Go Miyazaki is corporate vice president, Fujifilm Corporation; president and CEO, Fujifilm North America Corporation; and chairman and CEO, Fujifilm do Brasil Ltda. Miyazaki joined Fujifilm in Japan in 1981, serving in several key positions in international sales and marketing. After holding many positions worldwide, he came to the U.S. as division president, Electronic Imaging. Later, he was made division president for Fujifilm’s Imaging division. In 2012, he was promoted to president and COO of Fujifilm North America Corporation, and last year he was named president and CEO of that organization. In 2014, Miyazaki was also named chairman and CEO, Fujifilm do Brasil Ltda.
I sat with Go Miyazaki on the occasion of Fujifilm’s 80th anniversary to talk about the history of the company, their current strategies and their plans for the future.
JG: Congratulations on Fujifilm celebrating its 80th anniversary. What are the hallmarks that have made this company so successful and enabled it to be such a strong industry leader for 80 years?
GM: Fujifilm was established 80 years ago in 1934 as a strategic company for the production of aerial film prior to World War II, and for a long time we were a successful photographic company. When I joined the company 33 years ago, in 1981, Fujifilm’s goal was to be a total solution provider. I remember we always seemed to be chasing Kodak, who was then a giant. So we had a very clear target—and a strong motivation to catch them.
Was that always the driving force? Wasn’t Fujifilm stronger in Japan?
Yes, Fujifilm had about 70% market share in Japan—maybe even higher in some Asian countries—but once you went to Europe and the U.S., it was more like 80/20 Kodak to Fujifilm. So although we started from the film side, we strategically expanded into graphic arts, printing and medical applications, such as X-ray film. But film was king for a long time.
Fujifilm seemed to have anticipated the digital revolution. Did the Kodak bankruptcy surprise you?
It did. We were always rivals in the business and knew they had good, talented people. So when it happened we were surprised. We were profitable, but while they were much more profitable, most of their profit was derived from one business. Fujifilm had diversified its business portfolio.
It seems that Fujifilm is well positioned on several different fronts.
Yes. Today our Imaging Solutions business, which includes photo-imaging, optical devices and digital cameras, makes up only around 13% of our revenue. Another 45% comes from the Fuji-Xerox company, and the balance comes from Information Solutions, which includes graphic systems, recording media, industrial products, medical and life sciences such as pharmaceuticals, cosmetics, and highly functional materials that aren’t marketed in this region.
Let’s talk about printing. When digital took over, the printing revenue machine practically ceased to a halt. It seems to be coming back.
The 4×6 print is seeing a clear down trend—lots of free prints offers—but if you look at other aspects, like photo gifts and calendars, the opportunities are growing. You can walk into most mass retailers or photo retailers today and make a calendar or a photo gift. That’s something consumers would never think of 10 years ago. But we’re seeing both growing and shrinking aspects of the business. In the film days, there were so many prints due to the nature of film processing; the prints came automatically. Now, photo books are easy to make, and we’re seeing millions of pictures taken with smartphones, which is a huge printing opportunity. So there are certainly growth areas.
Is printing a generational thing?
There is a place in Japan called Harajuku where many young people go; it’s a kind of high society area where very famous brands are headquartered. We opened a small concept store in January there called Wonder Photo Shop. Most of the customers are under 30, and we’re trying to recognize the market trends that might come from this experience. We have to understand what the younger generation really wants from photography. For example, we’re seeing that 70% of the prints they make are from smartphones. We’re also seeing matte surfaces becoming popular, and most of them are making square prints.
You have to understand what people want to do, instead of a manufacturer establishing what should be done with photography; we have to always ask the consumer what they want to do. Square prints, matte surfaces—it’s interesting to see the younger generation doing different things. Either you fight it or you change along with them.
So is a smartphone a good thing or a bad thing?
From a camera standpoint, it’s a bad thing. We’re seeing that in addition to the decline of compact cameras, which we expected, DSLRs are being hurt. But the lenses in smartphones are small and dark. There’s only so much a smartphone can do as a camera.
You’re in the camera business as well as the printing business, so isn’t it a double-edged sword—good and bad?
Yes. The number of pictures being taken is dramatically increasing. So it certainly opens up opportunities for us, but manufacturers need to embrace this trend and work together.
Is connectivity from smartphones an issue?
In Japan, iPhones make up 70% of the market, and the Apple iPhone 4 and 5 connect via Wi-Fi. The same thing is happening here, but it doesn’t seem that it’s easy, and people don’t necessarily seem to be doing it.
