If you have not yet heard the news, today Olympus made an announcement that it is going to sell its camera division to Japan Industrial Partners (JIP) by the end of 2020. With its continuous losses in the past few years thanks to serious declines of camera sales (thanks to the rise of the smartphone), Olympus is basically leaving the camera industry, letting a third party manage its camera business. And with the COVID 19 pandemic that has really hurt the camera industry, it is clear that the company is doing what it can to survive as a business.
Without a doubt, this is truly sad and terrible news, which shows just how badly the camera industry has been hurt in the past few years. We have written a number of articles on the rise of the smartphone and the decline of the camera industry, and we have even given our thoughts on how camera companies can survive the smartphone. However, it is pretty clear that the game is over for Olympus Imaging – the division that dates all the way back to 1936. While the company has stated that JIP might make Olympus Imaging “more compact, efficient and agile”, and has used such words as “continuous growth”, I don’t see how a financial services company that has no expertise in the camera industry can somehow make Olympus Imaging profitable and successful again. That’s just not going to happen.
The likely outcome of this takeover is going to be a few more years for the Olympus camera brand to live before it eventually dies off and disappears completely. Without any serious product development and innovation that requires a lot of R&D funding, Olympus Imaging is not going to survive. There is no way JIP is going to pump a ton of cash into a dying company that has basically gotten obliterated by the smartphone industry. And this is the best-case scenario. The worst-case scenario, is JIP splitting up what’s left of Olympus Imaging and selling it off before it bleeds even further. Sadly, I personally don’t see any other outcome out of this announcement…
So why shouldn’t we have any faith in JIP taking over Olympus Imaging and making it successful? Well, just take a look at JIP’s investment portfolio, which includes many divisions that were transitioned as separate companies. For example, when Sony wanted to get rid of its VAIO PC division, it sold it off to JIP, which then carved it out into a separate company. Other notable investments by JIP include Toyota’s CAD/CAM software division, NEC’s ISP subsidiary, as well as ITX Corporation, which was previously owned by…wait for it…Olympus! That’s right, JIP and Olympus have had a past, and it was not pretty. After a series of corruption scandals, Olympus sold ITX Corp off for $676 million to try to stay afloat.
From what I have been able to research, none of these companies have done well under JIP’s umbrella. The closest electronics company to Olympus is VAIO, which is worth looking into to understand the potential best-case scenario. Although VAIO still makes laptops and sells them in the USA and internationally after five years since being separated from Sony, the laptops have mixed / poor reviews, and very few people seem to be buying them. I don’t see how such a company can survive the fierce competition. The VAIO name has stayed for five years and a few new products have been rolled out since then, but none of them have been revolutionary by any means. So if JIP does the same thing to Olympus Imaging as it has done to VAIO, forget about the Olympus brand…
Olympus’ Innovative Past
Without a doubt, Olympus was once a truly innovative company. Together with Panasonic, Olympus basically invented mirrorless technology, which landed the two companies many recognitions and innovation awards. To date, Olympus is still unrivaled when it comes to 5-axis in-body image stabilization system, which Olympus has licensed to other camera manufacturers. The live image development during long exposures is a feature I have not seen on any other camera. Superb pixel-shift technology, as well as hand-held pixel-shift are still features no other camera manufacturer has been able to properly replicate or implement.
Let’s not forget about the seriously compact and highly capable cameras like E-M1, E-M5 and E-M10. Over the years, I have used all three models of different generations, and found them to be small, lightweight and extremely versatile.
When the original E-M5 came out, I immediately bought one after trying it out. It was small, lightweight and had everything I needed in a mirrorless camera. I even upgraded to the E-M5 II when it was rolled out, since I loved that camera so much.
Best of all, I loved the small M43 zooms and primes. My favorite lenses have been the Olympus 7-14mm f/2.8, Olympus 12-40mm f/2.8, Panasonic 15mm f/1.7, Panasonic 20mm f/1.7 II, Panasonic 25mm f/1.4, Panasonic 42.5mm f/1.2 and Olympus 75mm f/1.8. Without a doubt, these are very sharp and highly capable lenses. I did not have much experience with many other M43 lenses, but I am sure many of them are equally great, if not better.
