Interview with the CTO of OM Digital Solutions

Here an interesting interview between Setsuya Kataoka, former head of strategy for the Olympus Imaging business, now CTO for OM Digital Solutions, and photographer Koichi Akagi, a close friend of Olympus in general and of the late Yoshihisa Maitani in particular:

What will become of the Olympus camera company? Photographer Koichi Akagi talks directly to an executive of the new company!

What kind of company is the newly established camera manufacturer "OM Digital Solutions", which has become independent from Olympus on January 1, 2021? What will happen to the "Olympus" camera brand? Will there be any new products in the future? Koichi Akagi, a photographer well known to camera fans, spoke to CTO Setsuya Kataoka. Incidentally, the two men are old acquaintances.

--I was worried about what I would do if Mr. Kataoka didn't join the new company. After all, I think it's important for a camera to be "personable", or to be able to "see the person" who is passionate about the product. As one of the managers of the new company, you are also the CTO, but are you also involved in development as an engineer?

Kataoka: Yes, as Chief Technology Officer, I oversee all aspects of development and manufacturing.

The name "Olympus" means a lot to us.

--How did you decide on the name of the newly-launched OM Digital Solutions?

Kataoka: We considered a number of different ideas, but we wanted a name that would convey to the public that we would be independent from Olympus, and that we would continue to operate our imaging business. Well, we still have the "Maitani Colour" (laughs).

----Mr.  (Yoshihisa) Maitani is the creator of the OM system, which began with the famous OM-1 (originally called the M-1), launched in 1972.. I have heard a rumour that O stands for Olympus and M for Maitani-san.

Kataoka: When Maitani was developing the OM system, he said, for example, that he wanted to create something that had never existed before, and that it didn't matter how big the camera was as long as it took good pictures. And we're still making products in line with those ideas. In short, with Micro Four Thirds, you can take your camera to places where it was previously too heavy to carry, and you can shoot handheld. You can take pictures even when it rains. In the past and today, the value of our products has not changed. We thought that "OM" was the best way to convey the message that we would continue our business.

--However, many users, including myself, are concerned about how long we will be able to use the "Olympus" logo. In extreme cases, will we be able to use it forever? It's a shock to users when the brand name of a camera changes.

Kataoka: At least for the time being, we will continue to use "Olympus". We are proud of the fact that we have nurtured "Olympus" as an imaging brand. But is it better to leave Olympus as an entity and continue to use the name Olympus? That's a question we'll have to consider carefully.

--As a camera brand, the name "Olympus" is very significant. For example, "Pentax" is still the feeling of "buying a Pentax camera" even now that it has become Ricoh Imaging. On the other hand, there is the idea like Panasonic's "Lumix", which has a separate company name and brand name. There are also examples of camera systems with the same mount that have changed from "Minolta" to "Konica Minolta" and "Sony".

Kataoka That's right. In any case, we have no intention of making a brand change that will cause anxiety to our customers.

We will more simply make products and sell them to customers.

--While the camera market has been shrinking recently, you have launched a new company; can you tell us how this came about?

Kataoka: First of all, I want to be clear about the reason why we established this new company. Up until now, we have been making imaging systems under the umbrella of Olympus. We wanted to find the best way to make that system sustainable. We decided that it would be better to work independently from Olympus.

If we stayed within Olympus, we were still a division, and if Olympus decided to quit the camera business, there was nothing we could do.

This is because the camera market is shrinking. It is difficult to increase sales and grow the company in the current situation, and not only for us. In order to be profitable, we need to cut costs, and to do this we need to make structural changes.

Olympus are now becoming more and more a "Medtech Company", i.e. a company focusing on medical equipment. This means that the manufacturing processes of a medical equipment manufacturer are strengthened, and the imaging business has to follow the company's rules.

In other words, it is difficult within Olympus to change the content of the organisation in line with changes in the camera market. For example, even if we want to lighten the supply chain, we have to use Olympus' own bases and there are other restrictions. It is difficult to make bold structural reforms.

We came to the conclusion that it would be difficult to keep the business alive within Olympus if such structural reforms were not carried out, and that this would cause inconvenience to our customers.

If the camera market shrinks, we will have to create a structure that allows us to more simply make products, deliver them, and sell them to customers. In order to create a structure that would allow us to do this, we thought it would be better to become independent from Olympus and to be able to do various things by ourselves, so that we could continue our business. That's how we see it.

