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.
Are my Olympus cameras going to stop working suddenly? No. While I still have my Nikon DSLRs, I haven’t used them in ages. The Olympus kit is smaller, lighter and gives images just as good, unless you’re trying to take photos in complete darkness! I’ll consider changing systems when my Olympus cameras stop working – until then I’ll carry on taking (hopefully better) photos. Think about the many great images captured with equipment which many would regard as prehistoric…
That’s true of course. But I view it like a owning a car. You hold on to it for as long as you can, trying to balance the cost to keep it going with the trade in value you will eventually want. If you keep it too long, then it’s worthless and doesn’t help with the purchase of a new one. Unfortunately for me, I’ve never been able to pick that perfect timing!
Bob, I fully agree with your sentiment – if a camera system is working, that’s all that matters!
I am just sad that Olympus is going with the JIP route. Looks like that company won’t do anything good to the brand’s future.
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
I’m saddened to see Olympus go (I’d be saddened by any camera manufacturer to fold) but I’m much more pissed by the way they’re doing it: this is specifically in order to circumvent the large number of Japanese laws that, unlike those in the US, protect workers from being just fired without any justifiable reason. Bad enough for Oly to have literally lied 4 or 5 months ago saying its imaging sector wasn’t for sale (when reports state that they’ve been in contact on JIP since last September about this deal, so it’s not really anything new at all here) but to do it in the most insulting possible way for their employees? It’s just disgraceful, no matter how one looks at it.
M43 is not dead, obviously, but unless Panasonic decides to invest more in it than in full frame, it could be in for a rough time, that’s undeniable. Still, cameras and lenses bought today or recently will not stop working just because Oly jumped the boat so if I were a m43 shooter I wouldn’t be worrying too much. The overall state of the photography market though…I really do hope this isn’t just one of a series.
As for JIP, it’ll cannibalise and just sell whatever they can to the highest bidder, that’s basically what they do. Vaio computers are horrid, made with bin parts somehow dragged out of some Chinese backstreet shop (not literally, but I’ve yet to hear anyone who is knowledgeable about laptops speak well of them) and I guess that’s very much an indication of what “Olympus” and “Zuiko” will be used for in the future. It’s just depressing.
Tomáš, I fully agree with you, but I am not surprised, given how bad Olympus management has been in the past few years.
Thanks for this Nasim. You’ve probably come up with the most detailed and thoughtful response I’ve seen to this news. As a committed Olympus user, I really don’t see any positives here. Nobody knows whether switching systems is the best strategy as Olympus are unlikely to be the last of the casualties.
Colin, that’s true – might be best to wait and see what happens in the next few years. There might be other casualties, which is very unfortunate.
I suspected this would happen a couple of years ago and sold off most of my Olympus gear. Interesting article with the background of the purchaser. I agree I can’t see them bothering with trying to continue the brand at all. What’s the point from a business perspective, it was failing to turn a profit before, so I suspect the value lies in their patents.
I don’t wholly blame the smartphone; I think some blame rests with the camera industry too. They failed to address the most compelling feature of smartphones…the ease of sharing/posting. Despite some improvement in apps the past couple of iterations, the process of using a “real” camera is still the same. Shoot images, take camera home, turn on the computer, remove the card, put in a reader, launch software and download the images, optimize, resize and so on, export so you can send it via email/social media, etc. That’s a lot of steps for a snapshooter to do when the finished product is a low rez image destined for someone’s phone or social platform. No manufacturer found or tried to address that problem. If someone had integrated the camera with iOS or Android, so you selected your images and processed them quickly, then who knows, maybe the industry could’ve limped along for a while longer? Or perhaps you could have them automatically upload to the cloud, so when you got home, they were already there? I don’t know, but I suspect that Canon will survive, and probably Sony, I’m not sure about the others though if the market continues to tank.
Scott, I agree – camera companies like Olympus (especially given the small sensor size), should have made easy to use cameras that appeal to those who want something better than a smartphone. In fact, Olympus went the other way – cameras got much more complex, menus were too cluttered, buttons and functions became overwhelmingly hard to use. I wrote about this in my article linked above, but I think it is a bit too late to address the issue. Camera companies did not go after the average consumer – they went after photographers who wanted more functions and buttons, while smartphone companies continued the idea of simplicity and automation.
There is no profitable business opportunity for inexpensive cameras that are better than cellphone cameras. Most people in that market segment already decided they prefer a cellphone and are willing to compromise image quality which is between not much and nothing given how good cellphone cameras have become.
The market is segmenting into serious photographers who will buy expensive equipment and cellphone photographers squeezing out the market in-between them. Good chance there will be no inexpensive cameras that are better than cellphones. It is not a good business to be in.
Olympus was right to take the product lone upscale in quality and charge accordingly. They just did not have the scale and business resources to succeed at it. Engineering succeeded in a big way. Business management failed miserably.
