F u l l c o v e r a g e of th e D o c u m e n t M a n a g e m e n t I n d u s t r y , In a l l I t s f o r m s .
INCORPORATING THE MICROGRAPHICS MARKET PLACE AND THE MICROGRAPHICS NEWSLETTER JANUARY 2003
ISSN 1476-3842
ISSUE No. 13
W hat w ill th e K o n ica m e rg e r m ean! M in o lta Minolta and Konica, two major Japanese makers of cameras and office equipment with significant distribution in the United States and Europe, have announced a plan to merge by the end of 2003. The combination will be called Konica Minolta Holdings. The partners hope it will enable them to compete worldwide with larger rivals such as Canon, Fuji Photo Film and Ricoh. One of the announced goals is to "greatly strengthen competitive capabilities in our image information products business."
manufacturers have been inundating the market with cheap models against which Minolta has not been able to compete.
This w ill be pursued through subsidiaries, Konica Minolta Photo Imaging Corp. and Konica Minolta Business Technologies Corp. There w ill also be a combined technology centre, all headquartered in Tokyo.
The new company's basic product brand name will be Konica Minolta, except for films using the Konica name and cameras using the Minolta name, respectively. How products will be distributed worldwide will be addressed later in 2003.
At first glance the combined company seems to have good synergy. Minolta is best known for cameras and printers. Konica's strength is in film and lenses. Together the two will rank fourth in Japan's precision equipment industry, which includes photographic (including microfilm and digital) equipment. They are currently outranked by Canon, Fuji and Ricoh.
In announcing the proposed merger, Minolta and Konica said they hope to increase sales by 18% and more than double profit by March 2006. Along the way they expect to eliminate about 10%, or 4,000 jobs, of their combined work force over the next three years to reduce costs.
W orldw ide C o m p etito rs The new company will be big, starting with sales of $U.S. 9.2 billion. Minolta makes four-fifths of its sales outside Japan and is particularly well established in the United States. But worldwide Minolta has lost money for the last two years and its debt equals more than five times its equity. Konica has a much healthier balance sheet than Minolta and has done well selling film in China, Russia and other emerging economies, but it has never gained major market share in the United States, the most lucrative film market. Minolta has been losing camera business as its former mainstay, consumer analogue single-lens reflex cameras, are being overshadowed by digital cameras. In the latter area, Sony, Matsushita and other Japanese
In the copier market, the two companies have only a 10% share of the Japanese market while Canon, Fuji and Ricoh take 90%. Outside Japan, they face additional competition from Hewlett-Packard, Kodak, Xerox and Samsung, among others. The same holds true for scanners.
W hat abo ut M icrofilm Products? Last Fall, Minolta turned over the distribution and marketing of its microfilm equipment line in the United States and Europe to Eastman Kodak, in effect acknowledging the difficulty of mounting a major marketing effort in a declining marketplace. Minolta remains a leader in the library field with its digital microfilm reader-printer line. It also offers scanners. At this moment it's impossible to guess what the combined company will do in the micrographics field. Will it consider the segment now too small to continue and dispose of it to pursue other more potentially profitable product segments? Or will it continue it as a small, but profitable line? Such issues have probably not yet been addressed but, rest assured, they will be in the months and years ahead.
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