank asset:
Gov't debt instrument that will mature in a few years

Central bank liability:
Entry it credited to the private sector bank's account, held at the central bank, or equivalently, IOU notes — that is, banknotes — it handed over to the private secotr bank.

Total of the assets and liabilities of all the parties involved: after mutual cancellation of assets and liabilities, there remains, at the national level, a net asset that's equivalent to the amount of the gov't debt.

Thus, the acquisition by the central bank of gov't debt does not change the netted asset and liability positions of the actors involved, including the government's.
There is thus neither an increase, nor a decrease in liability, that is, there are no "ups and downs" at the national level.

What does change, when a central bank purchases an asset, is the money supply. This is obviously relevant when implementing monetary policy, as the quantity of money in circulation is believed to play a role in the prevention of economic contractions and deflationary spirals.

Hence the unconventional policies pursued by the various central banks — the Fed, the ECB and the BoJ — which have all increased their assets purchases of late, thus increasing their respective currencies' money supply.

When you are answerable to shareholder, there is no long term direction for a 'hobby business.' You can't knowingly throw away shareholder wealth year after year and still claim fiduciary responsibility.

I'm guessing Olympus gave their cameras a long leash as long as they were gaining penetration; you can absorb short term losses as long as you have longer term potential for increasing market share, even in a diminishing market.

Unfortunately, Olympus has been losing market share.

I suspect they may be on their final bullet as they begin to belatedly (too belatedly) start to slash very high retail prices. Hopefully this will keep them viable a little longer.

On the other hand, Olympus has already given up 35mm SLR, 35mm bridge, Olympus medium format, Olympus 4/3, walked away from DSLR...

Gosh I hope they survive and thrive. But despite what Thom or anyone else alleges, plenty of companies have slashed money losing consumer product lines.

Olympus, along with all other mirrorless makers, continues to shed money like there is no tomorrow. Sales are falling and are projected to fall further. R & D money is spent to get less sales the next year.

Mirrorless has had 5+ years to turn a profit and still has not reached that point. All of the mirrorless makers put together are out sold by Nikon and produce 0 pennies in profit.

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