Friday, 29 November 2013 06:41

Epson’s long road back

By

INTERVIEW: Minoru Usui is president of Japanese electronics company Epson. He was in Australia recently to look at prospects for the company locally, and to spread to Epson message.

He likes to come here, he says. “It’s a beautiful country, and the people have advanced ideas.” And great golf courses. But no time for that, on a flying visit of barely 24 hours.

Epson is best known for its printers and computer projectors, but they are markets that are not providing the growth that Epson wants. In 2008, when he became president, Usui initiated the SE15 strategy, intended to revamp the company’s product line and return it to the profitability that had largely eluded it since the company floated on the Tokyo Stock Exchange in 2003.

(SE15 stands for ‘Seiko Epson 2015. The company is properly known as Seiko Epson –it started as a sister company of Seiko watches, but the two companies are now completely separate).

Things have not been easy. The Global Financial Crisis hit in 2008, just as Usui became president, and in the horror year of 2009 Epson lost nearly 20% of its workforce and suffered an enormous ¥111 billion loss – around 10% of revenues - when it shed the loss-making LCD panel business.

Since then the company has broken even, but revenues have continued to decline as Usui’s new strategy has been put into place. Last year revenues were down to ¥851 billion ($9.2 billion). But now things are looking brighter – Usui says the current financial year will be much better (Epson’s financial year end on 31 March). The interim six mont results, released recently, show a 20% increase in sales over the same period last year, and a strong turnaround in profits.

The SE15 strategy is simple in concept – though hard to implement in practice. It essentially revolves around evolving the company away from its previous two product areas into four new product streams based on what it sees as its areas of competitive advantage.

“We had two businesses when I became president,” explains Usui. “We had finished products, which were essentially printers and projectors, and we had components – LCDs and semiconductors.

“The components business was bleeding. We had no competitive advantage – so we got out of it. And our finished product business needed a refocus.”

Epson now concentrates on four product areas:

Printing systems

The company’s traditional strength. Its piezoelectric printing technology made it a market leader in dot matrix printing during the PC boom in the 1980s and 1990s, but that advantage has been largely eroded with the advent of cheap laser printers. Epson is now using its technology to develop new types of printers, mostly on a larger scale for such things as signage and print areas of A3 are larger where laser are unsuited. It has also adapted the technology to print onto fabric.

Projection

Another traditional strength – but where Epson is expanding its product range to include large scale projector for auditoriums and halls, and wearable technology such as head mounted displays and smart glasses.

Sensing systems

Epson has developed sophisticated and high accuracy sensing systems using the gyroscopic technology it developed for sister company Seiko’s watches. It has accelerometers and other devices that can be worn on the wrist to sense bodily movements and other functions, such as blood sugar levels.

Factory automation

Epson is productising its own internally developed factory automation systems for ‘intelligent manufacturing’. These include decision-making robots and advanced dual-arm systems.

“All these technologies and products have one thing in common,” says Usui. “They are based on our original component technology – none of the components come from elsewhere. That gives us a leverage that out competitors simply cannot imitate.”

When asked about the products that will emerge from these technologies, Usui says that Epson is seeking partners and developers. “Applications are the key. We know we can’t do all that ourselves.”

The market is starting to take notice. The share price has more than doubled in the last year. Usui says the SE15 strategy, which still has two years to run, is starting to yield result. “The balance sheet is strong and we are consolidating. Our products are better and more competitive.

“Some of our new areas, like sensors, are still quite small but are growing quickly. They have massive potential.”

Epson has reinvented itself before. It originated as a manufacturer of components for Seiko watches. It moved into printing when Seiko was the official timekeeper for the 1964 Tokyo Olympics and needed printed output for timed events.

It is not widely known that the company developed what is agreed to be the world’s first laptop computer, the 1981 HX20, which had a full keyboard but a tiny LCD screen. And in the late 1980s it virtually owned the PC printing market, which means it still has strong brand recognition.

Minoru Usui has two more years to see through his vision. He still acts as the company’s chief technology officer – he was head of research and development before becoming president.

“But technology is not just about products – it’s about exciting people and exceeding their expectations. That’s what we want to do at Epson.”

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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