What's NEW

NEW: I updated my 6 part Color Basics Series - See the "What's News" Page for details...

Tuesday, October 29, 2019

The new OMD EM5 III and what it tells us about Olympus?

Article last update: 13 November 2019 (See new timeline)

For months Olympus photographers talked about the new Olympus OMD EM5 III. They followed micro four thirds rumor sites and speculated on forums while the EM5 III became one of 2019 most anticipated cameras.

It was the EM5, followed by the original EM1, that established the OMD range with a high level of brand recognition. Olympus OMD cameras support various photography styles and is popular amongst photographers looking for portability, image stabilization (IBIS) and a good lens offer.

In this article we take a look at the 2012 Olympus financial scandal and we study the impact it had on Japanese companies. We also look at how Olympus turned the company around after appointing a new management team.

Olympus EM5 III Press Release Statement
17 October 2019

Olympus Corporation President Yasuo Takeuchi is pleased to announce the newest M43 standard interchangeable lens camera, the Olympus OMD EM5 III, scheduled to go on sale Nov 2019.

As expected Olympus decided to do a modern style social media launch. Weaved into the launch was a mix of traditional launch activities plus web based activities like forum drops, YouTube videos and Instagram advertising. See my article on how companies use social media.

Social media offer companies unique access to consumers while giving customers a way to experience the new camera. Example, within days YouTube videos went live including the option to see live Q&A sessions. Customers "experienced" the camera, saw it in action and enjoyed a real time view of the camera in use.

We saw the global scale of the launch, effectively supporting the consumer buying behavior process as customers saw different Countries launching the camera. Reviewers approving of the EM5 III, the look & feel, size and performance. A truly interesting global event, especially for those following marketing communications trends.

While rolling out the OMD EM5 III we also witnessed an increased volume inaccurate and in some cases nasty social media reports on Olympus. To the untrained eye these negative forum drops, looks like just another product complaint or another sensor size TROLL.

Creating parallel events to distract from the main event is one of the oldest counter strategies in the book. Think when you were caught with your hand in the cookie jar and you politely suggested to your wife, look there and not here.

We often see Olympus openly attacked on forums and some posters appear to take a personal interest in smearing Olympus. We saw this same "parallel activity" when Olympus launched the new EM1X.  The near hostile forum drops one see on DPR including the ongoing sensor size "war" motivated me to study Olympus history and to write this article.

This unfortunate example shows how "experts" smearing Olympus. It is amusing to see posters make radical conclusions reading the Olympus 2020 mid year Report. Wildly claiming the EM1X was not a success or it does not contribute to the Olympus Imaging Division bottom line.

Get yourself a cup of coffee, sit back and enjoy the ride, this is fun.....

The Financial scandal Exposed in 2012


Again and again we are challenged with the worst kind of forum gossip At times I am stunned at the irresponsible nature of some of these forum posts, especially when one learn many of these claims are inaccurate or not in full context. To illustrate, digging a little deeper into the 2012 Olympus financial scandal, we learn that what happened at Olympus was in fact part of an under reported practice in Japan. The image below is an excerpt of a report on the scandal including an interesting description of Japanese corporate culture at the time.


This "management model" was not only limited to one company, it was a general management style amongst Japanese corporates. Senior managers were basically powerless while receiving how-to and what-next orders from the different company Board's of Directors. As in all cases with too much power at the top, questionable practices take place....

It all started in the 1990's when Olympus were caught up in reporting irregularities which then over the years went from bad to worse. Bad parties became involved and as things really worsened it all broke out during the big 2012 scandal. In fact Japanese corporate history reads like a criminal novel. Olympus basically became the flash point that exposed it all and that started subsequent Japanese financial governance reform.


Interesting is that it was not only Japan that were having tough times implementing reform, the US were also challenged when Enron became surrounded with a financial scandal. Other large corporates like Nissan, Philips, and Toyota were also under public scrutiny at the time. General change was required to ensure long term corporate reform. All said, never underestimate the magnitude of the scandal at Olympus, it was big and it was serious....


The good news was, not all was lost. In fact when reading the full story one learn it was a top UK executive appointed at the Olympus Japan head quarters that uncovered the irregularities. He was also instrumental in the Olympus turn around and the subsequent Japanese financial governance reform.


