Imaging Business Strategy
Masamichi Handa
Head of Imaging Business Unit
Olympus Corporation
March 30, 2016

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Positioning of Imaging BusinessAward-winning submissions in Olympus Global Open Photo Contest 2015

We will build a reputation as a unique brand from which customers seek value.
Through the development and manufacturing of the OM-D series cameras and PROlenses, we will continually create advanced digital, low-cost production, and mobiletechnologies. By applying these technologies to other businesses, we aim to contributeto Olympus as a Groupwide technology driver.

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Distribution of Sales and Positioning
FY2016 Net Sales (Forecast)Mirrorlesscameras

106¥816 billion
615

15Others

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No data copy / No data transfer permitted「OM-D E-M5markⅡ」「PEN-F」

Interchangeablelenses

FY2016 Net Sales(Forecast)「OM-D E-M1」

80

Compact cameras: Tough series
IC recorders, binoculars

Business Strengths (SWOT Analysis)

Unique technologies accumulated by

products (transition under way)concentrating on mirrorless cameras
Sales structure for high-priced mirrorless camera

Competencies in designing and manufacturing

Small shares of massive U.S. and Chinese markets

compact, lightweight, high-performance lenses


Leading share in mirrorless cameramarket (domestic)

Ｓ ＷＯ Ｔ

Solid demand in mirrorless camera market



Expanding camera applications and growing
imaging-related technology demand in nonconsumer markets

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No data copy / No data transfer permittedIntensified competition in mirrorless cameramarket

Rising presence of smartphones, tablets, etc.

Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Recognition of Current Conditions
 Review of Medium-Term Vision Period (FY2013~)
FY2013(Billions of yen)

Target

FY2015*1
ActualTarget*2

FY2016
ActualForecast

149.0

107.6

152.8

79.4

80.0

Operating income

1.0(23.1)

6.8(11.7)

0Operating margin

1%－4%

－0%

Net sales

MeasureEvaluation (FY2016)

Minimize risks in compact camera
operations◎ that can be differentiatedFocus resources on high-margin
mirrorless cameras○Progress made in increasing ratio of sales through channels featuring strong demandfor high-value-added mirrorless cameras

Improve responsiveness to market
changes△In process of constructing systems that allow inventory risks to be minimized andexpenses to be maintained at appropriate level△In process of lowering cost of sales ratio by consolidating manufacturing bases anddecreasing R&D expenditures and staff size in conjunction with reduction of model
numbers centered on compact cameras, reorganizing sales structures, and shifting
toward mirrorless cameras

Establish cost structure
appropriate for business scale

Large reduction made in number of models and scope narrowed to focus on models*1 The new business previously included under the Imaging Business is now included in Others. Figures for FY2015 have been restated to reflect this change.
*2 Targets are figures set when announcing the medium-term vision in June 2012.
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Recognition of Current Conditions

Promoting further selection and concentration and reducing expenses toconstruct systems that generate stable earnings amid ongoing market
contraction

Securing earnings by redefining specific customer groups that resonate withOlympusʼ unique characteristics and improve brand value through the ongoingprovision of products and services that earn high levels of customer satisfaction

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators10

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Market Trends
Market Trends(Operating Environment)

Field

Competitors

FY2021:

 Canon10 million units Nikon Increased sales ratios for mirrorless cameras~13 million units

 Sony Rising sales ratios for high-priced models(CAGR*2: - Fujifilm

 No new market participants

6.0%~0.0%)

 Panasonic, etc.

 Ongoing contraction of SLR market, mirrorless

Digital ILCs
(including SLRs andmirrorless cameras)Market Scale*1(GrowthForecasts)

camera market scale unchanged*1 Source:Olympus Corporation*2 From 2016 to 202011

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
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Business Strategies

 Select and concentrate and prepare for market contraction:•Advance business structure reforms to construct systems capable of generating stable income•

Prepare for market changes through timely sales structure reforms (reduce scope of operations)•Continue to minimize inventory risks

 Clarify and entrench Olympusʼ unique characteristics:• Focus business on providing unique value to specific customer groups (specialists) andmaintain strong market position (advance “Business to Specialist” strategies forImaging Business)•13

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Fulfill role as technology driver for entire Olympus Group by developing advanced digital andnetwork technologies

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Select and concentrate and prepare for market contraction
Advance ongoing business structure reforms•

Focus on development of high-value-added mirrorless cameras (primarily OM-D series) and interchangeable lenses(PRO series)•

Consolidate manufacturing functions to limit increases in manufacturing costs and improve efficiency of new productmanufacturing startups•

Create systems and cost structures that generate stable income

Improve responsiveness to market changes•

Prepare multiple scenarios based on potential market and Company share changes and monitor market scale andCompany share to transition to different scenarios in timely manner in response to changing conditions, thereby
improving sales function efficiency and advance market selection and concentration

Minimize inventory risks•

Improve SCM processes to reduce product supply lead times and lower risks associated with overdependence on
certain regions and consequently shorten inventory turnover periods

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Clarify and Establish Olympusʼ Unique Characteristics(Advance “Business to Specialist” Strategies
Providing unique value to specific customer groups
OM-D E-M1

M.ZUIKO DIGITALED 300mm F4.0 IS PRO

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OM-DOffering mirrorless cameras that surpass SLRs and provide high-levels of flexibility and resolution
capable of satisfying specialists
１2Before merging (narrow focus range)

After merging several photos (wide focus range)

１ Dual FAST AF and pleasing high-speed performance realized through inclusion of contrast AF and on-chip phase detection AF
Focus Stacking mode allowing for macro shooting (flowers, insects, products, etc.) with entire scene in focus from foreground
2 to background3 Resilience (dustproof, splashproof, and low-temperature resistant) allowing for peace of mind
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M.ZUIKO DIGITAL ED 300mm F4.0 IS PRO
Realizing previously difficult handheld shooting (no need for use of tripod) at ultra-long distancesSuperior flexibility
granted by compact,
lightweight design

Competitorʼs 600mm F4 lensOlympus systems
substantially morecompact andlightweight thancompetitorsʼ 35mm,
full-sized, sensorequipped digital camerasystems

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M.ZUIKO DIGITAL ED 300mm F4.0 IS PRO
Realizing previously difficult handheld shooting (no need for use of tripod) at ultra-long distances

Unparalleled 6-axis image
stabilization realized bycombining lensstabilization system withcameraʼs in-body 5-axis
image stabilization system18

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Todayʼs Agenda

1. Business Overview
2. Recognition of Current Conditions
3. Market Trends
4. Business Strategies
5. Targets and Indicators
19

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Targets and Indicators (FY2021)
Create business structure capable of securing operating margin of 4.0% even if net sales decrease by
as much as 7% each year after FY2016 due primarily to compact camera market contraction
売上⾼Net sales

Operating income
営業利益

Operating margin
営業利益率（Billions of yen）

1,000
100

Net sales: ¥55.0 billion

8055Others

Operating income: ¥2.0 billion(Operating margin: 4.0%)

10%

500
50

5%

4%

Digital
SLR0%020

2016/3/30

No data copy / No data transfer permitted0FY2016
2016年3⽉期（Forecast）

3FY20212021年3⽉期（Target）

0%