January 22, 2006

Sony Eyes Big Push into High-End Digital Cameras

TOKYO -- Sony Corp. said on Friday it would aim for a quarter of the digital single lens reflex camera market after acquiring assets for a push into that market from Konica Minolta Holdings Inc.

Konica Minolta announced on Thursday that it would sell a portion of its SLR camera business to Sony for an undisclosed sum, part of its move to pull completely out of the business of selling cameras and photographic film.

The deal was not a total surprise as the two agreed last July to jointly develop digital SLR cameras, which are generally more expensive and offer better performance than simple point-and-shoot compact models, and typically use interchangeable lenses.

Sony is the world's No. 2 digital camera maker behind Canon Inc. but it currently has no presence in the potentially lucrative digital SLR market, having lacked the history selling interchangeable lenses for film SLRs to warrant a push.

The digital SLR market is currently dominated by a handful of traditional camera makers that sold millions of interchangeable lenses during the film era. This is seen as key factor because many of those lenses can also be used on digital SLRs.

Canon and Nikon Corp. control the lion's share of the digital SLR market, but Pentax Corp and Olympus Corp. have recently formed alliances with electronics makers in a bid to boost their sales.

Yutaka Nakagawa, president of Sony's digital imaging business group, told reporters the company would aim for 20-25 percent of the fast-growing digital SLR market by focusing on relatively inexpensive models that could achieve mass-market appeal.

"But because there are few players in this market, I would like to grab an even bigger share than that," he said.

Nakagawa said Sony would have several advantages in the market including its ability to produce image sensor chips, displays and batteries in-house, as well as leveraging its strong audiovisual technology used in its electronics products.

Sony plans to launch its first model this summer based on Konica Minolta's Maxxum/Dynax mount system, meaning that existing owners of those lenses -- Konica Minolta sold about 16 million lenses over the years -- will be able to use them on Sony's SLR.

Nakagawa reiterated Sony's target of selling 13.5 million digital cameras this business year to March, seeing little impact from the recent sales suspension of some models in China that local officials said did not meet quality requirements.

"Even if we are affected by China, sales in other countries are strong. We are on track," he said.

Nakagawa said he thought digital SLRs would eventually account for 20 percent of Sony's overall camera sales, but he did not expect that to happen anytime soon.

"I don't think it will happen in one year. I don't expect a such a big contribution to profit in the first year."

Shares of Sony closed up 2.5 percent at 5,020 yen, outperforming the benchmark Nikkei average, which was flat on the day.