I could go on and on about everything I loved about Olympus cameras and M43 lenses. It’s been truly sad to see all the turmoil that has been surrounding the company over the past few years. The leadership of the company showed its real face with all the corruption scandals, while talented teams of engineers and designers were busy making such superb cameras and lenses. The mismanagement and the lies of the corrupt executives brought the company down, heavily denting its reputation. Add the strange marketing decisions Olympus has taken in the last few years by making large and expensive M43 cameras that nobody wants, and it becomes clear that things have not been well at Olympus for a while now.
Sadly, despite the blatant lies by top Olympus executives that things are all well and healthy, many of us in the industry have been expecting this outcome for a number of years now, so it does not come as a surprise. Rumors about the sale of Olympus Imaging have been circulating for many months.
Unfortunately, this news is not good not just for Olympus, but overall for Micro Four Thirds. With Panasonic transitioning to full-frame mirrorless, the development of Micro Four Thirds is probably not going to move much further.
As much as I hate to see Olympus Imaging fade away, it seems like it is the first camera company casualty during these tough times. Let’s hope that others don’t follow.
Here is the official press release / memorandum from Olympus:
Signing of Memorandum of Understanding for Divestiture of Imaging Business
Olympus Corporation (“Olympus”) and Japan Industrial Partners, Inc. (“JIP”) hereby announce that, today, the parties signed a memorandum of understanding to carveout Olympus’s Imaging business to a new company (“NewCo”) and subsequently transfer its shares to a fund managed, operated or otherwise handled by JIP (the “Transaction”).
After the due diligence and further discussions and negotiations, the parties are aiming to sign a legally-binding definitive agreement for the Transaction (the “Definitive Agreement”) by September 30, 2020. We will promptly make further announcement if any matters relating to the Transaction that needs further announcement occur.
1. Background and Purpose of the Transaction
Olympus’s Imaging business began with the manufacture and sale of a camera using the photographic lens Zuiko in 1936. Through innovative technology and unique product development capabilities, Olympus has developed and launched various products, aiming to contribute to make people’s lives more fulfilling. Those products include: Olympus Pen, the innovative half-sized camera; Zuiko Pearlcorder, the world’s first micro-cassette tape recorder; and Olympus OM-D series, the mirrorless interchangeable lens camera. Olympus has implemented measures to cope with the extremely severe digital camera market, due to, amongst others, rapid market shrink caused by the evolution of smartphones; Olympus has improved the cost structure by restructuring the manufacturing bases and focusing on high-value-added interchangeable lenses, aiming to rectify the earning structure to those that may continue generating profit even as sales dwindles. Despite all such efforts, Olympus’s Imaging business recorded operating losses for 3 consecutive fiscal years up to the term ended in March 2020.Under such circumstances, Olympus considers that, by carving-out the Imaging business and by operating the business with JIP, the Imaging business’s corporate structure may become more compact, efficient and agile and it is the most appropriate way to realize its self-sustainable and continuous growth and to bring values to the users of our products as well as our employees working in the Imaging business. Olympus therefore has decided to sign the memorandum of understanding for the Transaction.
JIP has strong track records in supporting strategic carve-outs that realize growth potential and encourage autonomous growth. By adding support from JIP, the NewCo, as the successor of reputable brands such as “OM-D” and “ZUIKO,” will utilize the innovative technology and unique product development capabilities which have been developed within Olympus, and will realize continuous growth of the business by bringing better products and services to the users and customers and by making itself a productive and rewarding work place for its employees.
2. Imaging Business after the Transaction
NewCo will succeed and maintain the research and development functions and manufacturing functions globally as reformed under the contemplated structuring reforms to continue to offer high-quality, highly reliable products; and also continue to provide supports to the imaging solution products that have been distributed by Olympus.3. Outline of the Transaction
The specifics of the Transaction shall be decided in the Definitive Agreement after careful examination and consultation between the parties. The parties currently consider the outline of the Transaction shall be as follows.The parties will proceed with the actions and procedures for Transactions in full compliance with applicable laws including consultation obligations and other requirements under local employment laws.
– Structure: Olympus’s Imaging business will be transferred to the NewCo by way of company split or otherwise, and then, shares in the NewCo will be transferred to a new company to be established by JIP.
– Signing of Definitive Agreement: Scheduled to be signed by September 30, 2020
– Closing: Olympus and JIP strive to close the Transaction by December 31, 2020.Structuring Reform
Prior to the closing of the Transaction, Olympus plans to implement structuring reforms to the Imaging business aiming to change the business structure of Imaging business to be more profitable and sustainable. We are currently investigating costs and other impacts of the structuring reform. If any future event which requires disclosure arises, Olympus will announce it promptly.