Everyone was prepared to cut out the organization.

--I see, now I understand the reason for the establishment of the new company. So what exactly was the process?

Kataoka: In the course of looking at ways to continue our imaging business, we considered a number of different options, including downsizing the division, spinning it off internally, and carving it out under the umbrella of the fund we've chosen.

In the midst of all this, we were able to reach an agreement with Japan Industrial Partners (JIP). The basic agreement was reached in June last year. From there we worked out the details, in September we signed the contract, and here we are today.

JIP are very good at taking a business out of a company and turning it around. To give you an example, they carved out Sony's PC business, VAIO, and made it independent. They don't do the kind of thing that you might imagine with a fund, where they buy a business and then sell it in pieces. They wanted to create a fund that one could work with over time.

We looked at a number of options, and JIP seemed to be the most suitable partner, and they also said they would be happy to work with us. It was a good fit for both of us.

It is not easy to create an organisation that can respond to changes in the market, even if you simply "spin off" within the company. Instead, we decided that it would be better to work with JIP, who had a lot of knowledge about independence.

In fact, we became independent under JIP, but there was a huge amount of work involved. We had to set up a whole new infrastructure. I don't think we could have done such a big organizational change as a mere "spin-off".

We had to be prepared to cut out the organization, and that's why we were able to do it. I realized that it is difficult to make structural reforms that involve real pain. That's why I think we made the right choice.

--Do you think that you and JIP will be able to work together closely in the future?

Kataoka: Of course, the imaging business has been in the red for the past few years, so the first thing we need to do is stop the bleeding. It is checked with strict eyes.  However, I am glad that we made the right choice because JIP do not tell us to follow their instructions from one to ten, but to think together.


What kind of new camera and lens products does the new Olympus aim to produce? Interview with an executive of the new company.

Where is the newly established camera manufacturer OM Digital Solutions, which became independent from Olympus on 1 January 2021, headed? What is the future of the camera brand "Olympus"? This is the second part of an interview in which photographer Koichi Akagi talks to CTO Setsuya Kataoka.

The number of employees to be reduced by about half compared to the previous imaging division

--According to a news release, Olympus established OM Digital Solutions as a wholly owned subsidiary on the 1st of last month. On the same day, 95% of the shares of the new company were transferred to a holding company (OJ Holdings) established by JIP (Japan Industrial Partners). In other words, the new company became independent from Olympus as a new company owned by that holding company.

Kataoka: That's exactly what happened. As an independent company, we have everything we need to carry on our imaging business. Development, production and sales. In addition, we have human resources, general affairs and accounting, which used to be our head office departments.

The number of employees has been reduced by about half compared to the previous division. Our global workforce, including the Vietnam plant where we manufacture and assemble our products, is approximately 2,000. Of these, about 280 are in Japan.

By the way, until now, the Vietnam factory has been mainly producing imaging and medical products. So this time, we have established a new company, Imaging Vietnam, as a subsidiary of the new company. We are now able to communicate with each other more smoothly, and we are able to adapt to market trends in a more flexible manner.

In the imaging business, lenses are the key, so we have had a lot of optical designers come to work for us. However, we have reduced the number of people in the development department as a whole. Of course, this is partly in response to the shrinking camera market, but we also believe that the future is an era of open innovation, of manufacturing through external collaboration. Of course, we will continue to develop our own core technologies and product points.

We have created a business structure that can withstand the Corona disaster and fluctuations in the camera market.

--This is a very difficult question to answer, but if the company fails to return to profitability, will it be sold by JIP?

Kataoka: When we became independent from Olympus, we lightened the structure of the company considerably. We have created a structure that can withstand the current Corona disaster and fluctuations in the camera market. We have changed our business structure so that we can make a profit in line with our plans, which are not too unreasonable. So you can rest assured that we will be able to achieve this.

However, we have to ask ourselves how much profit we will make next year. We are not in a position to give you any specific information about how much we will make next year, or what will happen if we lose money.

We will, of course, keep our costs down, and on top of that, we will make sure that our operating profit and cash flows are in the black. Then we will use the profits to invest in the next step and grow the company little by little. That's our basic attitude.

--How do you see the camera market and consumer trends changing in the future?

Kataoka: I believe that photography will continue to have value as a hobby. Neither the value nor the people will disappear. I believe that it is the camera, not the smartphone, that will take care of this.