Michael Woodford, the UK executive, that uncovered the irregularities wrote a book "Exposure", about his experience at Olympus and how the scandal became the kick-of event for Japanese financial governance reform.


2011 - How Olympus nearly Collapsed 

Olympus closing in China and reopening in Vietnam

The slide on the right was part of an investors presentation Olympus presented in Jan 2019. The "Reconstruction" phase taking place from 2012 to 2016 really impacted all 4 the Olympus business divisions.

The imaging division were hit especially hard, as they had to cope with multiple challenges. On the one hand it was cost restructure, R&D reform and closing and relocating part of their China factory.

On the other hand the compact camera market were decreasing fast. Some publications estimated the 2012 global compact camera unit sales were just below 100M units, dropping to just above 11M units in 2016. Further down more about the digital camera market.

Olympus Pen F using a Color Profile

As discussed, when studying the above presentation slide, one see that 2012 was a pivotal year for Olympus. The financial scandal broke, Olympus replaced its management team and the share price was down. Starting in 2012 Olympus implemented a "Reconstruction" phase that effectively turned the company around. The share price recovered and the new management team held onto Olympus image as a Trusted and valued Technology Partner. This surely developed to became an interesting corporate case study. You will find many interesting reports written about this period at Olympus.

The reconstruction phase main goal was to enhance Olympus corporate value and to recover any lost client trust. It also included a world wide company savings and streamlining program, building a new R&D methodology and the future Olympus manufacturing concept. The EM5 III became a window into the new R&D and manufacturing strategy at Olympus.

In April 2016 Olympus introduced a new 5 year Corporate Strategic Plan (16CSP), designed to strengthen the different Olympus business divisions and to grow their global business portfolios to support sustainable growth leading up to and beyond their 100th anniversary.

This new 16CSP corporate plan further streamlined corporate overhead costs plus it prioritized future product segmentation and portfolios. It also included relocating critical parts of the old Chinese plant to their Vietnam factory with new R&D and high-tech manufacturing capabilities. Important for readers to know is Olympus also re-evaluated its imaging business and their complete camera offer during this phase.

Olympus decided to focus on the so called "high profit" camera business in support of steps to better manage the imaging business cost and to improve profitability. It is clear from the different corporate reports and statements that Olympus regard the mirrorless camera as most profitable. In addition one also see that Olympus place high priority on their PRO range.

Most forum "experts" smearing the Olympus imaging division, like to present the camera business as just a bad dream for Olympus. When digging a little deeper one clearly find this is not the case. I like to invite you to go see this Olympus presentation. See slides 6 to 8.

Is it true that the Olympus imaging business are running at a loss? Yes it is true, Olympus reported that the 2019/2020 losses are the result of the declining market, previously accrued costs and moving their manufacturing from China to Vietnam. In the above presentation you also see on slide 8, that Olympus goal is to reach an operating profit of 4% in 2021. To reach this goal, Olympus put different programs and action plans, like the Reconstruction Plan, CSP16 and Transform Olympus.

Extract from the 2020 2nd half financial report presentation

In the 2020 mid year results, Olympus stating that "curbing SG&A expenses" is really important. Investors knows exactly what Olympus is talking about when they see SG&A expenses are on target. When you study slides 24 to 29 you will see how Olympus started preparing the Imaging Division for the future and what these SG&A savings was. Obviously as time continued they updated these SG&A targets, the details which you will find in each following year annual reports.

Also see page 10 in the 2020 mid year presentation and you will see the imaging business, profit is moving in the right direction. Keep in mind Olympus has different management programs running specifically to improve the imaging business. Investors view this positively as it show Olympus are planning ahead with clear KPI's one can track. As we review the Olympus product range at the end of this article you will learn more about Olympus clear product segmentation strategy.

Olympus Imaging Division product strategy were taking shape in 2016 when Olympus launched the new OMD EM1 II, this was a strategic launch in support of growth and profitability. The OMD EM1 II was also an important product, signaling the importance of the Imaging Division.

Olympus Announcement Closing Shenzen
May 2018

"Japanese camera maker Olympus has announced that it will shut down its factory in Shenzhen City, South China's Guangdong Province, due to the changed market landscape, Chinese media reported on Tuesday. The National Business Daily reported that the factory, located in the Hi-tech Industrial Zone of Nanshan District in Shenzhen, disclosed details of the closure to its employees during a radio broadcast on Tuesday afternoon, but that a compensation plan had not been worked out.

