My predictions, as usual, provoked a great deal of discussion all over the Internet. But it struck me in defending my position that a lot of folk don't distinguish between "product" and "business." To put it simply:
- You can have a great product and fail as a business.
- You can have a poor product and succeed as a business.
I didn't talk about quality of product in what I wrote, I talked about what was happening at business levels. Let me put it a different way. Given the sorry state of the economy, do people really think that the camera maker landscape is going to continue unchanged? This is a very challenging environment we've entered into. Momentum was already draining out of the camera sales channels before the financial crisis turned virtually every market indicator upside down.
There's a ton of unsold inventory out there. Nikon and Canon are going to use price to move metal (or plastic if we're talking about low end cameras). This is going to hurt product margins for them, but it's going to absolutely destroy product margins for the low volume producers. This is a business crisis, not a product crisis. Nikon doesn't have any choice in this: if they don't survive as a camera company, they don't survive as a company. They will stop at nothing to survive.
Pentax's camera operations, on the other hand, is now a small piece of a much larger company and no longer protected by family decisionmaking. Look around you. Everyone is cutting 5% or 10% or even more of their staff in anticipation of the downturn. As they should. Now what if you happen to have 10% of your company that no longer has profitable product margins and no real chance for realistic growth in the near future. Do you as a company cut 10% of your staff everywhere, or do you think about cutting off 10% of the company that's not producing the level of ROI you expect? That's why this is a business decision and not a product decision. The product may be fine, but the business environment in which it lives has deteriorated to such a point that you might not see how you're going to make that a productive, profit producing business any time in the near future. If you think the downturn is going to be long, your decision gets easier.