Canon’s Q3 Profits Tumbled Down By 42% (Revenues By 13%) – Some Thoughts

 What It Takes To Image - Canon At PhotoPlus Expo 2012

Bad news for Canon. According to the Q3 earning reports, the Japanese company profits lost 42% (down to $908 million), while the revenue tumbled down by 13% (down to $10.3 billion), both figures compared to the previous year's Q3. According to Engadget Canon blames the

[…] “negative impact of economic deterioration” in Europe and emerging markets like China, as well as the strong yen […] DSLR sales fell over last year, with Canon mentioning that its launch of new models like the EOS 5D Mark III didn't help to shore its camera figures up. […] printer sales falling and business-to-business numbers flatlining. The company doesn't see a bright fourth quarter either […]

Uh, I guess I heard similar stories before. Sure, there is an economic crisis in Europe, that's true, but I don't think this is much affecting Canon's sale figures. Maybe the major problem that Canon has to and should face as soon as possible is to become again an innovator, a company that makes products that are awesome. Products that people want to have, not products that are just alternatives to other brand's products, or products you buy because you have a huge EF lens collection. Yesterday's announcement of a new firmware for the EOS 5D Mark III made me think. Let me share some thoughts about Canon with you.

The EOS 5D Mark III is a great, professional full-frame DSLR. If it didn't produce the sales figures Canon was expecting it is mainly because of the initial price tag in relation to the feature set. The EOS 5D Mark III started with a price tag of $3500 (body only), much more than Nikon's counterpart, the D800. Nikon's D800 had also a powerful WOW-factor: an amazing resolution of 36MP (which, btw, few people really needs). Not that Nikon is much more innovative than Canon, they just managed to be innovative enough, compared to Canon, when they launched the D800.

The EOS 5D Mark III has an advanced auto-focus system (it's really advanced and high performing), but then sports almost the same resolution as its predecessor, and no amenities like built-in WiFi and GPS (which cost few pennies to implement). Customers don't like this, and easily oversee that the EOS 5D Mark III has an astonishing low-light/high ISO performance the D800 will never approach. DXOMarks are not telling the whole story: the sensor in the 5D Mark III is a very advanced piece of technology, despite its maximum resolution. The EOS 5D Mark III price is now going down. How many 5D Mark IIIs would Canon have sold if they started from the beginning with a lower price tag? Blaming the Yen or Europe's economical situation for missed sales figures doesn't really convince anyone. And dropping the price of the 5D Mark III after just 7 months definitely doesn't make happy those who buyed the 5D3 on day one.

Canon didn't do everything right with the 5D Mark III, and I think it is embarrassing that Canon announces a firmware upgrade for the 5D Mark III that promises features that are available in the D800 (i mean clean HDMI output). Moreover, features you can get today on your EOS 5D Mark III simply by installing a firmware replacement like Magic Lantern. We all know that companies are artificially crippling features only to fit their gear better into the market. It's sad, but it is common business practice. I just would like it wasn't that obvious. Announcing a firmware update that promises the same features as a firmware hack that was announced the day before is, well, awkward and disconcerting. And it gives a feeling of disorganization, especially if you consider that the firmware update will be available in April 2013 (that's more than 6 months from now). Did Canon really announce this update only because Magic Lantern made a feature like clean HDMI output available for everyone? Looks like. On the other hand, it is not the first time I am disappointed that Canon didn't implement some features other brands did. Maximum exposure range (for HDR) and an useful auto-ISO are just some examples from the recent past. It is even more annoying since these features can easily be made available by firmware.

It's no secret even for hardcore Canon fans that other manufacturers are doing better in some areas. For instance, take the EOS M, Canon's entry in the mirrorless market. It's a solid performer with high image quality and much more you may want on a mirrorless system camera. Nevertheless, myself and others can't get rid of the impression Canon did something halfhearted. They had to do it (Canon was the last big manufacturer to announce a mirrorless camera), and they made something that could have been done better (e.g. flippable display, viewfinder). However, my EOS M has yet to arrive, and I don't want to criticize too much before having it had in my hands and having tested it. What I want to say is that Canon just did what it had to do, nothing more, a robust performing camera with no WOW-factor. These are probably business rules: you have a big, well working DSLR market, and you do not want to cannibalize it producing an awesome mirrorless system camera. This may work for a while, not forever.

So, maybe you consider what I said as the rants of a disillusioned Canon fan boy. I am not. I think Canon makes great cameras, I think they have some of the most advanced image sensors you can get (Canon developes sensors on its own, they have a strong research unit in this area), I think I will buy more Canon DSLRs in the future. But I also have an engineering background, I know about software and firmware, and about hacking. Yesterday's firmware update announcement for the 5D Mark III simply reminded me about how easy it is to add features. And also how easily companies decide not to add features, maybe because you are offering these features in a higher priced gear. Or because it isn't the right marketing strategy. That's annoying.