You can find a copy of the above memorandum at Olympus Global.
Do you own Olympus gear? What are your plans for the next few years? Are you planning to sell and transition to another system, or keep shooting with what you have? Please share your thoughts in the comments section below.
I started with an early Olympus 35 mm slr. Years ago. Have a couple of Canons, but am thinking of upgrading. Any recommendations for one of the Olympus still available? Small size and quality are most important as I am outside or riding a lot. I’m a semi serious amateur.
I bought into the Olympus system a few years ago after seeing wonderful safari photos, write-ups, etc, and getting some arthritis in my hands. I started in serious photography with an Olympus OM-1 and took photos all over the Western Pacific in the ’70’s. In fact, I bought 2 more lately, since I couldn’t remember where my first one went. So Olympus was in my blood and reminded me of the joys of photography. I’ll keep my OM-D EM-1 for “general purposes” and also because I’d cry to try to sell it used for, what, $300 with lens? I still enjoy film on the OM-1, so will continue to use those. Seeing Jane Boem’s work on an OM-1 is enough to assure that. Black and white film though the “poor man’s Leica” is still a a fun way to do photography!
…I mean Jane Bown! My apologies…couldn’t edit spelling after posting.
Nasim —
Oh gosh, have i enjoyed m4/3. For myself or family members i have bought: G1, G4, GH1, EM5, PL7 and GX9 (that last in 2018). i won’t list the lenses.
But in 2018 i realized that m4/3 and Olympus had stalled on sensors in 2015 or 16. It seemed obvious to me: if you are tied to a small sensor, keeping up with state of the art sensor design is proportionally *more* important than larger formats. Your customers are always fighting noise and DR issues: heck, m4/3 bodies all but confirm this by having exposure comp as a primary control.
Sony/Nikon have kept pushing DR and ISO since 2015 with at least two generations more sensor technology, and this is technology you can really use as a photographer. Where was Olympus? Poring scarce R&D dollars into pixel shift (which can only be used in idiosyncratic circumstances), amazing but limited usefulness 6.5 stop VR, and — oh please, Jump-The-Shark — the OM-1x mega body. That last was the ultimate statement of everything a m4/3 user did not want and . . . if Oly was going to make it, the body should have had at least industry leading AF tracking of moving targets. Nope: that will be hand-held pixel shift instead. The AF was hardly better than the three year old OM-1 mkii. Thanks, but no thanks.
i still keep my m4/3 GX9 as a “light tourist kit” even though i use the 12-40 f2.8 (which i love). i am truly sorry that they did not choose to pursue a BSI-enabled modern sensor with at least a stop more ISO / DR performance. That is what would be needed to keep me out of APSC but i guess the sales volumes and R&D $ were not there for it.
Sigh. i loved them.
— gary ray
Business things are too complex that looking into past of JIP company can bring some linear anticipation for the future.
I would personally be glad that they continue with brand support, without much innovation, as firstly, I don’t care for 4k videos, even less for 8k, than I don’t think noise of m43 sensor is critical issue compared to many advantages, and finally their smallest camera IBIS is still appearing to be significantly better than the ones on top cameras around, and that is not the only feature they still have lead in.
Why would ordinary photographic enthusiast care about corporate issues? If service and spare parts continue for next 6-7-8 years, many things could be clearer by that time. Will Nikon survive by that time? If Nikon falls, I fear they will fall abruptly, with no transition period.
Who will survive by that time? Sony that offers “top cameras” with best papers specs, but still lousy colours and unreliable AF and cost as a car?
Many things can change, I fear staying on market has little to do with quality, most of compact cameras still offer much more than smartphones, yet they mostly disappeared from market. Can camera company ever have growth similar to PC companies or even smartphone companies, where it’s necessary to purchase new model every few years? How many photographers really want to change cameras, even lens system every now and than?
Very sad news. I have owned OM 2n , OM1, OM2, OM4Ti
And know someone who is shooting digital professionally now.
It will be a sad loss to all of us and the photographic community as a hole.
