TOKYO -- Ricoh is shrinking its money-losing camera business to concentrate resources on commercial applications as smartphones continue to crowd out long-established names in photography.
The Japanese company will undertake a radical review of a production and manufacturing strategy centered on cameras for the retail market, including such brands as Pentax and the GR series of compact models. Options include withdrawing from the personal camera segment altogether.
Ricoh started out as a camera company. In 2011, with the digital camera market already shrinking, it purchased Japanese peer Hoya's Pentax single-lens reflex camera business for 10 billion yen (about $125 million at the time) because it lacked high-end models. Ricoh envisioned the Pentax brand leading a charge toward higher sales to camera enthusiasts.
But sales remained sluggish. Ricoh ranks a mere sixth in global market share in interchangeable-lens cameras and eighth among camera makers overall. The company does have distinctive products like its 360-degree-camera series, Theta, but the rise of high-resolution smartphone cameras has left its personal camera business stuck in the red since the acquisition.
Ricoh is now making a shift toward commercial applications by redirecting production assets and personnel to devices such as automotive cameras. It expects to have its first automotive cameras ready as soon as fiscal 2018 and sees lenses and related equipment generating 50 billion yen in sales in 2020. The company plans to use spare capacity at compact-digital-camera factories in Vietnam and elsewhere to ramp up production of automotive products.
Ricoh will also rethink the sales strategy for its mainstay office equipment business, which suffers from slowing growth, while overhauling noncore operations such as cameras and semiconductors.
In America, Ricoh is laying off 1,000 workers as it restructures its sales network to reduce overlap with companies it has acquired. In Japan, the company plans to offer early retirement, including to employees who have stayed on past the usual retirement age.
Global digital camera shipments totaled 24 million units in 2016, one-fifth the 2010 peak, according to the Tokyo-based Camera and Imaging Products Association. Compact digital cameras were hit particularly hard by the rise of smartphones. Shipments of these cameras have shrunk at a rate of 30-40% per year, dropping to 12 million units in 2016, one-tenth the peak in 2008, the year before Apple's iPhone debuted. Interchangeable-lens camera shipments have fallen to a similar level.
Companies that are strong in interchangeable-lens models, such as Canon and Nikon, have maintained profitability in cameras. Foreign rivals like Samsung Electronics and Chinese manufacturers have a hard time catching up to the Japanese industry's decades of know-how in imaging technology. But even within Japan the field is crowded, forcing the remaining players to retool their operations. Nikon has abandoned its full-lineup strategy, while Canon is pursuing greater automation of camera production.