Some say they should have just made ASP-C and/or FF cameras and not tried to pioneer a new system but with Canon and Nikon’s market share and scale it is unlikely that would have worked. SONY is succeeding so far but look at the resources they had to throw at the effort. They acted like a market share leader AND made great products, led in 35mm mirrorless ILC’s and forced Canon and Nikon into it.
It was impossible for OLY to do something like that no matter how good the products could be. They simply didn’t have the scale to compete when ILCs went digital. Olympus was doomed by disruptive technology, ironically because they did some of the disrupting.
It’s interesting how often I hear “I wished I had a better camera with me” when people got frustrated with smartphone results – but it never condenses to the purchase of one. It’s a bit like “I wished I had a better sound system for my home cinema”. For one movie or one picture it’s no point in investing hundreds or thousands of $ and as long as pictures need to be seen by the world/the followers on instagram right at the moment I take it – that excludes pretty much every regular camera as only few of them have a SIM card inbuilt.
What do you use when you need to pass somebody a quick mail with a pic of an instant situation in it? See?
Scott, look at Samsung Galaxy NX Mirrorless camera. They have done exactly as you ask for. APSC sensor, Interchangable lens , Android OS, Internal 16Gb Memory, 4G Connectivity Sim, 5 inch Touch Screen, Lots of Apps. etc. If only Olympus has done that too, they may survived till today & in future. Or with with Samsung on camera developments. JIP will make what they want and scrap off whatever they feel not right. Mobile phone companies will be next in that list too. Mobile technology has saturated till no one buys new phones based on communication features. Phone companies push more advertisement on photography or video specs & nothing else. Soon we’ll negative graph on that too. Hope some good news for all Olympus fans in near future.
“That’s a lot of steps for a snapshooter to do when the finished product is a low rez image destined for someone’s phone or social platform. No manufacturer found or tried to address that problem.”
Nikon’s Snapbridge app does just what you are asking for. Puts a low res image on your phone, where you are free to share it. It now works seamlessly. I am not familiar with the other camera brands, but I imagine they have similar apps.
I’d go Nikon, but not confident they’ll survive. Probably pick up a couple used Oly bodies to keep me going a couple of years, watch Fuji, Sony and Panasonic. Probably get a G9. Seems to be the best camera out there at the moment.
Kalea, I think Nikon will do just fine. While everyone is indeed hurting right now, Nikon is not even close to the condition of Olympus Imaging, which had many corruption scandals, and very bad marketing choices in the past few years.
It has to be proven, Nasim, if all Nikon marketing decisions were so much better than Olympus’?
In terms of bringing out a Pro DSLR which then doesn’t work together with 3rd party glass which IS working with any other Nikon DLSR from the past decade?
In terms of delayed lenses due to “factory problems” and other excuses?
In terms of going for an exotic f/0.95 lens which a small group of collectors buys, but costing endless R&D resources?
Nikon is far away from a complete line-up of great standard zooms.
No battery grip for their Z line-up.
Was there a big innovation by Nikon which no one else offers during the past decade? Something like Olympus 5-axis stabilisation? Something like Olympus waterproof seals (and not only “weatherproof” – sunshine without a cloud can also be called “weather”). Heck, Nikon didn’t even the Z 50 a fully articulated screen which all D5xxx have!
I’m not worried about Nikon because I’m not married to this brand. But I would not bet against their going out of business within the next ten years.
I moved from a Nikon d800 to Olympus due to size and have been very happy. I’ve also still got a ten year old pen I bought first and apart from dust making the selection wheel jump it still takes great photos. For now I’m going to keep my EM1 mk2 and lens, but I did just run out and buy two new batteries. Guess I’ll wait and see for a few years on what happens to other brands but I don’t expect good from JIP as their history is not promising.
Although Olympus are undoubtedly well respected for their history of innovation and flair in the SLR and DSLM markets, it is hard for me to see what their USP was in recent years. When the Nikon Z50 and various Fuji bodies are the same size as M43 but with better sensors, and Panasonic is established as the video experts, I’m not sure what Olympus offers today other than a weird nostalgia. Pentax are in a similar boat too I fear.
Remember Minolta? It became Sony.
Engineers at Olympus may migrate to Sony, Nikon, Canon and bring with them features now unique to Olympus.
Scott, look at Samsung Galaxy NX Mirrorless camera. They have done exactly as you ask for. APSC sensor, Interchangable lens , Android OS, Internal 16Gb Memory, 4G Connectivity Sim, 5 inch Touch Screen, Lots of Apps. etc. If only Olympus has done that too, they may survived till today & in future. Or with with Samsung on camera developments. JIP will make what they want and scrap off whatever they feel not right. Mobile phone companies will be next in that list too. Mobile technology has saturated till no one buys new phones based on communication features. Phone companies push more advertisement on photography or video specs & nothing else. Soon we’ll negative graph on that too. Hope some good news for all Olympus fans in near future.