Hoya to Liquidate Pentax Factory in Shanghai China

Hoya Corporation made an announcement on Monday that they will close down and disband their digital camera manufacturing unit in Shanghai as part of efforts to streamline operations, which has just been told recently in their recent financial report for the first quarter of the current financial year, see the Dow Jones Newswires report below:-

http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200808250319DOWJONESDJONLINE000049_univ.xml

The to-be-closed down Pentax unit supplies parts to Pentax plants in Philippines and Vietnam, which make Pentax digital SLR bodies and lenses respectively.

Although it is expected that Hoya will close down those "non-profitable" Pentax units as told, they really act very fast to do what they have just told! What an efficient company!

Besides, other Japanese financial news agents online also report this piece of news, see:-

1. http://www.lnews.jp/2008/08/28866.html (in Japanese)

The quick factsheet for the Pentax business unit to be liquidated is translated as follows:

Unit Name: PENTAX（Shanghai）Corporation
Location: Shanghai, China
Head of Unit: Torigoe Oco. (鳥越興)
Business Scope: Manufacturing of medical instrument and optical equipment/parts
Established: March 25, 2003
Invested Capital: 3 Billion Japanese Yens (300,000,000 JPY, or about US$ 2.73M)
Net Asset Value: 10,858,000 RMB (US$ 1.606M), as at end-March 2008
Total Asset Value: 12,731,000 RMB (US$ 1.883M), as at end-March 2008
Account Settlement: December
Owned by: HOYA, 100%

Well, it can be seen in the above that the factory is still quite new and very probably the investment has not been paid back yet as its net asset value (excluding liability) is now only 58.8% of the initial investment cost (the face value dropped by 41.2%, or simply US$ 1.124M has been lost).

2. http://techon.nikkeibp.co.jp/article/NEWS/20080825/156853/?ST=observer (in Japanese)

Translated and quoted:-

"The subsidiary company of Hoya, Pentax (Shanghai) Corp. in China, which manages the manufacturing of optical parts and the lenses, will be liquidated and closed down in March 2009. The company was established by Pentax in 2003, for the production of camera and optical parts. The initial production scale was set at 20,000 units per month, but profit has not been reached. The production changed to include the production of parts for digital cameras since approximately 2 years ago.

HOYA had explained in the August 2008 financial results meeting that they were reviewing the production facilities related to the digital camera business where the profits are unable to be met. In the future, they will continue to "rearrange" the production facilities at the Japanese home and to "re-group" and "re-gather" most of the digital camera production at the two plants in the Philippines and Vietnam."

So, after all these reports and happenings, I could only see one message and the attitude taken by Hoya, which is very clear: "Any business units which are not profitable will be executed!". But then there is one big question left and actually there exists a serious contradiction in their philosophy there: The whole Pentax camera business division is actually not profitable by now, thus neither the Philippines nor the Vietnam factories are profitable, very obviously, WHY not close them all together if they just follow the (only) reason they given and told??

To explain, the only answer is that Hoya are *still* interested in the camera business. However, with their shortsighted-ness and mean-ness shown and reluctance to invest and there is actually no commitment and determination of any kind for the camera business and the brand Pentax, I don't think they will ever succeed, or, just survive, for Pentax.

In fact, Hoya should do more to boost sales, but NOT *just* know (how) to cut costs. The key elements to succeed should include smart product ideas, up-to-date R&D and product features and system performance, competitive and comprehensive product lineup, which I think Pentax have none of these by now (Whilst Canon, Nikon, Olympus and Sony all have all or some!) But of course, to have better R&D and a more comprehensive lineup, Hoya needed to INVEST, FIRST! But sadly up till now, they do the reverse, which is the most disappointed thing afterall! Really really sad.. :-(( However, smart and unique product ideas are actually not much costly, but yet, where are those?? Can you see them in their latest digital products??

Now that the Photokina is coming close, Canon already have announced their 50D and Nikon have their D90 (and just earlier the EOS 1000D and the D700 Full Frame have both been marketed too), what Pentax (actually Hoya) are going to offer? Are they really just sitting there and wait to die?

GX-20 and Lenses are being Sold Very Cheap

Samsung has just recently "announced" the GX-20 in Hong Kong with very low price tags set for the GX-20 (body only) and kits with single and twin lenses. See the latest news article at the AV Buzz (Text in Traditional Chinese, use BabelFish to translate if needed).

