Samsung’s statement on this is as follows: Media reports that Nikon is allegedly buying our NX technology are not true.
All May Not Be as It Seems: A Licensing Deal?
But one can make the argument that there’s a difference between buying technology and licensing technology, and that difference is owning vs using.
Even if you accept Samsung's statement at face value, there may still be a deal – it could just be a licensing deal: virtually every piece of software you think you own, for example, is actually licensed to you: you don’t own it.
Or Maybe Samsung Is Buying Nikon?
Back in May, Nikon put out its full fiscal year results for the period ending March 31, 2015. Nikon's imaging business sales had declined 15% year over year, while its net income had declined 12%. Nikon estimated that its fiscal year 2015 imaging products business would decline further, with a forecasted 10% reduction in sales and 33% reduction in income.
The problem for Nikon is exacerbated by the fact that this — the imaging products segment — is the single biggest driver of their entire business!
Nikon's total net sales amounted 858 billion yen (about $7 billion), with net income of 18.3 billion yen (about $15o million). This is very, very difficult — especially as Nikon reported that they'd have to make continued investments in R&D.
Meanwhile, Samsung announced its fiscal year 2014 results in January of this year. With gross revenues of $196 billion and net profit of $22 billion, Samsung also experienced declines — but off a much larger and broader business portfolio.
I bet they could.
A Deal in Either Case
I wouldn't be surprised if a strategic deal has been struck between Samsung and Nikon – the basic idea that the two companies leverage each other’s strengths is just too powerful — and I'm guessing it tells us even more about Samsung's strategic assumptions.
First, the original particular non-deal deal:
1. Samsung has, by all accounts, excellent sensor technology and user interface in its NX1 APS-C mirrorless camera [B&H|Amazon] – but very little mindshare with or lenses for the prosumer and professional market.
In one fell swoop, two highly complementary companies and brands would combine their DNA to leapfrog Canon [B&H|Amazon] — and give Sony [B&H|Amazon] a run for its money — by creating a serious mirrorless camera with Nikon's cachet and lens catalog.
What Would A Deal Tell Us About Samsung's Strategic Assumptions?
Second – and this is the truly intriguing part — such a deal implies a set of strategic assumptions by Samsung that are very, very powerful:
- The cost of building a brand is quite distinct from building a technology, with a much less certain payback and fewer ways to manage the risk. Samsung is a huge brand, but has virtually no brand presence in the prosumer/professional camera space. Building the NX1 brand is high risk in and of itself (and to their credit, they've tried).
- Even if Samsung were to double down on an NX1 family, the most effective way for Samsung to manage this would be to create a separate brand altogether (think Toyota/Lexus, Nissan/Infiniti or Volkswagen/Audi), unencumbered by associations with smartphones, TVs, VR headsets, appliances, et al.
- An even smarter way would be the time-honored tradition of acquiring an established brand name and using leveraging it into new products. Think Voigtländer/Cosina.
- Samsung is losing the smartphone profit war to Apple (even as it wins the unit shipment war), and needs a high value-add response to the iPhone. Making their smartphones better cameras than iPhones is one fascinating option for a number of reasons, chief among them this: it requires an assumption that smartphones will continue down the path of destroying point & shoots – and smartphones are about to eat into the prosumer DSLR/ILC segment, too.
This last one, I think, is an especially valid assumption.
Is Samsung Betting Against DSLRs and ILCs?
Look at the recently announced L16 by Light. You can think of it as a Frankenstein prototype for the next generation of smartphone cameras. With software-driven depth of field, 50mp stitched resolution and more, this is the kind of product that could make the NX1 and all its competitors obsolete.
I'm betting Samsung is thinking about this very, very carefully.
The imaging industry is undergoing a wave of merger and acquisition activity (it always has), and this is one partnership – whatever its legal structure – that makes more sense than many.
Samsung Denies Nikon NX Rumor, Reportedly Has a Full Frame Mirrorless Ready
One of the big rumors circulating in the photo world this week is that Nikon acquired Samsung’s NX technology to gain strength in the mirrorless camera industry. It’s an intriguing idea, but it’s also one that Samsung is now officially denying.
Amateur Photographer received an official statement from a Samsung spokesperson that is clearer than your standard “no comment on rumors or speculation.” Here’s what they got back:
“Samsung’s statement on this is as follows: Media reports that Nikon is allegedly buying our NX technology are not true.”
mirrorlessrumors, which published the original rumor after talking to “trusted sources,” isn’t so sure. They point out that Samsung denied pulling out of the camera market… before officially withdrawing from European markets such as Germany and the UK.
(cover photo credit: snap from PetaPixel)
And always with the ambition of authenticity, humanity and wit.
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