Konica Minolta to Exit the Camera Business

Konica Minolta is to shutup shop in the camera area and transfer appropriate assets to Sony.

In a not unexpected move, Konica Minolta is getting out of the camera business and transferring the appropriate assets to Sony, who are expected to go ahead with plans to develop digital cameras using the Minolta lensmount. The only thing that is really unexpected about this is that it has taken so long.

Below is the press release followed by the one about the asset transfer to Sony. The press releases are written by Konica Minolta staff.

Konica Minolta Announces Withdrawal Plan for

Camera Business and Photo Business

Konica Minolta has long been a leading company in photo imaging
business covering wide range of imaging from input to output. In
addition, we have provided inspiring products and services by fusing
our unique technologies.

In camera business, we have expanded
picture-taking opportunities by developing innovative technologies such
as the world’s first autofocus cameras. In 1962, our camera,
well-accepted for its high reliability, boarded on the US’s first
manned spaceship “Friendship 7.” Also, ever since introduction of the
world’s first body-integral autofocus SLR camera, Maxxum/Dynax series,
in 1985, SLR cameras have become more popular among picture-takers, and
we have succeeded in selling 16 million units of interchangeable lenses
since then.

However, in today’s era of digital cameras,
where image sensor technologies such as CCD is indispensable, it became
difficult to timely provide competitive products even with our top
optical, mechanical and electronics technologies.

In photo business, represented by the
silver-halide photography such as color film and color paper, we have
produced Japan’s first photographic paper in 1903, and Japan’s first
color film in 1940, thus pioneering joy of photography for more than a
century. In 1984, we introduced the world’s first compact washless
photofinishing system known as a minilab system. The minilabs
contributed to the expansion of worldwide photographic market by making
photos closer to consumers and amazingly shortening delivery time.

However, traditional silver-halide
photographic market is shrinking astonishingly by the surge of the
worldwide digitization. In such a changing world, profits for camera
and photo businesses worsened in recent years, and it became necessary
to drastically reform business structure for the further growth of
Konica Minolta. Ever since we decided and announced restructuring
guidelines of our businesses on November 4, 2005, we have been
considering practical and detailed plan, and we would like to announce
our decision made today as follows:

1) Camera Business

In camera business, we have reached an agreement with Sony
Corporation(Sony), having numerous image sensor technologies such as
CCD and CMOS, to jointly develop digital SLR cameras in July 2005. In
order to continue to have our customers use Maxxum/Dynax lenses, and to
maximize possibilities of the optical, mechanical and electronics
technologies accumulated through development of SLR cameras in the
years to come, we came to the conclusion that it was best to transfer
assets concerning camera business to Sony. Since then, we have been
negotiating with Sony, and as a result, we have reached an agreement
with Sony to transfer a portion of assets regarding digital SLR camera
system to Sony*1. In this relation, we have decided to withdraw from camera business*2, such as film cameras and digital cameras, within Konica Minolta Group as of March 31, 2006.

Sony is planning to develop digital SLR
cameras compatible with Maxxum/Dynax lens mount system, so that the
current Maxxum/Dynax users will be able to continue to use them with
Sony’s digital SLR cameras. In addition, we will consign camera service
operations for Konica Minolta, Konica,Minolta brand cameras and related
equipment to Sony.

Pease refer to the news release, “Partial Transfer of Assets Related to Digital SLR Cameras “, separately announced today.
Except for digital SLR cameras and interchangeable lenses produced for Sony.

2) Photo Business

In today’s shrinking photographic market represented by color film
and color paper, we have been considering to scale back and to continue
photo business at an appropriate size; however, when we foresee the
photographic market, it is quite difficult to maintain profitability in
this field, and we have decided to withdraw from photo business. As
schemed below, we will, as much as possible, avoid causing any
inconvenience in providing products to our worldwide customers in the
course of withdrawal.

For color film and color paper, while
considering our customer needs, we will step-by-step reduce product
lineup and cease our color film and color paper production by the end
of fiscal year ending March 31, 2007.

For minilab business, we will cease production
of the system by the end of fiscal year ending March 31, 2006; however
we will have such company as Noritsu Koki Co., Ltd to provide
maintenance and customer services so as not to cause any inconvenience
to our customers.

Pease refer to the news release, “Consignment of Service and Maintenance Operations for Minilabs “, separately announced today.

In line with the above scheme, with consideration to our customers
and regional situations, we will step-by-step reorganize our sales
offices and withdraw from all of our photo sales activities by
September 30, 2007.

3) Personnel Management

a part of Konica Minolta Group’s restructuring, we will proceed
with withdrawal plan for camera and photo businesses and aggressively
shifted their management resources to other Konica Minolta Group
companies. While continuing this effort, in order to rationalize a
number of empl
oyees, we have decided to reduce worldwide Konica Minolta
Group employees by 3,700 from the current 33,000 including early
retirement offering by September 30, 2007*.

The early retirement offering is for Konica Minolta Group’s holding
company, five business companies and two common function companies in

The expenses to be incurred with this restructuring are already included in the forecast for fiscal year ending March 31, 2006.

Konica Minolta Group will make our utmost
efforts not to cause any inconvenience to our customer due to the
decision we made this time. At the same time, camera and photo
businesses are our traditional businesses ever since our founding, and
we wish to express our heartfelt appreciation to the worldwide Konica
Minolta fans for their patronage to our products for more than a

Konica Minolta Group is aiming to become more
powerful corporate group by swiftly meeting market changes and pursuing
“selection and concentration”. We will, from now on, be concentrating
our business resources on non-consumer businesses, such as the core
“business technologies” field, the strategic “optics and display
devices” field, and the growth expected “medical imaging” and “sensing”
fields, increase competitiveness, and endeavor to further expand
corporate value.

Partial Transfer of Certain Assets Related to Digital SLR cameras

Since July 2005, Sony Corporation (Sony) and Konica Minolta Photo
Imaging, Inc. (Konica Minolta PI) have been working on the joint
development of digital single lens reflex (SLR) cameras. Sony, Konica
Minolta Holdings, Inc. and Konica Minolta PI are pleased to announce
that they have decided to transfer a certain portion of Konica Minolta
PI ‘s assets related to digital SLR cameras to Sony, and at the same
time, that Konica Minolta PI will consign its customer service
operation for Konica Minolta cameras and related products* to Sony.
Agreement to this effect was reached today.

Under this agreement, on March 31 2006, Sony
will receive certain assets from Konica Minolta PI that are necessary
for the development, design, production and so forth of digital SLR
cameras compatible with Konica Minolta PI’s “Maxxum/Dynax lens mount
system”.** Sony will accelerate development of new digital SLR cameras
based on and compatible with the Maxxum/Dynax lens mount system with a
view to marketing these models this summer.

On the basis of its ongoing “selection and
concentration”, Konica Minolta Group will concentrate on its core
“business technologies” field and its strategic “optics and display
devices” field and withdraw from camera business*** as of March 31,
2006. At the same time, Konica Minolta PI will partially transfer
certain assets related to digital SLR cameras to Sony.

From April 1 2006, Konica Minolta PI will
consign the customer service operations for Konica Minolta cameras and
related products* to Sony, and Sony will implement service operations
from that date onward.

* Konica Minolta, Konica and Minolta brand film cameras, digital still cameras, lenses, accessories etc.

** An original lens mount system to connect camera body and lens adopted in Konica Minolta Maxxum/Dynax series SLR cameras

*** Excludes production of digital SLR cameras and interchangeable lenses for Sony

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