Your camera business is a great story; I remember being at photokina a few years ago and seeing the surprising introduction of the X100. And now you have an impressive expanded lineup. What was the genesis of that strategy?
Five years ago I was the GM for digital camera sales in Japan. Honestly, I was a newbie to the business. In those days we had a company called Fujinon; now it is the Optical Devices division that was merged with the digital camera side. They were making around 60% of the world’s TV lenses; most of the pictures you see in football stadiums, especially long zooms, are usually captured with Fujinon lenses. They are a super-high-technology lens manufacturer.
At the time we were selling $99 cameras. There was volume but not much profit, and it was tough to establish a brand. Of course, the Fujinon guys said they looked like toys, so we started to work with them. We basically built the X-series cameras around the lens. The X100 had a hybrid viewfinder and an amazing lens. It almost seemed you could take a picture of the air, it was that good. It’s the opposite from Leica, whose lenses are very sharp and you practically cut your hand taking a picture. Ours was softer, better for portraits and faces, so it was different but nevertheless a great lens.
Even though we were selling lower priced cameras, we felt the quality was so good pro photographers would buy them. We thought it would be a good second camera for DSLR owners who were serious photographers. The X100 really changed the way people saw Fujifilm in the camera market. Remember, we weren’t only selling the camera; we were selling the quality of the image—the color and the picture quality. If you really want a good camera you need a good processor, a good lens and the sensor size. Some companies can do some things better than others. But for Fujifilm, those three technologies are unchangeable, and we do not compromise when we make X-series digital cameras.
It’s a very competitive category now.
It has gotten competitive, but we are leading the category, and it’s a profitable category for us and our dealers. We’re competing not only within the category but also with entry-level DSLRs. Initially, when we decided to compete with the lower end DSLRs you could pay $550 and get a decent DSLR with a zoom lens. I wasn’t totally confident about asking people to spend $1,200 for our cameras. But we see now that if people see the difference in the lens and the picture quality, they’re willing to spend the extra dollars.
What is your retail strategy these days?
We have around 400 X-series dealers that we heavily support. And we have five tech sales representatives who visit these stores and schedule Fujifilm days so the stores can call in their customers. When that happens, they try out the cameras to make their selection. It’s a very grassroots type of activity—it’s the way to sell those cameras.
We also only sell direct to authorized dealers to hold the pricing in the market, since discounting cameras, especially high-end cameras, doesn’t make sense. It just damages your brand and makes the customers who already bought our cameras unhappy. So we’re trying to avoid it.
What about the mass market?
The specialists can sell these cameras much better, and we are supporting them with the right cameras and lenses to make money. But there is still a large market for the consumer range, so each distribution channel has a different playground.
Another thing we’re doing for the independents is trying to connect their kiosks to our main lab, where they can order various products for customers. Not just photo books and mugs—we recently started offering framed prints and metallic wall decorations. We’re trying to provide opportunities for the independent dealers to work with us, so we’re making a big investment to help our dealers.
What do you want retailers to think about when they think about your brand?
My main philosophy has always been trust. We want to be a partner who is trusted and who can really work together with them. We’re not just trying to sell them something and run away. We want to continue to work together with them.
Are there events planned for the 80th anniversary?
They had a big celebration in Japan in January, as the official anniversary was January 20th. That’s when we unveiled our new corporate slogan—Fujifilm: Value from Innovation. As part of the celebration, we opened a new technology center called Open Innovation Hub. This facility gives business partners a firsthand experience with fundamental and core technologies, as well as new technologies, materials and products under development, for new business solutions. About 40% of what they show are things I’ve heard about but never seen. Last fiscal year, we spent more than $1.6 billion in research and technology. Much of that was to reapply our film technologies to other businesses. There are many things on the industrial side that we have developed that are very different technologies for our company.
We’re very aggressive in looking at the kind of organizations we can establish in the U.S. to make these new product technologies into full-fledged businesses. And there’s more to come, because next year—2015—is the 50th anniversary of Fujifilm in North America.
What keeps you up at night?
Our business is doing relatively well, but if you look into the future, you see a drop in demand for prints and cameras. So how to sustain and grow the topline is my biggest worry. We’re all committed to making this company grow and continue our success. We believe in being slim and strong. It’s better to concentrate on what you’re really good at and find future growth, otherwise you have a big organization with lots of people but not a lot of profit.
I’ve had one philosophy since I came here: each year we try to do 80% that’s the same as last year and 20% that’s new. So we always experiment with that 20%. It’s not always successful, but as long as you don’t keep failing in the same way, you will move ahead. fujifilmusa.com
