04-25-2011, 11:59 AM
What he said is fundamentally flawed. That's why margins are so important. Volume does help with regards to potential for profits but does not dictate actual profits. There are many examples where companies establish an approach of taking a loss (or low margins) to gain market share but fail to capitalize on those market shares and eventually go bankrupt. In a game of slim margins for market shares small inefficiencies can be the difference between solid profits and massive losses. I've not studied the balance sheets for the companies mentioned (and I'm unsure the large ones break down exact numbers for the camera division(s) (slr/compact) with regards to unit sold; margins and other related costs (such as support, royalty and r&d).
Historically canon has done well (at least the few times I've looked at their balance sheet) but I'm fairly sure a couple of the companies mentioned have rather slim margins (some of that is due to lower volume as you suggested but some of it is due to inefficiencies and pricing).
[quote name='Brightcolours' timestamp='1303688191' post='7884']
What he said is correct, especially in high volume product lines. Making a single DSLR would cost a few million to develop. Only big volumes can make the cost per unit go down enough to make them "affordable" and still make a profit. The lower the volume, the lower the profit.
It is nonsensical to think one can make profits without big enough market share. The bigger the share, the bigger the possible profit. That is just how mass production works.
Yes, market share is VERY important for manufacturers. That is why Konica-Minolta had to quit and sell to Sony. And that is why Pentax had to be rescued by Hoya. And that is why Olympus is speculating quitting the camera business if they are not profitable enough in a few years.
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Historically canon has done well (at least the few times I've looked at their balance sheet) but I'm fairly sure a couple of the companies mentioned have rather slim margins (some of that is due to lower volume as you suggested but some of it is due to inefficiencies and pricing).
[quote name='Brightcolours' timestamp='1303688191' post='7884']
What he said is correct, especially in high volume product lines. Making a single DSLR would cost a few million to develop. Only big volumes can make the cost per unit go down enough to make them "affordable" and still make a profit. The lower the volume, the lower the profit.
It is nonsensical to think one can make profits without big enough market share. The bigger the share, the bigger the possible profit. That is just how mass production works.
Yes, market share is VERY important for manufacturers. That is why Konica-Minolta had to quit and sell to Sony. And that is why Pentax had to be rescued by Hoya. And that is why Olympus is speculating quitting the camera business if they are not profitable enough in a few years.
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