Now, let's look at the *suggested retail* prices by Samsung: GX-20 body sold only at HK$6490 (US$832), GX-20 + 18-55 for HK6990 (US$896) and GX-20 with 18-55 and 50-200 for HK$7990 (US$1024) only! As the street prices are usually even lower than those "suggested retail prices", I expect that we can easily get those stuff even cheaper at the streets.

So, with that significant price differences between the K20D and the GX-20 now and ditto for other same "Pentax" lenses (actually), there is no real reason to get the original Pentax stuff, unless the buyers just want to see the Pentax logo on the gear, but nothing else.

In fact, the GX-20 only lacks the PEF RAW file format (but it does have the universal DNG) and does look just somehow differently in cosmetic terms (some GX button and curve shapes are designed to look somehow silly, though, IMO and I do prefer the K20D's original design), there is actually no other difference then. As for the digital lenses, they are actually all Pentax OEM products (or Tokina OEM Squared products, it doesn't matter anyway..), just with a printed Schneider name on them. Nonetheless, the Samsung show girls look more attractive than what the Samsung gear look, just enjoy the nice photos anyway! ;-)

It seems that Samsung is going to eat the (already pathetic) sales from Pentax (with an obvious intention too), what will Pentax do? Price cuts or new models??

Hoya Reported Net Loss in Running Pentax and Overall Profit Declined

Here is the latest financial news from Bloomberg for the first financial quarter business results of Hoya:-

http://www.bloomberg.com/apps/news?pid=20601080&sid=a2INg8z8QZAQ&refer=asia

Two paragraphs in the report quoted:-

1. "Operating profit, or sales minus administrative expenses and the cost of goods sold, declined 3.5 percent to 21.9 billion yen ($199 million) in the three months ended June 30, Tokyo-based Hoya said today."

2. "Pentax had a 38 million yen loss in the quarter."

Besides, here is another more detailed report on the same news by the Tech-On! News of the Japanese Nikkei Business Publications:-

http://techon.nikkeibp.co.jp/english/NEWS_EN/20080812/156393/

The key paragraphs are also quoted, as follows:-

1. "Sales declined 6.1% to ¥130.156 billion (approx US$1.18 billion) and operating income decreased 8.2% to ¥21.857 billion, compared with the previous year's results including those of Pentax Corp, which Hoya bought out in March 2008."

2. "Digital camera business to be downsized"

3. "Concerning the digital camera business operated by Pentax, Hoya said it will aim to secure its profit by reducing the business scale from now on. Amid the market environment, where the price competition intensified and sales growth of SLR products slowed, financial results of Pentax also plunged with unit sales decreasing and unit price lowering in the April-June quarter."

4. "A sales decline of about 20% is anticipated to continue in the July-September quarter, as the business unit is building up inventory, lagging behind its rivals and market demand when releasing products, according to Hoya. The company is planning to cut costs by streamlining its bases in Japan by shifting production overseas and outsourcing, as well as reducing production to an appropriate level from now, it said."

Well, now, do some of the above statements sound very familiar (if you have read here just a little bit long enough). Those are what I have been talking about for quite some time now! Actually, the current situation is just somehow trivial and predictions are not really difficult.

But, the most worrisome thing as learnt from these news reports is not about those obvious things and facts (which are just so obvious except for those particular group of stupidly brand-blinded fanboys who are either not knowing the facts or not been unable to face them) BUT about the attitude and new direction/policy that will be taken by Hoya which will affect Pentax directly and of course their existing users much.

Now, even the Press and Media generally have the same view and have given a tone that Pentax is just like a burden to Hoya and have caused Hoya to earn less (but undoubtedly it is just a fact), what the shareholders of Hoya will think and (decide to) do - none of us will know exactly but of course they will! Really rather worrisome afterall.. :-(

Anyway, my own simple view is: to make Pentax profitable, Hoya MUST FIRST INVEST, which is the ONLY way to save Pentax (and to get Hoya themselves out of the current trouble for acquiring Pentax, as well). Otherwise, Pentax will inevitably die eventually (it just cannot survive in this cruel market). IF Hoya is just so mean NOT to invest, why not just decisively close down that dying camera division one-off and move on??

Afterall, I think there is nothing on Earth that one never invest (and so does he/she not have such a will, neither) but will eventually get a harvest, will one?

K20D is Still "Hot" with Firmware 1.01

Despite that Pentax released a firmware update of the version 1.01 for the K20D for trying/showing to eliminate the hot pixels issue, it seems that the effectiveness of this new and latest firmware is yet in question.

