This happens to many big market leaders when the market changes. They try to protect their old business, rather than jumping in on the new opportunity. The list of times where this has happened is truly massive: IBM - PCs, Microsoft - anyone remember Windows Mobile????, the list goes on and on.
Canon's imaging business (and everyone else's) is being eaten by cell phone cameras. Cell phone imaging systems are rapidly improving and are even doing things that the legacy cameras can't do, like allowing people to produce live video & computational imaging. The cell phone cameras are going to continue to improve over time. SLR type cameras will hang around because there are people who care about image quality, but the camera market will be a tiny fraction of its former size. All but the most dedicated will just use their mobile device. I would hate to have my bonus tied to the point and shoot camera market in the future...
Yep. That was my point. Canon could have made a big difference, but they chose not to in order to protect their lens/legacy business, like Intel, Kodak and countless other companies before. Now, you have the cell phone companies innovating in the photography space because that gives them bragging rights, which helps them sell more phones. The computational imaging stuff that they are working on is amazing (like Google's low light stuff).
You know that it is serious when Canon is basically warning investors that they are going to get out of the camera space and focus on more profitable areas.
Well, this is the end result of Canon not making the cameras people want at prices they can afford. Canon's strategy has always been to market lenses with the idea of using cameras to try to lock people into their lens ecosystem, but the cameras are crippled in terms of capabilities in an effort to protect their upscale cameras and lenses - such as their Cinema EOS line, for example, if video is your thing.
The problem with this kind of strategy is that you end up cutting off your nose to spite your face by jacking up the price of admission to certain capabilities to the point where only a few can enter. It may be initially profitable, and you may be able to run the company for a while that way, but it eventually catches up with you. Canon have not only rested on their laurels and refused to innovate, they've also tried hanging on far too long to their existing lens ecosystem as a way to remain profitable.
Another big problem that Canon have is excessive segmentation. They have too many cameras chasing too few consumer dollars and constantly short customers on features in hopes they'll stump up for the more expensive model one or two levels up. This tells me Canon are somewhat out of touch with the state of the global economy, which tanked in 2008 and still hasn't fully recovered.
Mind you, car makers do the same thing, but they realize that only 5 - 10 % of their market can afford to buy their upper-tier versions of their basic product. They don't position their cars as a "we have a really crappy base model that has only a manual transmission and no air conditioning and if you want better than that, you have to pay Cadillac prices" kind of proposition. Most car dealers won't actually sell the stripper models, they just use them as bait to get less well-heeled customers on the dealership floor. Those customers end up opting for something a little better than base and find that their finance payments are maybe $20 -$50 per month more than the base model anyway.
In short, Canon's camera line-up and marketing strategy is downright diffused and severely confused.
Blaming their problems on smart phones is a cop-out. What if Canon made a smartphone that incorporated camera technology that beat out every other smartphone maker's cameras by a wide margin? And concentrated on marketing it to the low-end crowd that don't have a really serious interest in photography, but would have bought a point-and-shoot instead back in the days when smartphone cameras weren't so good? What I'm getting at here is that what the world wants is a good, modern-day equivalent to the Brownie camera or the Kodak Instamatic.
Make it good, make it cheap, sell a bazillion of 'em. As the technology improves, camera users that have a more serious interest in photography may be interested in a more advanced but still reasonably-priced model.
But I digress.
If I could suggest how Canon could solve its problems, here's what I would recommend:
Ditch the digital SLRs, that ship has sailed; people want mirrorless cameras that outperform DSLRs and have none of their drawbacks.
Make one consumer-grade camcorder that does 4K, one semi-pro model that does the same thing, and one pro model. Price them at $1000, $1500 and $3500 ~ 4000.
Start making the whole range of mirrorless lenses, from wide-angle all the way to extreme telephoto, so people don't have to screw with adapters and get, at best, mixed results.
Make the lenses a common system that fits both APS-C and full-frame cameras; this will simplify manufacturing and cut costs.
Make one really good APS-C stills camera that can also do 4K video with no crop. Price the body out at $1K and offer a full range of good lenses retailing for between $500 and $750.
Stop incrementalizing your cameras by offering more expensive models that offer only a few extra features.
Ditch the XC10, XC15 hybrid cameras. While an interesting experiment, nobody buys these cameras, not even the photojournalists/videographers they're aimed at.
Ditch the EOS RP. It's so crippled that it's an embarrassment. Knowledgeable consumers don't like feeling like they have to make a Faustian bargain just to get a full-frame camera despite not having the kind of money camera makers want them to sink into a full-frame camera system.
Stop worrying about having your upper-end cameras and EOS Cinema cameras and lenses cannibalized by cheaper cameras that perform nearly as well. Pro cinematographers don't want low-end or even mid-range cameras and lenses. They want proper, fully professional cameras that can accept lenses made by Arri and other pro lens makers.
Seriously, the craziness I see in the photo equipment market is making me long for the days of the 35mm SLR, when everything was simple. For instance, Canon made the AT-1, AE-1, AV-1 and A-1 cameras starting back in the mid-1970s. There was just one lens system that would fit all of these cameras: the FD mount. There was no segmentation where you had a camera that accepted a small lens like the APS-C mirrorless lens of today, and another camera that would accept a bigger lens with a different mount. Their models were set out in a linear, logical fashion and it made sense. And you could do pro work with any of these cameras save for the AV-1 maybe, and the FD-mount lenses that they accepted.