Founded in December 1991, Olympus (Shenzhen) Industrial Ltd. is a fully-owned subsidiary of the Japan-based camera maker, specializing in the design and manufacture of traditional and digital cameras as well as other products. Sources from the factory told Shanghai-based The Paper that the popularity of smartphones has led to the rapid shrinking of the digital camera market and a sharp decline in the operating rate at the factory.

The equipment at the factory is worn down and unable to maintain its competitiveness, the report said. Data from the factory showed that it continued to make a profit in the past three years, but the operating rate at the Shenzhen site had slipped to only 20 percent of its peak.
Olympus will concentrate on the new plant in Vietnam to boost production and margins, according to The Paper."


Olympus Vietnam factory

"Olympus will move its entire digital camera business to its plant in Vietnam's Dong Naiver Province, to enhance "production efficiency and profitability" as well as "global competitiveness," according to the statement."
Source - dated May 2018

2019 and 2020 became two important years for the Olympus imaging business. The outcome and the success of 16CSP was basically reaching its peak and we started to now see the results of that hard work. Our window into the Olympus imaging business are the products Olympus release. From the 2020 mid year report we also see the 16CSP program has rolled over into the "Transform Olympus Management" program.

From 2012 onwards we see how Olympus continuously evaluated and improved their processes. There are no reason to allow forum clowns to distract Olympus customers. Olympus is a healthy global company operating responsibly in a competitive global environment. See these 3 links for more info on the new "Transform Olympus Management" program:

Link1  Link2   Link3 (Slide 18)

In an interview with Kenny Suzuki, he said: Last year, we closed one of our plants and that was one of the main reasons why we couldn't launch new products. But today, it's over and with this E-M1X we're going to again introduce new products.

In summary the new products launched in 2019 were all important to the imaging devision with a special focus on the high profit OMD business. That basically explains the new EM1X launched in January 2019. As explained, Olympus was placing its focus first on its Pro line, both in terms of the camera and lens offer. In 2019 we saw the following product launches:-

In one of Olympus interviews, they said both the OMD and the PEN cameras lines will continue. Some rumors claimed the Pen F will be discontinued. I could not find any concrete information or official statement by Olympus to support this claim. In fact, I found Olympus interviews that stated the Pen F will continue.

May 2018 Interview:- Mr. Shigemi Sugimoto, Head of Olympus Corp.'s Imaging Business Unit
They such important products (Pen range) for us, the recent line-up of the PEN, PL series and PEN-F. We are in line for our the initial project plan. Capability is important, you know, but we think that how the product feels is also valuable. In that situation, we think that people can distinguish OM-D and PEN, and they won't compete with each other, even though there may be a small likeness in some parts of them. From the user's point of view, there is no cannibalization, because the PEN-F itself is really unique, I think. Once they notice the product, I think no need to consider the OM-D. Totally different. We can separate the target users.

From this report we see Olympus will launch 2 more product in 2019. If you think about it, Olympus stated they will concentrate on the high profitability product lines like the OMD. Question, which one of the Pen F or the EPL-9 are more profitable? Has the EPL10 already been launched in Japan? Could Olympus decide to launch it in the rest of the world?

We saw Olympus launched the new Tough TG6 announcing the TG6 was profitable. Olympus also launched the E-PL10 in the Japanese market. All said, it was important for Olympus to launch these new products in 2019 and 2020. The reasons are basic economics, the more "high margin" products Olympus introduce the higher the chances of reaching their 2021 profitability goal.

Based on what we know, we could speculate, will we see the new Pen-F II in 2019 in preparation for the Christmas season? What other products could we expect during the remainder of 2019? Why do I think we saw interesting leads suggesting a new Pen F II. Olympus discontinued the Pen F. This is a normal step in preparation for a new product launch? Have you seen any YouTuber with a Pen F II?

Future Products and Turning the Company around

Kenny Suzuki: "In 2019, Olympus celebrates a double anniversary: the company's 100th anniversary and the 10th anniversary of its first hybrid camera. This year, Olympus has emerged from its slumber (reconstruction phase) and announced the release of the OM-D E-M1X, a rugged enclosure dedicated to professionals looking for reliability."