I’ve heard somewhere recently that Sharp would theoretically make the best ‘landing point’ for a keep-it-Japanese change of ownership of Olympus. Sharp is, as of this writing, making breakthroughs in camera tech (30+MP, 8K video) using MFT! Imagine if Sharp got Olympus’ tech, brilliant ‘braintrust’, and manufacturing resources, and set them to working to push MFT even further forward, AND integrating it with Android/iOS seamlessly, as Nasim and others have urged the camera industry to do. If this happened, then Sharp-lympus could become the perfect small, light, better-than-smartphone ‘expansion’ camera system to the billions of smartphone-users wanting ‘more, better’ photography. This will also free the engineers from the corrupt execs, perchance to innovate anew, which alone warrants the sale of Olympus Imaging.
Who’s next in line? With iPhone camera technology getting better and the high price of DSLRs, and mirror less camera’s and Lenses that only pros can afford. The camera industry gave up on the consumer base. Some in my Photo Club use only their iPhone and with today’s editing software, receive award winning images.
Now I feel like a vulture ready to swoop down on a dying prey but honestly, I have been eyeing the OMD system for quite some time. Sure I’ll keep my Nikon D810 for night photography and large print landscapes, however, the balance of my photography will be better accomplished with a M43 kit without the weight and bulk. I hope this sad demise(?) of Olympus imaging will have a silver lining of scoring some very good deals on the OMD system in the coming months.
Hi Nasim,
I bought into the Olympus system just over a year ago and I do not regret that decision at all. My E-M1X cameras and M.Zuiko lenses are the finest pieces of camera gear that I’ve ever owned.
Appreciating the tender state of the camera industry, I made my Olympus purchase knowing that there was some risk that the brand may transition, or worst case disappear, some time in the future. My Nikon 1 kit was discontinued 2 years ago and still remains as a wonderfully small, portable, and capable system that I still use, and will continue to do in the future.
JIP is in the business of buying distressed businesses, or ‘carving out’ poorly performing divisions, and reselling them down the road. From what I can see JIP typically holds on to an acquisiton for 2-3 years. NEC Biglobe is a good example. They bought the company in 2014 for $70 Billion Yen, kept it for about 3 years while apparently making it profitable, then resold it for $80 Billion Yen. Biglobe is still in operation today under different ownership.
I look at JIP’s involvement in Olympus imaging as a stop-over point for the equipment. Given the nature of JIP’s business I don’t think anyone should realistically think that they plan to own Olympus imaging for more than 2-3 years. JIP will make their money by restructuring the company and finding new ways to increase its profitability. One of the ideas that immediately popped into my head was using the new factory in Vietnam to do contract production for other manufacturers who may be looking to exit China as a manufacturing hub, and also want to reduce their fixed costs.
Much of what people love about Olympus camera features such as Pro Capture, Live ND, Live Composite, AI Subject Tracking, and Handheld Hi Res are firmware based. I see the future of cameras in computational photography, and to a far lesser extend in hardware advancements. It could be possible for Olympus cameras to incorporate new imaging technologies in the future by way of licensing agreements with software developers that have developed computational photography features for Smartphones in the past. This could lessen the need for internal R&D, while enabling Olympus imaging to bring new imaging technology to customers.
In the near term none of us knows how the carve-out of the Olympus imaging division will be structured, and what plans JIP has for it down the road. I’m not going to worry about things that are beyond my control, and instead will focus on enjoying my Olympus kit and its many wonderful capabilities. I may even add an M.Zuiko lens or two down the road.
The camera industry has seen a precipitous drop in volume over the past 8 years or so… and there will more to come in the future, I think anyone buying new camera equipment today, regardless of brand, should do so with the realization that any brand could disappear in the future depending on how far the camera market shrinks.
I’m in the twilight of my career and purchased my Olympus gear last year knowing that it would probably be the last major camera equipment purchase that I will make while still on this planet. The recent announcement from Olympus has not changed anything for me.
Tom
Excellent and objective analysis of the situation regards Olympus imaging. This was inevitable given the declining market and being a very small, 6% or so of the total business. Given that no other camera manufacturer wanted to buy them out validates your comment on the future of Micro Four Third’s products. The Olympus stock price has recovered to pre covid level so the market is looking at Olympus positively given its hospital related business. Will be interesting to see how JIP manages the business, hopefully for a future trade sale. Would be great if it would be eventually sold to a Chinese company similar to what happened with Hasselblad.