First up was the notice that Hasselblad had been sold again (for the sixth time, this time to the Ventizz Capital Fund IV). The medium format (MF) seems hot in one respect--a continuing flow of interesting new high-end products--but we continue to lose bodies in the war of attribution as sales in the MF market simply don't have much in the way of legs. The estimate, after all, is that the MF market is measured in the low 10's of thousands of units a year. Nikon alone sells 14 million+ cameras a year.
The Hasselblad news was followed by Hoya's sale of Pentax Imaging to Ricoh. Over a year ago I predicted that Hoya would sell the camera group. Hoya originally wanted Asahi (Pentax) for its medical products, and when the Pentax camera sales continued to slide after the acquisition a few years ago, the handwriting was on the wall.
So now we have another conglomerate, Ricoh, with a camera division that needs some healing. (Ricoh, by the way, is sort of a Japanese Xerox, very heavy into documents and document management). Cameras at Ricoh will now be about 5%+ of their sales if I'm calculating right.
The question everyone is asking is "what will a combined Ricoh/Pentax look like?" There is overlap in their business, but mostly at the low end. I predict that the Ricoh compact cameras will be what survives at that end, and the Pentax DSLRs should survive at the other end. Three products need some thinking: Q (see Mirrorless Summer 3), GXR, and the 645D.
If the 645D survives the transition, it will because someone thinks it is a halo product. Ricoh specifically spoke about "profitability" as part of the motivation behind the transaction, and the 645D doesn't sell in enough quantity to drive that at the levels they need to pay back the US$124m investment they just made. A few thousand 645D's aren't going to generate enough cash to make a dent in that.
The Q is pretty much a one-and-done deal now I think. It'll be a novelty buy in Japan where both Pentax and Ricoh sell well, but I see Ricoh having an even tougher time of selling this overseas than Pentax was going to have. Again, not enough sales to make a dent in the investment outlay.
The GXR is a different story, though. Flip the M-mount module to K and suddenly those Pentax pancakes and near pancakes (15, 21, 40, 70) look mighty interesting. Of course, that'll be a relatively deep K-mount module. Still, if nothing else there's optical expertise that should be able to generate more and more interesting GXR options.
So, we end up with Pentax GR series and Optio WG series (water/shockproof) compacts, GXR in the middle of the lineup with more and more compelling modules, and K-series DSLRs. Would I have spent US$124 million to build that lineup? No. But it's still a very interesting lineup.
Here's the thing that intrigues me most about the match-up: both Ricoh and Pentax have well-designed cameras that appeal primarily to serious enthusiasts. That's where the overlap definitely comes into play. With the combined assets of the two I would definitely drive them towards trying to become a moderate volume, cater-to-the-enthusiast brand. Enthusiasts like primes. Enthusiasts like manual control and overrides. Enthusiasts like image quality. Enthusiasts like the camera to get out of the way.
If Ricoh can cater to the enthusiast group with the right products, then things will be fine. If not, count how many times Hasselblad has changed hands and now project what happens to Pentax.
Update: it seems every time I write about Pentax people start attacking things I write, but usually misinterpret what I've written or read too much into it. Just so that I'm clear:
- 645D. I doubt it will go away soon. Partly because it will take time to transition to the new management and make all the decisions that need to be made. There's no downside in continuing to build and sell what they've designed. But I'm doubtful that much investment would go into extending its life unless it's decided that Ricoh wants the halo product. With the MF market so small, I think that's an unwise invesestment (see three bullets down).
- Q. If I'm not mistaken, Ricoh has experimented with a C-mount design very similar to what Q is. The problem is that these will turn out to be specialty items, I think. The real problem with the Q is the price. While Ricoh camera pricing has not been bargain-like by any stretch of the imagination, US$799 for a compact camera is a real stretch, and the product is from the beginning a speciality/novelty item. Speciality items do not become mass market and tend to have short sales spans unless you continually find some way to make them unique and near collectible, as Leica has with the M series.
- Pentax demise. Almost eight years ago I predicted the demise of Pentax. Perhaps I was too strong in my wording back then, which I eventually tempered. However, the company has now sold twice in four years for declining dollar amounts and if you look at the Imaging division sales and profits, they're nothing to write home about. I predicted that Pentax was in trouble and I was correct. Pentax has been and continues to be, a marginal brand in terms of economic viability. The question now is whether Ricoh management can fix that. With Hoya in charge, it was always clear that they really wanted the medical and some of the parts components of Pentax, not the struggling camera maker side. Ricoh appears to have the aspirations to try to build a viable camera business, and they've said all the right things about this deal so far. It appears that they truly intend to invest in the acquisition, not pull off the pieces they want. That's one thing Pentax needs. Moreover, Pentax/Ricoh are a good match in terms of customers they target (the serious enthusiast I mention above). If Ricoh can rationalize the product line with that in mind and make the right adjustments in terms of selling/support practices, then perhaps Pentax has finally found a home. We won't know the outcome of that until some clear product decisions get made.
- Pentax+Ricoh. Under Hoya, Pentax's sales have continued to drop, and market shares have declined. They are a distant fourth in DSLRs (a declining market), not really a player yet in mirrorless (a growing market), a distant ~10th in compacts (a declining market). Combining that with Ricoh's sales doesn't actually change those positions. Pentax has been cutting back subsidiary staff and support. Ricoh doesn't do camera support in the US (they use a third party for all service, for instance, and have no US "digital camera support local contact"). Ricoh HQ in the US is in New Jersey, Pentax in Colorado. So besides the challenge of building a competitive product line, there's the issue of getting distribution, marketing, and support right worldwide.