Reporter: The OM-D E-M1X is a M43 mirrorless camera for professional photographers. What is Olympus' vision for mirrorless cameras in 2019?

Kenny Suzuki: We will focus on M43 mirrorless cameras. Many full-format mirrorless cameras are coming on the market, but we will continue to launch new M43 cameras. We don't want to go to full frame cameras, we want to stay focused on what we do well, because we want to offer compact and lightweight products. So there will be no change on this point.

Kenny Suzuki: the market is in a difficult situation today. Overall, the digital camera market for hybrid (DSLR + Mirrorless?) cameras are still decreasing. This trend could continue, but for Olympus, the hybrid (Mirrorless focus) market should continue to grow. In Germany, hybrids already account for 60% of sales. This was already the case in Japan before. This is now the general trend at the global level.

It is unclear exactly what Kenny Suzuki meant when talking about hybrids. I assume hybrids are both DSLR and mirrorless cameras. This is interesting because it confirms what we see taking place in the market. DSLR cameras are decreasing and are basically being replaced by mirrorless cameras. That is why Kenny Suzuki said, Olympus see and expect to continue its growth into the mirrorless market.

From the graphic below we can see that mirrorless camera volumes has been increasing slightly while DSLR camera volumes are steadily decreasing. This is something DSLR manufacturers did not want to see. Could it be that many thought Full Frame cameras is popular enough that it will "protect" the DSLR segment?

We know that Sony, Fuji, Olympus and Panasonic were all fully aware of this "steady" mirrorless segment increase and they all timely invested into this segment. Canon and Nikon until yesterday did not believe that the DSLR market will decrease. They are now really late to the party. Example Sony entered the mirrorless market in 2010 and Fuji in 2012. The Fuji XT-1 was launched in 2014 and the first Sony A7 in 2013.

The graph data is CIPA - The purpose is to show/explain trends (Mobile phones not included)

From the inserted mini graph we see the camera market had a peak around 2010. Several reasons are given for this peak. The main graph basically shows the "market", returning to its pre 2010 volumes. Ask yourself this question, before the first iPhone in 2008, the camera market experienced a steep growth, see the inserted graph. Olympus introduced the MFT format and had good success. Was it possible Olympus invested heavily into this fast growing market? Did anybody expect to see this fast market growth disappear and mobiles phones to replace compacts cameras within 2 to 5 years?

It is interesting to see how mirrorless cameras continued to replace the traditional DSLR camera. Will we only see dedicated and specialized DSLR's in the future? Olympus and Panasonic 2008 visionary outlook prepared them for this emerging mirrorless market. When they invested into the mirrorless market the rest of the industry thought they crazy. Now that we see the DSLR market disappearing and replaced by mirrorless cameras it might be the worst possible timing to enter into the mirrorless segment.

Olympus and Panasonic are therefore well positioned with an unmatched camera size benefit, great camera bodies, leading IBIS performance and a comprehensive lens offer. Sony and Fuji are growing their lens offer and are well prepared for the mirrorless segment. Who will be the future leader?

Another significant comment Olympus Ray Okubo made, was when he said Olympus see IBIS as a KPI. He continued saying they will invest more into IBIS to keep it the industry best performer.

If you think about it, M43 cameras enjoys a huge mechanical advantage with its M43 sized sensor. When the camera instructs the sensor to make quick IBIS counter movement the M43 sensor reacts quickly because it is more mechanically efficient. The M43 sensor IBIS "cage" also requires lower energy when compared to a full frame mechanically huge "IBIS" cage...

One should also keep in mind that Olympus are 10 years in the business of developing and refining IBIS. One just cannot compare any other brand with Olympus IBIS, not even Panasonic. Important to know is when you see other manufacturers add an "IBIS" logo to their cameras, it does not imply the same high performance and reliability as we come to value from Olympus IBIS technology.

By adding an IBIS "logo" to a new camera, other manufacturers basically try to capitalize from the good reputation Olympus and Panasonic earned with their excellent IBIS technologies. That is why we have something like patents, to protect industry leaders from this to happen to them.

In another interview:-

Toshiyuki Terada: I would like to add something. From we announced that we will focus on the M43 market, our OM-D E-M1 Mark II sales increased in some Countries. I think this is a positive sign for us and a sign that the market is interested in compact and lightweight camera systems.