First of all, Dpreview still needed to tell this issue in their final published review of the K20D, despite that which was only published after Pentax completed their firmware update in response to the issue, indeed already for quite a while, after the first time DPR reported the issue that another reviewer and they found earlier. Specifically, the following quotes are extracted from that "Conclusion" page of the DPR K20D review:-

"However, the hot pixel problems, combined with the sample-to-sample variability (in this instance ISO 3200 banding), represent the sorts of problems we haven't seen in DSLRs launched in the past few years. Which makes us wonder whether Samsung has over-reached itself with such an ambitious design. This is reflected in our image quality score that without these niggles would have been even higher." - Dpreview

Well, I do also agree that the image quality of the K20D could be quite good, but the hot sensor and this hot pixel problem seems to be a *real* issue, and worst thing is that it seems to be *just* a hardware issue, as I guessed the first time when I saw the hot pixel reports, which the DPR technical writers are also wondering the same thing in the above.

Another fact that does tell that the K20D has an ever hottest sensor is that there is NOW *no* option for the user to turn off the dark-frame-subtraction "Noise Reduction" (NR) for longer time exposure which just reflects that this sensor is extremely noisy by itself and the user is forced to turn on the NR all the time when just longer shutter speeds are selected. Note that the K20D is the *only* Pentax DSLR which had this NR function disabled, so it is obvious that it must be the Samsung sensor!

Now, user reports on the appearance of hot pixels yet continue. See the recent report below, with sample photos showing the hot pixels posted:-

K20d, still hotpixel issue with jpegs or something wrong with my camera?

As we all can see, the hot pixels issue has never been resolved with the firmware 1.01. The following are quoted, for what the user reported:-

"Not in the same spot, they move around quite a lot. The crops are, for example taken on the right side in one image, and more to the left in the other. Even if a frequent blue + white/green close to each other and then a red abit away from them seem to happen a lot.

Did more pixel peeping, and in at least one picture if I zoom in a lot I can find at least 15 dots that got no reason beeing there. All looking like the ones I showed in the first post."

Do note that the number of hot pixels are not small indeed, nor, they are fixed in positions, i.e., they are going to show up randomly and are moving around.

Despite some of the good image quality I really like with the K20D, this particular hot pixels issue (most probably caused by a hot sensor itself) is just enough to put me off to consider the K20D further. I hope Pentax and Samsung can make a debugged version of the K20D with a debugged sensor very soon, so as to make a new sensor and hence the final produced images of the new camera are no longer so hot!

All in all, if someone is just so naive that such very possibly hardware problem could be cured (or just completely hidden) by firmware (which is just a software thing afterall), then we should not be seeing those hot pixels anymore *now*, nor, DPR needed to report the issue, even though they had been "kind" enough to wait for Pentax to complete their remedial firmware before they published their final report for their K20D review.

Official: New Pentax DSLR Model is Coming; Full Frame Model is Under Planning

In the 11th China International Photograph & Electrical Imaging Machinery and Technology Fair (CHINA P & E 2008) held in Beijing from June 21 through June 24, an interview was made by the ZOL China (a member of the CNET China Group), with the Managing Director & General Manager of the Pentax Trading (Shanghai) Co., Ltd., Mr. Akio Usui (柴田智賀). The full interview article is here:-

http://dcdv.zol.com.cn/96/968674.html

(Article in Simplified Chinese, use Babelfish to translate if needed. Also, a Traditional Chinese version can be found here.)

I summarise the key important messages as obtained in this interview, as below in Bold Italic (and my own comments follow per point):-

1. "Pentax will market a new DSLR in the second half year of 2008 and aim at diversify the product line for more choices for the customers."

So, this is what I have been thinking and suggesting for a long time already. What Pentax really needed to do is to make a *real* entry level DSLR that is compact and cheap, but yet with more updated popular features like an usable LiveView function and other innovations. Majority of people just don't choose the K200D currently owing to the outdated design and bulkiness of this camera. It is not very low priced neither, when compared to the competitors' aggressive pricing strategy.

I think Pentax do need at least some marketing insights, creativity and true innovations afterall. Here is my previous suggestion for one of my ideas, which I think could help them and is viable.

Still, the good thing is that Pentax do realise that their current product lineup is actually weakest in diversity and variety. Let's see:-

Canon have: EOS 1000D -> 450D -> 40D -> 5D -> 1DMkIII -> 1DSMkIII;

Nikon have: D60 -> D80 -> D300 -> D700 -> D3;

Sony have: A200 -> A300/350 -> A700 -> Upcoming "A900" Full Frame;

Olympus have: E-420 -> E-520 -> E-3;

Pentax have *only*: K200D -> K20D.