--I think that the establishment of the new company is a very big turning point, but if you've come this far, there's no need to stick to Micro Four Thirds anymore, is there?

Kataoka: I think that as the camera market becomes truly supported by the hobbyist segment, products will be divided into major brands and others. The products that survive in this market will be the best systems that meet the demands of the people who want to take this kind of picture. In this sense, we would like to survive by meeting the needs of our customers with the values and features that we perceive in Micro Four Thirds.

Thanks to your support, the Micro Four Thirds system has achieved the No.1 position* in the domestic market in 2020 in terms of the share of units by lens mount. I believe that this is proof that the Micro Four Thirds system is needed, and we will continue to expand the system.

*Based on BCN ranking data (specification category: interchangeable lens type) for January/December 2020, according to the company.

--But if the Micro Four Thirds camera market becomes smaller, is it possible that semiconductor manufacturers will stop making sensors?

Kataoka: I don't think there's any need to worry about that, because we order the sensor, pay the development costs, and they make the sensor.

Developing lenses that will change the way you shoot

--I think that there are some lenses that are unique to Micro Four Thirds and that are not possible with full size lenses. There was a bright lens with an f/2 aperture in the Four Thirds series, but is it possible to make a product like that?

Kataoka: I think that lenses are what will differentiate camera systems in the future. If you compete only on the basis of the size of the body alone, there won't be much difference. In fact, it doesn't really make much sense. In other words, if the lens is big, it doesn't matter whether the body is a little lighter or smaller. On this basis, we want to produce lenses that will convince our customers that Micro Four Thirds lenses can do this.

--(Looking at the new lens in front of him) In that sense, the compact size and light weight of this super-telephoto zoom, the M.ZUIKO DIGITAL ED 150-400mm F4.5 TC1.25x IS PRO, is astonishing. And of course, the picture quality must be amazing.

Kataoka: This lens combines mobility and high image quality to enable handheld super-telephoto photography. I think it will provide new value in wild bird and other telephoto photography. A product with a similar concept is the all-in-one zoom lens M.ZUIKO DIGITAL ED 12-100mm F4.0 IS PRO. In short, we are creating products that would not be possible if we tried to do so with full-frame lenses. We can't do this with every lens, but we do want to plan lenses that we think will change the way people shoot by using them.

--On the other hand, I am not satisfied with the fact that full-frame lenses are still ahead in terms of standard and wide-angle lenses. Of course, I don't know if they will sell in large numbers, but I think there is a need for such products.

Kataoka After all, we've made the company so small (laughs). We have a lot of things we want to do. However, we have limited funds and human resources, so we have to prioritise what we want to do. Last year, we were able to release this lens thanks to the hard work of our development and manufacturing teams, while we were working on the carve-out. From now on, we have to settle the company down. I would like to think broadly about what we will do in this context.

--Is there any chance that you could produce a camera like the PEN-F that would be profitable, if not a hit?

Kataoka: I think it is possible. The worst thing you can do is to sell a product that has a high level of appeal at a low price because you don't have confidence in it. If you do that, you won't make any profit at all because the production volume is so small. If you do it, sell it at a fair price. Products for hobbyists are not produced in large numbers, but the numbers themselves can vary a lot. If we can properly find out what they are, I think there is a possibility that we can produce it.

Will there be any new camera bodies or lenses in the near future?

--It's all about performance, design, build quality, feel and so on, but now that the company has become more compact, it would be nice to see some distinctive products. But for the time being, shouldn't we expect new products?

Kataoka: No, not at all (all laugh). This is a carve-out for us to continue to provide value to our customers, so it's not just about making a living for ourselves. If that were the only reason, we would stop developing new products for the time being and just sell them. But that's not the point of having a carve-out. In order to provide value to our customers, we believe that it is our mission to sell the same products and provide the same services as before, but also to introduce new products. --Therefore...... they will come out!

--Oh, that's a strong word (laughs). Can we expect them to be released before the end of the year?

Kataoka: Within the year...... I can't give you a time frame, but we are working hard on it. I get angry if I talk too much but, at the very least, we'll continue to release products that will make people feel glad that we've continued to make cameras even after establishing a new company. Naturally, there will be more than one product (Akagi: Oh my!). Some of these are products that include such special features that you'll say "ooh" and "ahh" over them.

--I'm so happy. I'm really looking forward to that.

Thanks for the translation Mistral75!
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