As I was saying, the idea that full frame cameras offer higher image quality than M43 cameras is true, but that improved IQ is really only useful in a very small portion of applications. In most cases, the M43 camera IQ is sufficient.

For professional or enthusiastic photographers who wants a very good image quality and a compact and light system, we recommend the E-M1 Mark II. But if the photographer wants to use a camera in more extreme conditions with a need for reliability and fast ergonomics with a vertical grip, we can recommend the E-M1X. 

In another interview:-

Ray Okubo: Before I finish, I wanted to add something. Internally at Olympus we defined those "core competencies", which sets us apart from the competition. Point 1 is a compact and lightweight system and we have mentioned it several times. Point 2 is our range of optics: without lenses, we cannot make images. It is the combination of the housing and the optics that counts. Thirdly, image stabilization is also a subject on which we want to be ahead of the industry. With these three points, we want to continue to shape the mirrorless market and outperform the competition.


Today much are being said and written about the Micro Four Thirds sensor. Experts of all kinds are roaming M43 forums and are freely arguing with M43 owners. Like in 2008, Olympus and Panasonic are still visionaries, having a good grip on the future for the Micro Four Thirds format. Those three key M43 values, IBIS, comfort & size and finally the existing and comprehensive lens offer are still as relevant as yesterday. Keep in mind as sensor technology improves things like IBIS, size and the scale of the M43 offer will only become more attractive. These three key values are really unique to the M43 format.

Olympus also said, if it is ultimate IQ you want the M43 format is not your answer. You probably then need to consider medium format cameras? Olympus continued to say, they believe that those ultimate IQ applications is a small dedicated segment only. In other words current 20MP Olympus and Panasonic sensors are more than most will ever need. We see proof of this in our day to day image results including published results by talented M43 photographers. Will Olympus benefit from a new and updated sensor? Absolutely yes, also when it is an exercise in optics only.

Perspective is always important I believe. We sometimes forget, it was only yesterday that many of us did professional work with 13MP mirrorless cameras. These were followed by 16MP cameras like the EM1, which became the basis for many professionals changing to the M43 cameras.

What can we expect from future Olympus products? Olympus said they implemented a new R&D concept and they also adapted their manufacturing/product strategy. Managing manufacturing cost by controlling what materials they use plus manufacturing process costs are key future indicators. They will also focus on external technology inputs and the expertise from outside suppliers. This is nothing new, large companies knows that smaller high tech companies are innovative and agile.

Interesting trends we saw in 2019 was Olympus re-using technologies across their cameras. Example the EM1X, the EM1 II and now the EM5 III all share the same sensor and the same AF algorithm. Could it happen that Olympus use only one sensor for its complete mirrorless range in the future?

Does this look like a company that is planning to close operations in 8 months?

Perspective is important when evaluating any situation

We also saw the new EM5 III now has a plastic body. It is still water and dust resistant like the previous EM5 II plus it continues the same EM5 II high quality tradition. What we did learn is that the new EM5 III was not the wow product showing off new things like the EM5 II did. I can imagine the wow factor is now shifting to the EM1X and the EM1.

Olympus also made a clear distinction to what the EM5 III target market is and what they believe are the best solution for that segment. Is a plastic body a bad thing? Probably not, we have experience with the EM10 II and the EM10 III and we have not see any negative aspect related to manufacturing or camera quality.

See the review below and you will agree, Olympus did an amazing job with the new EM5 III. There should be no doubt about what we can expect from Olympus in the future.

Is it important for the EM1X and the EM1 II to have magnesium bodies? I think yes, the professional demands these sturdy bodies as they are exposed to extreme external conditions. The environments these cameras are used in, should not be under estimated,  Professional photographers are placing higher demands on their equipment when compared to hobby photographers.

It will take me a few days to complete this summary. For the interim you welcome to download the image and to make your own notes.....

1 comment:

  1. Thanks for the excellent research + info. yes. I too Olympus fan but impressed by Fuji out of camera colours.
    I have got new Olympus EM5 mark II with 12 -40mm. Previously , have PEN mini 2 with 25mm -1.8 it is awesome and great value too. Above, too nice pictures for my limited use.

    ** By the by, how to increase the video limit beyond 28.59 on EM5 Mark II. I can not see any direct settings. I have seen you comments on DP review. that how i read your passionate blog.

    Chandra from Singapore


Most read Articles