Exceeding Customer Expectations

Focusing on Strengths to Create Value That Exceeds Expectations

The business environment has changed greatly in the seven decades since Epson was founded, but through it all Epson has consistently maintained a commitment to earning trust around the world by satisfying customers and creating value that exceeds their expectations.

In 2011, northeastern Japan was devastated by a catastrophic earthquake and tsunami. This disaster, which triggered the nuclear accidents in Fukushima and the subsequent shutdown of reactors in Japan, and the 2011 Thailand floods exposed electrical power supply and environmental problems while underscoring the importance of the global supply chain. These served as stern reminders of the gravity of corporate social responsibility, but they also convinced me that Epson is headed in the right direction.

I firmly believe that by relentlessly pursuing innovation in compact, energy-saving, high-precision technologies¹, Epson can create fresh customer value that matches the world's desire for smaller, more powerful products that have lower power requirements and lower environmental impacts. We are already on our way. For example, the compact inkjet printers we launched to market in 2011 are 39% smaller than equivalent models from the previous year, providing greater freedom of installation and reducing environmental impacts in manufacturing and transport.

Over the year we made strides toward meeting the expectations of society through other businesses, as well. In inkjet printers, we leveraged Epson's unique Micro Piezo technology² to develop powerful models for business, commerce and industry, in addition to the compact models described above. In 3LCD projectors, we expanded our lineup with various models that include features such as 3D support, short-throw lenses and improved interactive capability. We also launched an exciting new category of product: a head-mounted display. Finally, we merged our sensing, low power, and wearable technologies³ to begin providing products and services to the healthcare and sports markets.

¹ Compact, energy-saving, and high-precision technologies: Technologies that save energy, time, and unnecessary labor; technologies that make products smaller, lighter, and "greener"; and technologies that provide product with greater precision and accuracy
² Micro Piezo technology: Epson's proprietary Micro Piezo technology uses piezo-electric elements arrayed in a print head to eject ink materials. The force needed to eject the ink is created by applying a voltage to the piezo-electric elements, causing them to change shape, thus creating mechanical pressure that ejects the ink droplets.
³ Wearable technology: Devices that can be worn like clothes or strapped to the body like a wristwatch for use

Staying the Course and Accelerating Execution

Back at the beginning of the 2009 fiscal year we announced a long-range corporate vision called "SE15." We laid out the strategy for achieving the vision in a pair of three-year business plans, the SE15 First-Half Mid-Range Business Plan (FY2009-11) and the SE15 Second-Half Mid-Range Business Plan (FY2012-14). The three-years under the first-half plan were set aside as a period for restoring our ability to generate profit and for positioning Epson for fresh growth. Although we still have work to do when it comes to reacting swiftly to sudden environmental changes, such as economic slowdowns, the strong yen, and natural disasters, we did make steady headway in expanding business domains and product lineups, and in improving profitability by reducing total costs.

Over the next three years we will stay the charted course and accelerate execution of strategies designed to achieve the SE15 vision. In the printing segment we will use our Micro Piezo technology to bring innovations not only to the consumer and office markets but also to the commercial and industrial sectors. In the projection segment we will continue creating new possibilities for projected images and communication with innovative microdisplay and optical technologies. In the devices and precision products segment we will restore the health of our businesses and expand our customer base by using our unique strengths in QMEMS⁴, low-power semiconductor, and precision mechatronics technologies to create competitive products.

We intend to accelerate certain strategic actions. Specifically, we will hasten the rise of inkjet printers to a position of dominance in office printing, supplanting laser printers. We will also expedite the switch from analog printing systems to digital printing systems in the commercial and industrial sectors. We also want to raise the profile of our new businesses. For example, we are looking to provide wearable devices that are small, energy-efficient, accurate and fun or reassuring. These devices include head-mounted displays that customers can use to view visual content whenever and wherever they like. They also include a GPS running monitor and a wristwatchtype pulse monitor that tracks users' physical condition or physical performance.

⁴ QMEMS: Micro-electro-mechanical systems (MEMS) made of quartz material Seiko Epson Corporation that has been processed using semiconductor microfabrication technology

Aiming to Be an Indispensable Company for You

Epson is a global company whose mission, as stated in the company's Management Philosophy, is to be "a company trusted throughout the world." Put another way, we are committed to what we call"trust-based management." A succession of serious scandals involving publicly traded companies in Japan in 2011 cast doubt on management practices and hurt corporate trust. These scandals prompted us to rededicate ourselves to maintaining and fortifying our own internal controls. Effective internal controls are essential for creating, producing, and delivering value in an organized, efficient, healthy and sustained way. What it boils down to is establishing a comprehensive governance system for the Epson Group and fostering common values and a common corporate culture.

Epson's "Exceed Your Vision" tagline expresses our commitment to exceeding the expectations of our customers and our desire to bring them surprise and delight. Exceeding expectations is our goal, our responsibility, and our promise to our stakeholders. We can achieve this through teamwork. Toward this end, I am visiting Epson plants and sales offices to talk with members of management about the Management Philosophy and to ensure that we are working as a team toward common goals.

To earn trust around the world, we must conduct ourselves and our businesses in line with universally understood concepts and principles. Epson has participated in and pledged to uphold the ten principles of the United Nations Global Compact since 2004. In 2005 we established "Principles of Corporate Behavior," rules of conduct that are aligned with the principles of the Global Compact (GC), and an Employee Code of Conduct that requires compliance with GC principles. All employees are trained in these as the cornerstone of our business activities. We will continue to work around the world to make Epson an indispensable company for customers and society, through the ethical and responsible conduct of each of our employees.

Minoru Usui
President
Seiko Epson Corporation