Thursday, Dec 14, 2017
Science & Technology | Asia-Pacific | Japan

Nikon Corporation

Optical technology for industry 4.0


1 year ago

Kazuo Ushida, President & Representative Director of Nikon Corporation
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Kazuo Ushida

President & Representative Director of Nikon Corporation

In 1917, three of Japan's leading optical manufacturers merged to form a comprehensive, fully integrated optical company known as Nippon Kogaku K.K. On entering the camera market in 1948, striking images taken with Nikon equipment appeared in US media demonstrating the high quality of the company’s products and established it as one of the optical industry’s global leaders. President Kazuo Ushida explains the rise and expansion of Nikon into other business sectors, the impact of smartphone photography on the industry, and the part Nikon’s optical technology will play in the upcoming ‘robotics revolution’.

 

With almost 100 years of history, Nikon has today gained solid recognition around the world as a world-class camera manufacturer. What would you say are the core values that still run through the company's DNA today?

1945 was a major turning point for Nikon. After World War II, Nikon decided to create optical equipment for civilian purposes. In 1948 we launched our first camera product called the Nikon Model I. Since then, our prestige did not stop growing.

David Douglas Duncan, who is well known for his photographs of Pablo Picasso, is a photographer with a really strong relationship with our company. In 1950, Mr Duncan was a photographer for Life magazine, one of the biggest photo magazines in the United States. During the Korean War he and some other photographers used our Nikon cameras and Nikkor lenses to take pictures of the war. Those pictures were released and published in Life magazine. Because of the quality of these pictures, Nikon started to receive a close up. At that time, Japanese cameras were considered to be copy products of German cameras. However, in 1950, The New York Times created a special feature citing the pictures of Life magazine taken by Mr Duncan, on how Japanese camera manufacturers had caught up, offering very good quality, putting the spotlight on Nikon. That was when Nikon came onto the world stage and was introduced as a reputable manufacturer of cameras. As a company we feel very indebted to Mr Duncan for giving us the opportunity to come onto the world stage.

The big transformation came when the world became digital. The 20th century was the era of film cameras, but the 21st century is undoubtedly the era of digital cameras. From the very beginning Nikon was an optics company and a precision manufacturing company, based on observing things, and with a strong expertise at ‘looking at things’ – whether through cameras, binoculars or optical machinery for medicines. Our strength, and the whole concept behind our company, is to observe things. Humans can see visible light on the wavelength about 400nm to 800nm – the strength of Nikon obviously is that we possess optical technology utilizing light covering all wavelengths from X-rays to infrared.

 

Your most iconic product, digital single-lens reflex cameras, is a market dominated by both you and Canon. What make your products stand apart and explain your high market share?

We are the only company that has not changed the lens mount, called the F Mount, on all of our single-lens reflex cameras that we have produced since the beginning until now. The mounting of the lens is the same, so once you purchase a Nikon lens you can use it for any of the Nikon single-lens reflex cameras that we produce. This is a very strong strength because at the end of the day these customers can update or purchase a newer model camera but they use the same lens that they originally purchased.            

Our quality is our competitiveness and we consider that all of our products deliver a stable performance. We believe that the quality is recognized by our customers. This is the second thing we need to always be appreciative of Mr Duncan: individual customers around the world believe and understand the strength of Nikon’s lenses and our good product performance.

 

The camera market is being swiftly eaten up by smartphones and is now half as big as it was at its peak. The decrease is especially big for compact digital cameras. However, Nikon is determined to see this as an opportunity, and you said that this trend to take pictures all the time in the end will inspire lots of people to become photographers. For Nikon, smartphones are not competitors to conventional cameras: they are a tool to support the functionality of your camera. What new value do you think you can offer with your cameras to entice consumers to go one step further and acquire a real camera (hopefully a Nikon)?

In regard to the compact camera market, we recognize that this market is shrinking mainly because people have their smartphones in their pockets and bags at all times and there is no point in having a separate compact camera. Sales of compact cameras have gone down considerably. It is amazing when you look at the actual number of photos that are being taken by these new photographers, usually in primary school or middle school! They love to share them with the rest of the world. I consider this trend very positive, even if personally I believe that these young people, who are born using smartphones to take pictures, are always going to use their smartphones to take pictures.

In Nikon, we have products available that communicate between the smartphone and the camera; the pictures are taken by the camera and transferred to the smartphone and cloud service. These pictures will offer an absolutely higher quality compared to the smartphone picture. Users will be able to take pictures that they cannot take with a smartphone, and I hope that this trend will eventually result in a migration of these young smartphone users wanting to have a new Nikon camera. It is also important to understand that these young consumers have scarcely read the user setup manual for a smartphone; everything is very intuitive. Today, when you purchase a camera, it comes with a thick manual. From my point of view, we should ensure that our products do not need a user manual so that these users can adopt our products with the same ease as a smartphone.

 

Beyond cameras and your other existing markets that have already matured, Nikon has been developing new businesses. What kind of areas is Nikon about to enter at this moment?

In Nikon we have a six-business portfolio:

  • imaging products business,
  • semiconductor lithography business,
  • FPD lithography business,
  • microscope solutions business,
  • industrial metrology business,
  • and the medical business.

