Olympus Has Fallen

Tips & Techniques

If you have not yet heard the news, today Olympus made an announcement that it is going to sell its camera division to Japan Industrial Partners (JIP) by the end of 2020. With its continuous losses in the past few years thanks to serious declines of camera sales (thanks to the rise of the smartphone), Olympus is basically leaving the camera industry, letting a third party manage its camera business. And with the COVID 19 pandemic that has really hurt the camera industry, it is clear that the company is doing what it can to survive as a business.

Olympus OM-D E-M5 II
Olympus OM-D E-M5, the camera I used to own and enjoy shooting with

Without a doubt, this is truly sad and terrible news, which shows just how badly the camera industry has been hurt in the past few years. We have written a number of articles on the rise of the smartphone and the decline of the camera industry, and we have even given our thoughts on how camera companies can survive the smartphone. However, it is pretty clear that the game is over for Olympus Imaging – the division that dates all the way back to 1936. While the company has stated that JIP might make Olympus Imaging “more compact, efficient and agile”, and has used such words as “continuous growth”, I don’t see how a financial services company that has no expertise in the camera industry can somehow make Olympus Imaging profitable and successful again. That’s just not going to happen.

Portrait of a young woman, captured with Olympus E-M1
E-M1 + LEICA DG NOCTICRON 42.5/F1.2 @ 43mm, ISO 160, 1/8000, f/1.2

The likely outcome of this takeover is going to be a few more years for the Olympus camera brand to live before it eventually dies off and disappears completely. Without any serious product development and innovation that requires a lot of R&D funding, Olympus Imaging is not going to survive. There is no way JIP is going to pump a ton of cash into a dying company that has basically gotten obliterated by the smartphone industry. And this is the best-case scenario. The worst-case scenario, is JIP splitting up what’s left of Olympus Imaging and selling it off before it bleeds even further. Sadly, I personally don’t see any other outcome out of this announcement…

Antelope Canyon
E-M5 + OLYMPUS M.45mm F1.8 @ 45mm, ISO 200, 1 sec, f/8.0

So why shouldn’t we have any faith in JIP taking over Olympus Imaging and making it successful? Well, just take a look at JIP’s investment portfolio, which includes many divisions that were transitioned as separate companies. For example, when Sony wanted to get rid of its VAIO PC division, it sold it off to JIP, which then carved it out into a separate company. Other notable investments by JIP include Toyota’s CAD/CAM software division, NEC’s ISP subsidiary, as well as ITX Corporation, which was previously owned by…wait for it…Olympus! That’s right, JIP and Olympus have had a past, and it was not pretty. After a series of corruption scandals, Olympus sold ITX Corp off for $676 million to try to stay afloat.

Death Valley Salt Flats
E-M5 Mark II + OLYMPUS M.12-40mm F2.8 @ 13mm, ISO 200, 0.6 sec, f/5.6

From what I have been able to research, none of these companies have done well under JIP’s umbrella. The closest electronics company to Olympus is VAIO, which is worth looking into to understand the potential best-case scenario. Although VAIO still makes laptops and sells them in the USA and internationally after five years since being separated from Sony, the laptops have mixed / poor reviews, and very few people seem to be buying them. I don’t see how such a company can survive the fierce competition. The VAIO name has stayed for five years and a few new products have been rolled out since then, but none of them have been revolutionary by any means. So if JIP does the same thing to Olympus Imaging as it has done to VAIO, forget about the Olympus brand…

Olympus’ Innovative Past

Without a doubt, Olympus was once a truly innovative company. Together with Panasonic, Olympus basically invented mirrorless technology, which landed the two companies many recognitions and innovation awards. To date, Olympus is still unrivaled when it comes to 5-axis in-body image stabilization system, which Olympus has licensed to other camera manufacturers. The live image development during long exposures is a feature I have not seen on any other camera. Superb pixel-shift technology, as well as hand-held pixel-shift are still features no other camera manufacturer has been able to properly replicate or implement.

Sand Dunes with Snow
E-M1 + LEICA DG SUMMILUX 25/F1.4 @ 25mm, ISO 200, 1/800, f/5.6

Let’s not forget about the seriously compact and highly capable cameras like E-M1, E-M5 and E-M10. Over the years, I have used all three models of different generations, and found them to be small, lightweight and extremely versatile.

Portrait of a Young Woman Looking at a Man
E-M1 + LEICA DG NOCTICRON 42.5/F1.2 @ 43mm, ISO 200, 1/200, f/1.2

When the original E-M5 came out, I immediately bought one after trying it out. It was small, lightweight and had everything I needed in a mirrorless camera. I even upgraded to the E-M5 II when it was rolled out, since I loved that camera so much.

Turret Arch Through Window Arch
E-M5 + OLYMPUS M.12-50mm F3.5-6.3 @ 18mm, ISO 200, 1/6, f/5.6

Best of all, I loved the small M43 zooms and primes. My favorite lenses have been the Olympus 7-14mm f/2.8, Olympus 12-40mm f/2.8, Panasonic 15mm f/1.7, Panasonic 20mm f/1.7 II, Panasonic 25mm f/1.4, Panasonic 42.5mm f/1.2 and Olympus 75mm f/1.8. Without a doubt, these are very sharp and highly capable lenses. I did not have much experience with many other M43 lenses, but I am sure many of them are equally great, if not better.