  • Alex

    Good post. Completely agree. Good cameras, no WOW factor. 6D will be very late to game with mediocre(at least on the paper) auto focus.

    • Eli

      Amen to that. Canon needs something people desire.

  • Bob B.

    Well…this “disillusioned Canon fanboy” (LOL!)…., after watching the massive price drop of the 5DIII is going to sit back and watch the ridiculous price tag on the 24-70mm f/2.8 II drop down to $1500 where it belongs (along with a lot of the prices of their newer glass). I sold my 24-105mm back in April anticipating the new 24-70mm…which was delayed and delayed and delayed (that is understandable)…but after the financial burn I am taking on my 5D III (and once again watch talented hackers enabling a camera perform to its full potential, huh?)and Canon’s ridiculous prices of late…I am going to keep my money in the bank, use my Sigma 50mm f/1.4 and watch them squirm for a while! 🙂

  • 4324234

    it´s good that canon feels some pressure… maybe i will buy the next generation of canons 5D.

  • Ra

    agree on 90% what you said.

  • Nuno

    …selling 5D II at an excelent price along with a not-much-better 5D III as some responsability on these Canon numbers? Many will agree on this.

  • Mark

    i totally agree.
    I have a 5D mk2 & 7D, i am sick of paying top dollar for a camera that has features held back that could have been added in the first place. I would have bought a Canon mirrorless if it had a viewfinder. If Sony bring out a FF mirrorless I will consider it. But, I am invested in Canon, what I really want is Canon to lift its game, I want gear that is innovative ahead of the pack not 6 months behind it. If the 5D mk3 comes down more, then I will probably buy one, but I want to offer clients more like wifi, etc. I don”t know, I think I will sit back and see what happens, if i buy a 5D mk3 two months later it will drop $500 or canon will bring out a model with wifi, but probably leave out some other feature that I need? What to do?

    • Bob B.

      The M is YEARS behind the pack for a mirrorless camera…..years.

  • XDR

    Canon = NOKIA Falling down….

    • Bob B.

      Canon could become Crackberry, the way they are heading. Changes happen in a flash these days…

  • opp

    That’s the great think about the global economy. You lose profit if people don’t like what your doing. I didn’t upgrade my 5D MII because I was disappointed by the new features of the MarkIII. Good to see that I was not the only won who is a missing innovations and key improvements in video and photo mode. I also stopped buying canon lenses, maybe I switch to Nikon next year. 36MP and sharp 1080p is what I want. And most important: For under 3000€!

  • DAB

    I subscribe to a well known photography magazine from the UK, and have noticed that in their recent equipment reviews of mostly entry level or mid level cameras and lenses, Canon hasn’t been doing very well. Overall, their equipment hasn’t rated anything like as well as the other manufacturers. This is a huge mistake on Canon’s part as these reviews do influence first time buyer’s purchasing decisions. When you buy your first camera, it’s most likely you’ll want to stay with the same brand, especially when you start to amass a collection of lenses. Canon is likely losing ground in this very critical area, and will feel the effect for many years to come. The competition isn’t relying on past acheivements, it’s innovating, and bringing great technology to the market at a reasonable price.

  • Archer

    I totally agree with this post. This is pretty much what i was saying for some time now – Canon traded happy fans for a quick cash grab from the early adopters. They could sell a gazillion of new 5d cams if the price was realistic right from the release. I was going to buy new 5D MKIII at release, but after learning the price I was like “You gotta be kidding”. Look at D800 – the price is firm simply because it is a fair price for this particular product in this particular market. Nobody is saying that D800 is overpriced because it is not. Canon builds a solid product, but with its lack of innovation (considering the WOW factor from the competitors), Canon has to think twice when they build their pricing strategy.

  • lol

    article argued in favor of canon… go out canon and take an a99!

  • S

    This is awesome news. Canon has been on their high horse thinking they are invincible while releasing underspecced mediocre cameras while the competition has been innovating. Hopefully Canon sees this as a wake up call and gets their act together. We want new sensors, better IQ, less noise, and much better video features like what Panasonic and Sony are doing.

  • Noa

    Totally agree with your article.the canon 5d mark iii should have a sp of $2800 since the beginning.

  • Ingo

    Great conclusion!

  • Steve

    Nikon also innovated with the 800E for those that want the absolute highest resolution. That is how you can charge more for a product that doesn’t cost more to make.

  • Fentons

    The EOS M is fine for it’s place in the line-up.
    Unfortunately, Canon needed a second mirrorless option with IQ closer (or even slightly better) than the current 7D, and with weather sealing and a great EVF.. A new improved 7D II should also have been launched sooner. The 7D should remain the premier camera for long-zoom shooting situations, with an EOS-MPRO as a perfect back-up. An EOS-M pro would also be the perfect back-up camera for Canon full-frame shooters, offering the security of a portable back-up body (particularly important for news).