Of that six-business portfolio the imaging products, the semiconductor lithography, and the FPD lithography are considered matured industries with mature markets. With regard to the industrial metrology business, Nikon has historically been very good at the measuring small objects in micron order. In 2009, we acquired a European company specialized in measuring large objects such as automobiles and aircrafts. Thus, as a company, we can provide measuring systems for not only small objects but also large objects. We believe this is a strong driver of growth going forward.

Industry 4.0, or the robotics revolution, is coming: production facilities will be soon fully automated by systems. The system at a factory will manage a production facility, needing to get information from all the different areas on an automated basis. In order to do this, the system will need to be able to see and measure all the different activities that are happening in a factory. This measurement is the key to the success of industry 4.0 and is a product area we are very strong in. In this case Nikon would like to become the eyes of the new system in factories.

 

How do you nurture a culture of innovation? What kind of new innovation or next generation products are you working on at the moment? How will this contribute to exceed consumer expectations?

We have a number of businesses that we are currently nurturing and we feel very excited about. To give you an example related to our microscope solutions business, we recently partnered with a Swiss company called Lonza, the world’s largest manufacturer of cells for regenerative medicine therapeutics. We have established a new company, wholly-owned by Nikon, dedicated to regenerative medicine contract manufacturing in Japan. By entering into the cell product contract manufacturing business, we will acquire the know-how to manufacture cells, including somatic stem cells, and will accelerate its effort to realize future practical applications of iPS cells (induced pluripotent stem cells) in the field of regenerative medicine. Furthermore, we will prepare for the major breakthrough in regenerative medicine market driven by iPS cells and will also be developing equipment and disposables needed to optimize the manufacture of high-quality cells and to provide clinical solutions including both hardware and software from Japan to international markets.

 

In regard to your global expansion strategies, what are your target markets?

We have recently acquired a UK-based company named Optos, which is a leading company in the retina diagnostic imaging equipment market. Optos has very unique and distinct ultra-widefield (UWF) technology. This technology enables the instant capture of images of approximately 82% of the retina, which is 50% more of the retina when compared with other conventional fundus cameras. This is important for example when a person has diabetes and gradually starts to lose their eyesight. The person gradually starts to lose eyesight from surrounding areas but this is not something they can usually pick up because people are always looking at the areas in front of them. By using this technology that covers 82% of the retina, doctors would be able to promote an earlier prevention of diabetes and the loss of eyesight.

 

Together with China, the US is one of the two biggest markets in the world. Six of your group companies are in the US. In this regard, how do you see the US market, not only in terms of sales but also regarding product development and for capital?

The United States is the single largest market in the world and makes up 25% of our sales, compared to about 20% for Europe. Beyond sales, the US also provides a unique environment for innovation for Nikon. We are looking at that very closely, and specifically on the West coast around Silicon Valley; there are always new ventures that are starting up with interesting technologies. We participate as a venture capital investor, as we are constantly looking at new companies’ technologies that we could adopt. For example, we recently invested in a US-based venture that makes handheld X-ray analyzers. When we think of X-rays we do not think of innovation. However, these machines are very big and very expensive. The venture company we have invested in is working on X-ray machines that are very portable, compact and low priced. This is just one example.

Nikon is a company that is shifting business strategies. We are considering being more involved with ventures in the United States, but also worldwide. Up until now, all of our products have been developed internally. However, we are shifting to a model where third parties’ technologies or ideas will become more important. Nikon needs to be more open and collaborate with others to be able to create new products that will be suited to the next generation.

 

The medical business is one of the pillars for your growth and you are aiming for early development of this area by accelerating M&As and efficient use of corporate venture capital (CVC). How can M&As with US companies help you in this regard?

We are looking into different opportunities but we cannot go into details on any specific case. In general terms, we are always looking into developing new partnerships or into new ways to acquire new businesses. These decisions will be based taking into account if they create new synergies or not. We do believe that we need to have third parties using our technical strengths and that we need to use a third party's technical strength too. Whether this is done through an M&A, a joint venture or a partnership, at the end of the day it does not really matter.

 

You have had a very successful career in Nikon: you joined the company in 1975 and 40 years later, in June 2014, you became the President of Nikon Corporation. With this incredible experience, what is your personal vision for the company? If we come back in five years from now, where would you like Nikon to be?

Nikon will celebrate its 100th anniversary next year. I have always in my mind how Nikon is going to move forward from there. The global trend that most of the work that has been done by humans is going to be gradually shifted, automated, and be done by systems. Computer programs will do a bunch of business functions that are currently being undertaken by individual humans. As this trend naturally occurs, computers will need to have a capability of looking at things. This is where Nikon has an opportunity, thanks to our technology.

Another trend is in the medical industry, where it is more and more obvious that humans cannot be replaced. True there are robots for surgery, but at the end of the day the diagnosis has to be applied by a doctor with their patients. Supporting these doctors is always going to be critical, especially when supporting them to better see their patients’ bodies. Whether it is something they cannot physically see with their eyes, Nikon will provide equipment and solutions that help them to diagnose their patients. Our business will always on a face-to-face basis and Nikon as a company will always be supportive of doctors and the medical industry as a whole.

 

To conclude, what would you like to says as direct message about Nikon?

Nikon is a company that helps “observe things”. As a company we will develop products and solutions that help people to see what they have never been able to see before or to see things in a better way. Nikon in turn should be seen as a company that will be always increasing human capabilities to see further into the future. 



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