Racetrack Playa at Sunset
E-M5 Mark II + OLYMPUS M.12-40mm F2.8 @ 12mm, ISO 200, 1/10, f/8.0

I could go on and on about everything I loved about Olympus cameras and M43 lenses. It’s been truly sad to see all the turmoil that has been surrounding the company over the past few years. The leadership of the company showed its real face with all the corruption scandals, while talented teams of engineers and designers were busy making such superb cameras and lenses. The mismanagement and the lies of the corrupt executives brought the company down, heavily denting its reputation. Add the strange marketing decisions Olympus has taken in the last few years by making large and expensive M43 cameras that nobody wants, and it becomes clear that things have not been well at Olympus for a while now.

Image of a Cake
E-M5 + LEICA DG SUMMILUX 25/F1.4 @ 25mm, ISO 200, 1/800, f/1.6

Sadly, despite the blatant lies by top Olympus executives that things are all well and healthy, many of us in the industry have been expecting this outcome for a number of years now, so it does not come as a surprise. Rumors about the sale of Olympus Imaging have been circulating for many months.

Unfortunately, this news is not good not just for Olympus, but overall for Micro Four Thirds. With Panasonic transitioning to full-frame mirrorless, the development of Micro Four Thirds is probably not going to move much further.

As much as I hate to see Olympus Imaging fade away, it seems like it is the first camera company casualty during these tough times. Let’s hope that others don’t follow.

Here is the official press release / memorandum from Olympus:

Signing of Memorandum of Understanding for Divestiture of Imaging Business

Olympus Corporation (“Olympus”) and Japan Industrial Partners, Inc. (“JIP”) hereby announce that, today, the parties signed a memorandum of understanding to carveout Olympus’s Imaging business to a new company (“NewCo”) and subsequently transfer its shares to a fund managed, operated or otherwise handled by JIP (the “Transaction”).

After the due diligence and further discussions and negotiations, the parties are aiming to sign a legally-binding definitive agreement for the Transaction (the “Definitive Agreement”) by September 30, 2020. We will promptly make further announcement if any matters relating to the Transaction that needs further announcement occur.

1. Background and Purpose of the Transaction
Olympus’s Imaging business began with the manufacture and sale of a camera using the photographic lens Zuiko in 1936. Through innovative technology and unique product development capabilities, Olympus has developed and launched various products, aiming to contribute to make people’s lives more fulfilling. Those products include: Olympus Pen, the innovative half-sized camera; Zuiko Pearlcorder, the world’s first micro-cassette tape recorder; and Olympus OM-D series, the mirrorless interchangeable lens camera. Olympus has implemented measures to cope with the extremely severe digital camera market, due to, amongst others, rapid market shrink caused by the evolution of smartphones; Olympus has improved the cost structure by restructuring the manufacturing bases and focusing on high-value-added interchangeable lenses, aiming to rectify the earning structure to those that may continue generating profit even as sales dwindles. Despite all such efforts, Olympus’s Imaging business recorded operating losses for 3 consecutive fiscal years up to the term ended in March 2020.

Under such circumstances, Olympus considers that, by carving-out the Imaging business and by operating the business with JIP, the Imaging business’s corporate structure may become more compact, efficient and agile and it is the most appropriate way to realize its self-sustainable and continuous growth and to bring values to the users of our products as well as our employees working in the Imaging business. Olympus therefore has decided to sign the memorandum of understanding for the Transaction.

JIP has strong track records in supporting strategic carve-outs that realize growth potential and encourage autonomous growth. By adding support from JIP, the NewCo, as the successor of reputable brands such as “OM-D” and “ZUIKO,” will utilize the innovative technology and unique product development capabilities which have been developed within Olympus, and will realize continuous growth of the business by bringing better products and services to the users and customers and by making itself a productive and rewarding work place for its employees.

2. Imaging Business after the Transaction
NewCo will succeed and maintain the research and development functions and manufacturing functions globally as reformed under the contemplated structuring reforms to continue to offer high-quality, highly reliable products; and also continue to provide supports to the imaging solution products that have been distributed by Olympus.

3. Outline of the Transaction
The specifics of the Transaction shall be decided in the Definitive Agreement after careful examination and consultation between the parties. The parties currently consider the outline of the Transaction shall be as follows.

The parties will proceed with the actions and procedures for Transactions in full compliance with applicable laws including consultation obligations and other requirements under local employment laws.

– Structure: Olympus’s Imaging business will be transferred to the NewCo by way of company split or otherwise, and then, shares in the NewCo will be transferred to a new company to be established by JIP.
– Signing of Definitive Agreement: Scheduled to be signed by September 30, 2020
– Closing: Olympus and JIP strive to close the Transaction by December 31, 2020.

Structuring Reform
Prior to the closing of the Transaction, Olympus plans to implement structuring reforms to the Imaging business aiming to change the business structure of Imaging business to be more profitable and sustainable. We are currently investigating costs and other impacts of the structuring reform. If any future event which requires disclosure arises, Olympus will announce it promptly.

You can find a copy of the above memorandum at Olympus Global.

Do you own Olympus gear? What are your plans for the next few years? Are you planning to sell and transition to another system, or keep shooting with what you have? Please share your thoughts in the comments section below.

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