  • QBNY

    All Canon had to do was take the G12 and make it with a interchangeable lens. They would’ve made a killing and shook up the mirrorless market.

    Then they should’ve made the G15 even smaller Witt the same features it has now.

  • commenter

    Excellent post – I could not agree more! Maybe at one time they could afford to cripple their products, only releasing small incremental upgrades when they would release the next new model but the competition is too strong now. They need to innovate. The EOS-M and 6D just don’t cut it in today’s market… Come on Canon- stop with the games! Get moving now!

  • jimbomb

    I was half hoping the EOS6D might retire my 7D; no luck,6D’s lack of a built-in flash and inferior AF (11 AF points & only a single central cross-type) tells me that Canon is up to its old tricks of offering the minimal sets of features but charging the maximium that it thinks the market will tolerate. This mentality must go in order for it to grow again! INNOVATE it must, as you rightly pointed out, if it wants to recapture it’s old market share! The EOS M is in the right direction, but an insufficient one. They must study the feature set of Sony NEX 7, Olympus OM-D & Panasonic G3 and go beyond those, in order to do that. Hopefully, the company that I once respected will make a come back!

  • peevee

    “EOS 5D Mark III has an astonishing low-light/high ISO performance the D800 will never approach.”

    What are you smoking? DxOMark ISO for 5D3 is 2293, for D600 is 2980. Claiming you have ISO 51,200 and 102,400 is not the same as providing usable images at those settings. The same noisy look can be obtained on the Nikons by simply pulling 12,800 or 25,600 up in post. 500 nm process is simply no match for 180 nm.

  • I haven’t posted here before, but I’ve been following the site for a while as I like to know what’s coming down the line.

    I have been all EOS all the time, until Canon dropped the EOS 1Ds range. it’s the camera I’ve made my living with for almost the last decade, but when they dumped it, I traded over, and now own a Nikon D800 & a D800E with a few lenses, and am very, very happy with them.

    Canon’s slow decent into mediocrity has been strange to watch, for twenty years they’ve held the undisputed crown high as the best maker of FF/35mm pro level gear and I have voted with my dollars and my ownership, but now they’ve lost me, and the chance of getting me back is slender when Sony and Nikon are pushing both the imaging quality and camera handling envelope so much harder and faster.

    I also don’t think the EOS M will hold a candle to Sony’s RX1 – a camera I’m really excited to get my hands on.

    Competition is good and complacency is bad. I hope for their sake Canon can turn this around, but with cell phone wiping out the P&S market, they better get really serious about the top end of the market really fast.

  • Unfortunately, this post rings a bell for me. I’ve ditched 2 lines of products from Canon in the last 6 months.

    I was a 7D user, and wanted to go full frame. Since my EF-S lenses would not work for a Canon full frame, i had to sell everything and start fresh, which also meant considering other manufacturers products. As I started checking the options, things were clear: The nikon D600 is a great product at a great price point, unlike the 6D, which, in comparison, is a mediocre offer with a couple of gizmos to compensate (i.e. very basic AF system, but wifi and gps…i’d rather have a decent AF). Canon’s lens lineup of full frame primes is mostly comprised of lenses from the late 80’s, early 90’s, and the new offerings (which are coming at a rather slow pace) as pretty expensive, and seem to be geared towards video shooters. Nikon’s has up to date designs for 50mm, 28mm, 85mm, all at good prices.

    Then, I’m also a mirrorless user. I was eagerly waiting for Canon’s entry in the mirrorless world before I settled for a system (right now i have a few m43 products, but nothing crazy). They got a couple of things right, like launching the product line with a fast 35mm equivalent pancake. They came up with a sensible no nonsense design. They sport an APS-C sensor. But. The AF is slow. There’s no EVF (not even as an option). There’s no lens lineup. So, its like…why should I invest in THAT system, when there are great offerings from other brands? As it is now, I’m going FUJI. Their products have top notch IQ. The prices are reasonable (X-E1). The ergonomics are awesome (you know, cameras that actually work like cameras and not smartphones). You get the idea.

    So, in 6 months, I’ve gone from a Canon user to…a Nikon and Fuji user. I don’t think I’m coming back to Canon in the foreseeable future. What a pity.

  • Richard

    I was a Canon user. When I had Canon, i have to do photoshop for each photo to avoid Canon’s very soft JPG performance. I then switched to Pentax K7 and Olympus E1 EP1 family of DSLR’s. I like Olympus jpg engine much better.

    Canon is feature oriented, technology oriented, rather than treat the final result as an “Art form”.

    Canon forced users to spend many hours in front of computer screen, the other makers, namely Olympus Fuji and Leica have offered alternatives for freedom.

  • Dave

    Spot on – Canon need to kick whoever’s in charge of innovation up the backside.