That leaves Pentax alone currently have the most limited choice in DSLR bodies. And in fact, the K200D and K20D are just too close in design, technology used, features and most importantly system performance, as they share the same aged design core deep inside, actually.

Anyway, I bet this new Pentax DSLR model to be a model lower than the K200D, very probably. K1000D or K2000D? (or whatever it is named)

2. "We (Pentax) have already noted the new Full Frame trend. We have started to plan for the development of a Full Frame DSLR. However, this will not be come true within this year."

Yet, it is a good thing Pentax do realise there is a trend (but which is in fact obvious and nothing "new", isn't it?) and that they confirm that they has (just?) started a plan for a FF body (How about a FF lens *system* then? The DA system is NOT Full Frame!). Late is always better than None! But if they could start earlier, the situation now they are facing may not be so difficult! Hmm... I (and some other people as well) did see the "trend" back to earlier last year, Pentax just be able to realise the reality only by now?? :-(

Nevertheless, there has been trace on a Full Frame Pentax DSLR is under planning and there was still *hope*. Here is what I reported earlier this year.

3. "The edge of our DSLR products is in picture quality, which has been our main focus in our Research and Development from time to time."

IMHO, this is pure (or simply "junk" IMHO, sorry) sales talk which is boring and meaningless. I don't think there is really any real edge neither. I would say each of the DSLR manufacturers do have different *styles* for the images produced by their DSLRs made by them, just say the images of K20D and K200D are more detailed even at higher ISO speeds, but they are also much noisier, as compared to other APS-C DSLRs in the competitions. This looks merely just a give and take to me but it can't get the best of both worlds (unless it is Full Frame!). All in all, I cannot see any real "edge" nor significant better image qualities here in Pentax products, as compared to products of the competitors in the same price range.

In contrast, since Mr. Usui did not (dare to?) mention emphasises will be put in camera performance aspects, particularly are speed and accuracy (which are even more important IMO, in considering the comparable IQ of the current generation of DSLRs, brand regardless), are Pentax still not focusing on improving those which they are lagging light-years behind?? This is rather disappointed, frankly.

Finally, as Pentax still lack true upper class (not even to mention "pro" class) DSLR products, the truth is that they are still lagging behind in the IQ department, also.

4. "Yes, we are now putting more resources and much focus in the development and marketing of DSLRs, but this is just a transitional strategical arrangement, this doesn't mean we are aborting the P&S DC market."

As we all know, the Pentax P&S DC sales are pathetic right now and there are actually no good choice of Pentax DCs in the market nor those models are having any special features and characters which worth the consideration of a potential customer. However, as for the DSLR market, I don't think and couldn't see Pentax are doing well neither, even though they "have been putting" "a lot of resources" in the development and sales of their products!

So, what have been going wrong? Well, I won't elaborate further. If you have read my Blog a little bit more enough, you would have known (and will know if you haven't yet).

5. "Currently (in China), our sales and after sales services (in other cities in China) solely rely on our agent (Remark: which is Jebsen & Co. Ltd., also known as "JNC"). In order to improve our services and supports for our Pentax products, we shall setup more local branch offices at major cities in China so that the needs of our customers can be catered better and to help them better for the problems they face with their Pentax products."

This is undoubtedly a good thing. Glad that Pentax could know that after sales services and supports are crucial and most importantly, they should do something to change and improve the situation! (But should be long ago, not now! Which is "still" under planning!(Financial concerns?)

6. "Although we have been purchased by HOYA, our independence in the camera business is ensured and maintained, as you all could see so far. On the other hand, Hoya being a large manufacturer and supplier of glass, Pentax have been able to get some advantages in getting the basic raw material in making lenses and cameras and there exists an edge."

Factual thing, no doubt here. But the worry is nobody knows *when* HOYA's internal policy and decision by the top management will change! Nor, I have not been able to see Pentax's products have been cheap after Hoya's acquisition. The worse thing is that the reverse is true, now go look at the new prices of the new Pentax DA* lenses, in particular those DA* primes, which are ridiculously high priced (especially if you compare the new prices to comparable FA* primes in the historical Pentax era) and that even now the new DA 17-70 is so ridiculously high-priced!

So, I just wish to ask: What's the real benefit to Pentax users and their customers for that "Hoya Edge" mentioned?? I really want to know..

At the end of the interview, the reporter asked Mr. Usui directly that if Pentax's products would have a better price-performance ratio just because of that "Hoya Edge". But then Mr. Usui just laughed and said that he refused to answer that question! (My opinion is that it seems that even he doesn't think so himself!)